Introduction to Accounting and Business Ch 1 Part 1

 Chapter 01 - Introduction to Accounting and Business 1.Acorporationisabusinessthatislegallyseparateanddistinctfromitsowners.  a. True  b. False ANSWER: True 2.Theroleofaccountingistoprovidemanydifferentuserswithfinancialinformationtomakeeconomicdecisions.  a. True  b. False ANSWER: True 3.Accountinginformationusersneedreportsabouttheeconomicactivitiesandconditionofbusinesses.  a. True  b. False ANSWER: True 4.Managerialaccountinginformationisusedbyexternalandinternalusersequally.  a. True  b. False ANSWER: False 5.Seniorexecutivescannotbecriminallyprosecutedforthewrongdoingstheycommitonbehalfofthecompanieswhere theywork.  a. True  b. False ANSWER: False 6.Financialaccountingprovidesinformationtoallusers,whilethemainfocusformanagerialaccountingistoprovide informationtothemanagement.  a. True  b. False ANSWER: True 7.Properethicalconductimpliesthatyouonlyconsiderwhat'sinyourbestinterest.  a. True  b. False ANSWER: False 8.Someofthemajorfraudulentactsbyseniorexecutivesstartedaswhattheyconsideredtobesmallethicallapseswhich grewoutofcontrol.  a. True  b. False ANSWER: True 9.Abusinessisanorganizationinwhichbasicresourcesorinputs,likematerialsandlabor,areassembledandprocessed toprovideoutputsintheformofgoodsorservicestocustomers. CopyrightCengageLearning.PoweredbyCognero.  Chapter 01 - Introduction to Accounting and Business   a. b. True False ANSWER: True 10.Twofactorsthattypicallyleadtoethicalviolationsarerelevanceandtimelinessofaccountinginformation.  a. True  b. False ANSWER: False 11.Anexampleofageneral-purposefinancialstatementwouldbeareportaboutprojectedpriceincreasesrelatedto transportationcosts.  a. True  b. False ANSWER: False 12.TheSarbanes-OxleyActestablishedstandardsforcorporateresponsibilityanddisclosure.  a. True  b. False ANSWER: True 13.Themainobjectiveforallbusinessesistomaximizeunrealizedprofits.  a. True  b. False ANSWER: False 14.Theprimaryroleofaccountingistodeterminetheamountoftaxesabusinesswillberequiredtopaytotaxing entities.  a. True  b. False ANSWER: False 15.Thebasicdifferencebetweenmanufacturingandretailcompaniesisthecompletionleveloftheproductsthey purchaseforresaletocustomers.  a. True  b. False ANSWER: True 16.Proprietorshipsareownedbyoneownerandprovideonlyservicestotheircustomers.  a. True  b. False ANSWER: False 17.About90%ofthebusinessesintheUnitedStatesareorganizedascorporations.  a. True  Chapter 01 - Introduction to Accounting and Business  ANSWER: b. False False 18.Anexampleofanexternaluserofaccountinginformationisthefederalgovernment.  a. True  b. False ANSWER: True 19.TheFinancialAccountingStandardsBoard(FASB)istheauthoritativebodythathasprimaryresponsibilityfor developingaccountingprinciples.  a. True  b. False ANSWER: True 20.Thecostprincipleisthebasisforenteringthepurchasepriceintotheaccountingrecords.  a. True  b. False ANSWER: True 21.ThemonetaryunitassumptionrequiresthateconomicdataberecordedindollarsforcompaniesintheUnitedStates.  a. True  b. False ANSWER: True 22.Ifabuildingisappraisedfor$85,000,offeredforsaleat$90,000,andthebuyerpays$80,000cashforit,thebuyer wouldrecordthebuildingat$85,000.  a. True  b. False ANSWER: False 23.Thefinancialstatementsofaproprietorshipshouldincludetheowner'spersonalassetsandliabilities.  a. True  b. False ANSWER: False 24.NosignificantdifferencesexistbetweentheaccountingstandardsissuedbytheFASBandtheIASB.  a. True  b. False ANSWER: False 25.Generallyacceptedaccountingprinciplesregulatehowandwhatfinancialinformationisreportedbybusinesses.  a. True  b. False ANSWER: True  Chapter 01 - Introduction to Accounting and Business 26.TheaccountingequationcanbeexpressedasAssets–Liabilities=Stockholder'sEquity.  a. True  b. False ANSWER: True 27.Therightsorclaimstotheassetsofabusinessmaybesubdividedintorightsofcreditorsandrightsofstockholders.  