Introduction to Accounting and Types of Business

I. True or False 1. Some entities are required by law to publish information about their affairs. True 2. Financial accounting informationis for the exclusive benefit of the owners of an entity. False 3. Learning accounting is like learning a new language in the sense that words used in accounting mean the same as they are used in everyday, nonaccounting sense. True 4. The main purpose of accounting is to provide information that is useful in making economic decisions. True 5. A school is most likely to be considered a manufacturing business – the raw materials are the students and the finished products are responsible and competent business professionals. False (in a way that school is technically a service type of business.) 6. Accounting is the major facet of a business that is responsible in generating funds needed to support the business operations. False (Finance is responsible for generating funds) 7. Taxation involves setting financial objectives, achieving them and generally safeguarding all the financial resources of the entity. False 8. Suppliers are interested in information that enable them to determine whether amounts owing to them will be paid when due. True 9. A corporation is owned by stockholders. It has the right of succession and the power, attributes, and properties expressly authorized by law or incident to its existence. True 10. A manufacturing type business involves designing products, aggregating components and assembling finished products True II. Multiple Choice 1. Which statement is false? a. Accounting is the language of business. b. Accountants are the scorekeepers of business. c. Accounting is dispensable in the world of business. d. None of the above. 2. A mechanical task involving the collection of basic financial data. a. Accountancy b. Bookkeeping c. Auditing d. Taxation 3. The checking of prepared accounts and reporting them on is called a. Taxation b. Bookkeeping c. Auditing d. Costing 4. A CPA is engaged in public accountancy if he renders service to a. prepare income tax returns. b. design, install, and revise accounting system c. audit or verify financial transactions and accoutning records d. all of the above 5. A highly complex technical branch of accounting that involves the computation of tax payable by both business entities and individuals a. Cost Accounting b. Bookkeeping c. Financial Accounting d. Taxation 6. Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process? a. Identification b. Communication c. Recording d. Analysis 7. The process of recording transactions has become more efficient because a. fewer events can be quantified in financial terms. b. computers are used in processing business events. c. more people have been hired to record business transactions. d. business events are recorded only at the end of the year. 8. Financial accounting provides economic and financial information for all of the following except a. creditors. b. investors. c. managers. d. other external users. 9. A business organized as a corporation a. is not a separate legal entity in most states. b. requires that stockholders be personally liable for the debts of the business. c. is owned by its stockholders d. terminates when one of its original stockholders dies. 10. The partnership form of business organization a. is a separate legal entity. b. is a common form of organization for service-type businesses. c. enjoys an unlimited life. d. has limited liability. III. Identification For the following items, identify what industry do the following business belongs. a. Service b. Merchandising c.Manufacturing. 1. Pampanga’s Best C 2. Airline Company A 3. Supermarket B 4. Food Panda A 5. Unilab C 6. 5 star restaurant A (Hybrid) 7. School A 8. Jeepney fleet operator A 9. Funeral parlor A