Question 1

Which form of business recommends a legal agreement between two or more business partners that outlines core business issues?
A)Sole proprietorship
B)Partnership
C)Corporation
D)LLC

Accepted Answer

A partnership recommends a legal agreement between two or more business partners that outlines core business issues such as the division of profits and responsibilities. This agreement is called a partnership agreement or articles of partnership.

Question 2

What is the fundamental difference found in a limited partnership?
A)Only one partner is responsible for all of the partnership's losses.
B)Both partners are responsible for all of the partnership's losses.
C)Both partners are protected from being responsible for all of the partnership's losses.
D)None of these.

Accepted Answer

In a limited partnership, there is at least one general partner who is fully responsible for the partnership's losses, and one or more limited partners who are only responsible for losses up to the amount of their investment in the partnership. Therefore, both partners are protected from being responsible for all of the partnership's losses.

Question 3

What is a hybrid entity that has the legal protections of a corporation and the ability to be taxed (one time) as a partnership?
A)Limited partnership
B)Limited liability corporation
C)Limited proprietorship
D)Limited shareholder

Accepted Answer

A limited liability corporation (LLC) is a hybrid entity that combines the flexibility of a partnership with the liability protection of a corporation. It allows owners (referred to as members) to report profits and losses on their personal tax returns and avoid double taxation. This is because LLCs can choose to be taxed as a partnership, meaning that the profits and losses of the business pass through to the individual members' tax returns. However, LLCs still have the legal protections of a corporation, which means that owners are not personally liable for the company's debts or lawsuits. A limited partnership (A) is a type of partnership that has general partners (who are personally liable) and limited partners (who act as investors and have limited liability). A limited proprietorship (C) is not a recognized business entity, and a limited shareholder (D) is not a common term.

Question 4

Accounting deals with the strategic financial issues associated with increasing the value of the business while observing applicable laws and social responsibilities.

Accepted Answer

Accounting primarily focuses on recording, summarizing, and reporting financial transactions to provide useful information for decision-making, rather than directly dealing with strategic financial issues related to increasing business value.

Question 5

What involves analyzing business operations for internal decision making and does not have to follow any rules issued by standard-setting bodies such as GAAP?
A)Accounting
B)Bookkeeping
C)Financial accounting
D)Managerial accounting

Accepted Answer

Managerial accounting involves analyzing business operations for internal decision making and does not have to follow any rules issued by standard-setting bodies such as GAAP. Accounting, bookkeeping, and financial accounting all have to follow GAAP standards.

Question 6

Partnership agreements typically include all of the following, except:
A)Expectations for sharing profits and losses.
B)Partner's salary requirements.
C)Methods for conflict resolution.
D)Shareholder's expectations for a successful business.

Accepted Answer

Partnership agreements focus on the roles, responsibilities, and expectations of the partners involved, not shareholders, as shareholders are typically associated with corporations, not partnerships.

Question 7

What is the function of the marketing department?
A)Deals with the strategic financial issues associated with increasing the value of the business while observing applicable laws and social responsibilities.
B)Includes the policies, plans, and procedures for the effective management of employees.
C)The function of selling a good or service and focuses on increasing customer sales, which increases company revenues.
D)The process associated with promoting the sale of goods or services.The marketing department supports the sales department by creating promotions that help sell the company's products.

Accepted Answer

The answer of What is the function of the marketing...

Question 8

Which of the following financial statements gives an accounting picture of property owned by a company and of claims against the property on a specific date?
A)Balance sheet
B)Statement of owner's equity
C)Statement of cash flows
D)Income statement

Accepted Answer

The balance sheet shows the assets (property owned by a company) and liabilities (claims against the property) of a company on a specific date. It provides a snapshot of the financial position of the company. The statement of owner's equity shows changes in the equity, while the statement of cash flows shows the inflows and outflows of cash over a period of time. The income statement shows the revenue and expenses of a company over a period of time.

Question 9

What occurs when businesses sell products or services for more than they cost to produce?
A)Expense
B)Profit
C)Loss
D)Revenue

Accepted Answer

When businesses sell products or services for more than they cost to produce, they earn profit. This is the main objective of every business.

Question 10

A loss occurs when businesses sell products or services for less than they cost to produce.

Accepted Answer

A loss occurs when a business incurs expenses that are greater than the revenue it generates from selling its products or services. This means that the cost of producing the product or service is higher than the price at which it is sold, resulting in a financial loss for the business.

Question 11

For-profit corporations primarily focus on making money and all profits and losses are shared by the business owners.

Accepted Answer

For-profit corporations are created with the primary purpose of making money and generating profits for the business owners. All profits and losses are shared by the owners, who expect to receive a return on their investment in the form of dividends or increased share value.

Question 12

Break-even analysis is the point at which revenues equal costs.

Accepted Answer

The answer of Break-even analysis is the point at which...

