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Basic Business and Accounting Concepts
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Basic Business and Accounting Concepts
Basic Business and Accounting Concepts
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1
Question
What is the definition of a business as given in Chapter 1?
Answer
An organization that trades goods or services to consumers
2
Question
Name two main types of profit/non-profit orientation for businesses.
Answer
Profit-oriented and non-profit
3
Question
What is a profit-oriented business example?
Answer
Gas stations, bookstores (examples of profit-oriented)
4
Question
What is a non-profit organization’s surplus used for?
Answer
To achieve the organization’s goals, not for profit distribution
5
Question
What is a service business?
Answer
Earns income by charging fees for services rendered
6
Question
Give examples of service businesses.
Answer
Schools (tuition), transportation services (fares), doctors, lawyers (professional fees)
7
Question
What is a merchandising business?
Answer
Buys and sells goods without altering their form
8
Question
Name examples of merchandising businesses.
Answer
Sari-sari stores, bookstores, drugstores
9
Question
What does a manufacturing business do?
Answer
Converts raw materials into finished products
10
Question
Provide an example of a manufacturing business.
Answer
A shoe factory turning leather and rubber into shoes
11
Question
Define sole proprietorship.
Answer
Owned by a single individual (proprietor)
12
Question
List two advantages of sole proprietorship.
Answer
Easy to set up; owner retains all profits
13
Question
List two disadvantages of sole proprietorship.
Answer
Limited capital; unlimited liability (personal assets at risk)
14
Question
Give an example of a sole proprietorship.
Answer
A small repair shop
15
Question
What is a partnership?
Answer
Owned by two or more individuals (partners) who share contributions and profits
16
Question
What are advantages of a partnership?
Answer
Easier to raise funds; decisions are shared
17
Question
What are disadvantages of a partnership?
Answer
May dissolve if a partner leaves or dies; potential for disagreements; unlimited liability
18
Question
Define corporation.
Answer
A legal entity created by law, owned by stockholders
19
Question
What are two advantages of a corporation?
Answer
Can raise significant capital; owners have limited liability
20
Question
What are two disadvantages of a corporation?
Answer
Expensive to establish; more government regulations; higher taxes
21
Question
What is accounting defined as?
Answer
The process of recording, classifying, summarizing financial transactions and interpreting results
22
Question
What is the purpose of accounting?
Answer
To provide useful financial information for decision-making
23
Question
What is meant by the 'Language of Business' in accounting?
Answer
Accounting communicates financial information
24
Question
List the recording process steps in order.
Answer
Recording; Classifying; Summarizing; Interpreting
25
Question
What are the four main branches of accounting mentioned?
Answer
Financial, Management, Cost, Government accounting
26
Question
What does financial accounting focus on?
Answer
Recording business transactions
27
Question
What does management accounting focus on?
Answer
Decision making
28
Question
What does cost accounting focus on?
Answer
How much the expenses are
29
Question
What does government accounting focus on?
Answer
Public funds
30
Question
What is internal auditing?
Answer
Checking operations for alignment with standards/policies