Organizational Structures & Journaling Notes 1. List the 3 types of business ownership. a. Sole proprietorship b. Partnership c. Corporation 2. How does the ownership differ between each type of ownership? a. Sole proprietorship one owner b. Partnership 2 or more owners c. Corporation owned by number of people (shareholders) 3. List at least 1 advantage and 1 disadvantage of each type of ownership. a. Sole Proprietorship i. advantage -- your own boss ii. disadvantage unlimited liability
b. Partnership i. Advantage easy to start, sources of capital easier ii. Disadvantage more than 1 boss, share profits c. Corporation i. Advantage increase sources of capital, owners liable up to amount of their investment ii. Disadvantage difficult to start, owners do not have control 4. If a partner makes a bad decision, what is the responsibility of the other partner(s)? a. All partners are equally responsible 5. Who is a shareholder? a. Owners of a corporation by buying stock of the corporation
6. What is a franchise? Give an example. a. Written contract granting permission to sell someone else s product or service in a prescribed manner, over a certain period of time, and in a specified territory. b. Barnes & Noble, Blockbuster, Zaxby s 7. What is a cooperative? Give an example. a. An organization owned and operated by its members for the purpose of saving money on the purchase of certain goods and services. b. Farmers Rural Electric Cooperative 8. What is a non-profit organization? a. A business that focuses on providing a service rather than making a profit.
9. What is e-commerce? a. Electronic commerce is the buying and selling of goods over the internet 10. What are some advantages and disadvantages of e-commerce? a. Advantages: 24/7, saves business money to advertise online verse printing, customers around the world b. Privacy, security of website and transactions 11. List the 8 steps in the accounting cycle. a. Transactions are analyzed b. Record in general journal c. Transactions are posted to the ledger
d. A trail balance is prepared, adjustments made e. Financial statements are prepared f. Adjusting entries are journalized and posted to ledger g. Closing entries are journalized and posted to ledger h. A post-closing trail balance is prepared 12. What is the next step after we have analyzed transactions? a. To record them in the general journal 13. How are transactions recorded in the general journal? a. By date order
b. Debit recorded first c. Credit recorded next and indented d. Record the source of information: source documents e. Memo or notation 14. After transactions are posted to the general journal, what is the next step? a. Posting the journal entries to their individual general ledgers 15. What is posting? a. Copying of exact dates and debit/credit dollar amounts from the journal to ledgers 16. What are steps to posting transaction from general journal to general ledgers? a. Find the general ledger account that matches the journal entry account name
b. Record the date, post reference, and amount in appropriate columns of the ledger c. Update the balance for the ledger in the balance column d. Record the account number in the post reference column of the general journal to prove the posting is complete Record each transaction onto the General Journal, then post to General Ledgers: 17. Owner, Martha Collins, invested cash $2,000.00, R1 (Cash debit, O.E. credit) 18. Paid cash for supplies, $350.00, C2 (Supplies debit, Cash credit) 19. Paid cash for prepaid insurance, $270.00, C3 (Prepaid Insurance debit, Cash credit)
20. Bought supplies on account, Office Supply Company, $450.00, M1 (Supplies debit, A/P-Office Supply Co. credit) 21. Sold services on account to Susan Jones, $275.00, S1 (A/R-Susan Jones debit, Sales credit) 22. Receives cash from sales, $775.00, R2 (Cash debit, Sales credit) 23. Paid cash for rent expense, $2500.00, C4 (Rent Expense debit, Cash credit) 24. Received payment from Susan Jones, $150.00, R3 (Cash debit, A/R-Susan Jones credit) 25. Paid cash on account to Office Supply Company, $450.00, C5 (A/P-Office Supply Co. debit, Cash credit) 26. Received cash on sales, $875.00, R4 (Cash debit, Sales credit) 27. Owner, Martha Collins, withdrew cash for personal use, $500.00, M2 (O.E. Martha Collins, Drawing debit, Cash credit)
28. Paid cash for advertising, $475.00, C6 (Advertising Expense debit, Cash credit) 29. Received cash from sales, $1,254.00, R5 (Cash debit, Sales credit) 30. Paid cash for utilities, $125.00, C7 (Utilities Expense debit, Cash credit) 31. Received payment on account, Susan Jones, $125.00, R6 (Cash debit, A/R-Susan Jones credit)