P1-38B Accounting vocabulary, financial statement users,accounting profession, types of business organizations, corporate
characteristics, and accounting concepts [15–20 min]
Consider the following terms and definitions:
TERMS: DEFINITIONS:
1. Proprietorship A. Feature that sets the maximum amount of financial loss by a stockholder to the cost of the investment
2. Faithful representation B. Reason why accountants should not write up the value of equipment due to an increase in its fair value
3. Partnership C. Is composed of accountants
4. Stock D. An entity that has fewer than two owners
5. Limited liability E. Principle that does not accept incomplete or bias data
6. Limited Liability Company F. Revenues of $40,000 and expenses of $25,000
7. Cost principle G. Possess mutual agency
8. FASB H. The corporate charter specifies how much of this a corporation can sell
9. Net income of $15,000 I. Entity where the business, and not the proprietor, is liable for the company’s debts
10. Business owners J. Use accounting information to set goals, to measure progress toward those goals,
and to make adjustments when needed
Requirement1. Match the terms with their correct definitions.
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