Question 13

What reports operating results (revenues minus expenses) for a given time period ending at a specified date?
A)Balance sheet
B)Statement of owner's equity
C)Statement of cash flows
D)Income statement

Accepted Answer

The income statement reports the operating results (revenues minus expenses) for a given time period ending at a specified date. The balance sheet reports a company's assets, liabilities, and equity at a specific point in time, while the statement of owner's equity reports the changes in equity during a specific period of time. The statement of cash flows reports the cash inflows and outflows for a specific period of time.

Question 14

What is the function of the sales department?
A)Deals with the strategic financial issues associated with increasing the value of the business while observing applicable laws and social responsibilities.
B)Includes the policies, plans, and procedures for the effective management of employees.
C)The function of selling a good or service and focuses on increasing customer sales, which increases company revenues.
D)The process associated with promoting the sale of goods or services.The marketing department supports the sales department by creating promotions that help sell the company's products.

Accepted Answer

The sales department's function is to sell goods or services and increase customer sales, thereby increasing company revenues. This is its primary purpose and distinguishes it from other departments. The other options are functions of other departments - A) strategic financial issues are the responsibility of finance, B) policies and procedures for employee management are handled by HR, and D) promotion of goods and services through advertising is the function of the marketing department.

Question 15

What involves preparing financial reports that provide information about the business's performance to external parties such as investors, creditors, and tax authorities?
A)Accounting
B)Bookkeeping
C)Financial accounting
D)Managerial accounting

Accepted Answer

Financial accounting involves preparing financial reports that provide information about the business's performance to external parties such as investors, creditors, and tax authorities. Accounting and managerial accounting may also involve financial reporting, but they focus more on internal decision-making and management rather than external reporting. Bookkeeping refers to the recording and organizing of financial transactions, but does not necessarily involve the preparation of financial reports.

Question 16

Which of the following is not a type of business?
A)Sole partnership
B)Partnership
C)Limited partnership
D)Corporation

Accepted Answer

"Sole partnership" is not a type of business. It may be referring to a sole proprietorship, which is a type of business structure where there is only one owner who is responsible for all aspects of the business. The other three options (partnership, limited partnership, and corporation) are all commonly recognized types of business structures.

Question 17

What refers to the amount earned resulting from the delivery or manufacture of a product or from the rendering of a service?
A)Expense
B)Profit
C)Loss
D)Revenue

Accepted Answer

Revenue refers to the amount earned resulting from the delivery or manufacture of a product or from the rendering of a service.

Question 18

What analyzes the transactional information of the business so the owners and investors can make sound economic decisions?
A)Accounting
B)Bookkeeping
C)Financial Accounting
D)Managerial Accounting

Accepted Answer

The answer of What analyzes the transactional information of the...

Question 19

What describes the basic transaction data such as its date, purpose, and amount and includes cash receipts, canceled checks, invoices, customer refunds, employee time sheet, etc.?
A)Balance sheet
B)Source document
C)Transaction
D)Financial statement

Accepted Answer

Source documents are the basic transaction data that contain important information such as date, purpose, and amount. Examples of source documents include cash receipts, canceled checks, invoices, customer refunds, employee time sheet, etc. These documents are used as a source of information for recording transactions in the accounting system. The balance sheet and financial statements are summary reports that use information from the source documents.

Question 20

Human resources management includes the policies, plans, and procedures for the effective management of employees (human resources).

Accepted Answer

Human resources management involves managing the personnel of an organization through policies, procedures, and strategies. It is responsible for recruiting, retaining, and developing employees to achieve the goals and objectives of the organization.

Quiz 20: B: Extension: A Business Basics

Which form of business recommends a legal agreement between two or more business partners that outlines core business issues?

What is the fundamental difference found in a limited partnership?

What is a hybrid entity that has the legal protections of a corporation and the ability to be taxed (one time) as a partnership?

Accounting deals with the strategic financial issues associated with increasing the value of the business while observing applicable laws and social responsibilities.

What involves analyzing business operations for internal decision making and does not have to follow any rules issued by standard-setting bodies such as GAAP?

Partnership agreements typically include all of the following, except:

What is the function of the marketing department?

Which of the following financial statements gives an accounting picture of property owned by a company and of claims against the property on a specific date?

What occurs when businesses sell products or services for more than they cost to produce?

A loss occurs when businesses sell products or services for less than they cost to produce.

For-profit corporations primarily focus on making money and all profits and losses are shared by the business owners.

Break-even analysis is the point at which revenues equal costs.

What reports operating results (revenues minus expenses) for a given time period ending at a specified date?

What is the function of the sales department?

What involves preparing financial reports that provide information about the business's performance to external parties such as investors, creditors, and tax authorities?

Which of the following is not a type of business?

What refers to the amount earned resulting from the delivery or manufacture of a product or from the rendering of a service?

What analyzes the transactional information of the business so the owners and investors can make sound economic decisions?

What describes the basic transaction data such as its date, purpose, and amount and includes cash receipts, canceled checks, invoices, customer refunds, employee time sheet, etc.?

Human resources management includes the policies, plans, and procedures for the effective management of employees (human resources).