a. True  b. False ANSWER: True 28.Thestockholders'rightstotheassetsrankaheadofthecreditors'rightstotheassets.  a. True  b. False ANSWER: False 29.Iftheliabilitiesowedbyabusinesstotal$300,000andstockholders'equityisequalto$300,000,thentheassetsalso total$300,000.  a. True  b. False ANSWER: False 30.Iftotalassetsdecreasedby$30,000duringaspecificperiodandstockholders'equitydecreasedby$35,000duringthe sameperiod,theperiod'schangeintotalliabilitieswasa$65,000increase.  a. True  b. False ANSWER: False 31.Iftotalassetsincreasedby$190,000duringaspecificperiodandliabilitiesdecreasedby$10,000duringthesame period,theperiod'schangeintotalstockholders'equitywasa$200,000increase.  a. True  b. False ANSWER: True 32.Ifnetincomeforacompanywas$50,000,$20,000incashdividendswerepaidandtheshareholdersinvested$10,000 incash,thestockholders'equityincreasedby$40,000.  a. True  b. False ANSWER: True 33.Anaccountreceivableistypicallyclassifiedasarevenue.  a. True  b. False ANSWER: False 34.Anaccountreceivableisaclaimagainstacustomerresultingfromasaleonaccount. Chapter 01 - Introduction to Accounting and Business   a. b. True False ANSWER: 35.Payinganaccountpayableincreasesliabilitiesanddecreasesassets.  a. True  b. False ANSWER: True False 36.Receivingpaymentsonanaccountreceivableincreasesbothequityandassets.  a. True  b. False ANSWER: False 37.Dividendspaidtostockholdersdecreaseassetsandincreaseequity.  a. True  b. False ANSWER: False 38.Purchasingsuppliesonaccountincreasesliabilitiesanddecreasesequity.  a. True  b. False ANSWER: False 39.Receivingabillorotherwisebeingnotifiedthatanamountisowedisnotrecordeduntiltheamountispaid.  a. True  b. False ANSWER: False 40.Revenueisearnedonlywhenmoneyisreceived.  a. True  b. False ANSWER: False 41.Assetsthatareusedupduringtheprocessofearningrevenuearecalledexpenses.  a. True  b. False ANSWER: True 42.Theexcessofrevenueovertheexpensesincurredinearningtherevenueiscalledcapital.  a. True  b. False ANSWER: False  Chapter 01 - Introduction to Accounting and Business 43.Theprimaryfinancialstatementsofacorporationaretheincomestatement,thestatementofstockholders’equity,and thebalancesheet.  a. True  b. False ANSWER: False 44.Anincomestatementisasummaryoftherevenuesandexpensesofabusinessasofaspecificdate.  a. True  b. False ANSWER: False 45.Astatementofstockholders’equityreportsthechangesinstockholder'sequityforaperiodoftime.  a. True  b. False ANSWER: True 46.Thestatementofcashflowsconsistsofthreesections:cashflowsfromoperatingactivities,cashflowsfromincome activities,andcashflowsfromequityactivities.  a. True  b. False ANSWER: False 47.Thebalancesheetrepresentstheaccountingequation.  a. True  b. False ANSWER: 48.Netincomeandnetprofitdonotmeanthesamething.  a. True  b. False ANSWER: True False 49.Profitisthedifferencebetween  a. assetsandliabilities  b. theincomingcashandoutgoingcash  c. theassetspurchasedwithcashcontributedbytheownerandthecashspenttooperatethebusiness  d. theamountsreceivedfromcustomersforgoodsorservicesandtheamountspaidfor theinputsusedtoprovidethegoodsorservices ANSWER: 50.Twocommonareasofaccountingthatrespectivelyprovideinformationtointernalandexternalusersare  a. forensicaccountingandfinancialaccounting  b. managerialaccountingandfinancialaccounting  c. managerialaccountingandenvironmentalaccounting d  Chapter 01 - Introduction to Accounting and Business  d. financialaccountingandtaxaccountingsystems ANSWER: b 51.Whichofthefollowingbestdescribesaccounting?  a.recordseconomicdatabutdoesnotcommunicatethedatatousersaccordingtoanyspecificrules  b.isaninformationsystemthatprovidesreportstousersregardingeconomicactivitiesandconditionofa business  c.isofnousebyindividualsoutsideofthebusiness  d.isusedonlyforfillingouttaxreturnsandforfinancialstatementsforvarioustypeofgovernmentalreporting requirements ANSWER: b 52.Whichtypeofaccountanttypicallypracticesasanindividualorasamemberofapublicaccountingfirm?  