Which of the Following Statements About Types of Business Entities

question 39

Multiple Choice

Which of the following statements about types of business entities is true?

• A)For accounting purposes,a sole proprietorship is not a separate entity from its owner.
• B)Ownership in a partnership is represented by having shares of capital stock.
• C)One advantage of the corporation form is the ability to raise capital.
• D)Sole proprietorships are subject to double taxation.

Understand the concepts of debit and credit in accounting.

Distinguish between asset, liability, and equity accounts.

Recognize the classification of various accounts within the accounting equation.

Apply the rules of debit and credit to record transactions accurately.

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Definitions:

Purchase Returns

Purchase returns involve goods sent back to the supplier, usually due to defects, inaccuracies, or dissatisfaction, resulting in a refund or credit.

Ending Inventory

The final value of goods available for sale at the end of an accounting period after all purchases and sales have occurred.

Gross Profit Method

An inventory estimation method used to estimate the cost of goods sold and ending inventory based on the gross profit margin.

Retail Inventory Method

An accounting method used in the retail industry to estimate inventory cost by relating the cost of merchandise and its retail price.