a. CertifiedPublicAccountant  b. CertifiedPayrollProfessional  c. CertifiedInternalAuditor  d. CertifiedManagementAccountant ANSWER: a 53.Financialreportsareusedby  a.  b.  c.  d. ANSWER: management creditors investors allarecorrect d 54.Allofthefollowingaregeneral-purposefinancialstatementsexcept  a. balancesheet  b. incomestatement  c. statementofstockholders’equity  d. cashbudget ANSWER: d 55.Whichofthefollowingisamanufacturingbusiness?  a. GeneralMotors  b. Facebook  c. AmericanAirlines  d. Target ANSWER: a 56.Whichofthefollowingisaservicebusiness?  a. Microsoft  b. DellComputers  Chapter 01 - Introduction to Accounting and Business   c. d. Facebook Walmart ANSWER: 57.Whichofthefollowinggroupsofcompaniesareallexamplesofaretailbusiness?  a. DeltaAirLines,Marriott,Gap  b. Gap,Amazon.com,DeltaAirLines  c. GameStop,Sony,Dell  d. GameStop,BestBuy,Gap ANSWER: 58.Whichofthefollowinggroupsareconsideredtobeinternal usersofaccountinginformation?  a. employeesandcustomers  b. customersandvendors  c. employeesandmanagers  d. governmententitiesandbanks ANSWER: 59.Thefollowingareexamplesofexternalusersofaccountinginformationexcept  a. governmententities  b. customers  c. creditors  d. managers ANSWER: c d c d 60.Whichofthefollowingisthebestdescriptionofaccounting’sroleinbusiness?  a.Accountingprovidesstockholderswithinformationregardingthemarketvalueofthecompany’sstocks.  b.Accountingprovidesinformationtomanagerstooperatethebusinessandtootheruserstomakedecisions regardingtheeconomicconditionofthecompany.  c.Accountinghelpsindecreasingthecreditriskofthecompany.  d.Accountingisnotresponsibleforprovidinganyformofinformationtousers.Thatistheroleofthe InformationSystemsDepartment. ANSWER: b 61.Managerialaccountantswouldberesponsibleforprovidinginformationregarding  a. taxreportstogovernmentagencies  b. profitreportstostockholdersandmanagement  c. expansionofaproductlinereporttomanagement  d. consumerreportstocustomers ANSWER: 62.Whichofthefollowingisnotacertificationforaccountants?  a. CIA c  Chapter 01 - Introduction to Accounting and Business    b. c. d. CMA CISA IRS ANSWER: d 63.Whichofthefollowingisnotaroleofaccountinginbusiness?  a.toprovidereportstousersabouttheeconomicactivitiesandconditionsofabusiness  b.topersonallyguaranteeloansofthebusiness  c.toprovideinformationtoexternaluserstodeterminetheeconomicperformanceandconditionofthebusiness  d.toassessthevariousinformationalneedsofusersanddesignitsaccountingsystemtomeetthoseneeds ANSWER: b 64.Whichofthefollowingareguidelinesforbehavingethically?  I. Identifytheconsequencesofadecisionanditseffectonothers.  II. Consideryourobligationsandresponsibilitiestothoseaffectedbythedecision.  III. Identifyyourdecisionbasedonpersonalstandardsofhonestyandfairness.  a. IandII.  b. IIandIII.  c. IandIII.  d. I,II,andIII. ANSWER: d 65.Whichofthefollowingwouldnotnormallyoperateasaservicebusiness?  a. petgroomer  b. grocer  c. lawncarecompany  d. stylingsalon ANSWER: b 66.MostbusinessesintheUnitedStatesare  a. proprietorships  b. partnerships  c. corporations  d. cooperatives ANSWER: a 67.Whichoftheitemsbelowisnot abusinessentity?  a. entrepreneurship  b. proprietorship  c. partnership  d. corporation ANSWER: a 68.Anentitythatisorganizedaccordingtostateorfederalstatutesandinwhichownershipisdividedintosharesofstock  Chapter 01 - Introduction to Accounting and Business isa     a. b. c. d. proprietorship corporation partnership governmentalunit ANSWER: b 69.Whichofthefollowingistrueinregardstoalimitedliabilitycompany?  a. Makesup10%ofbusinessorganizationsintheUnitedStates.  b. Combinestheattributesofapartnershipandacorporation.  c. Providestaxandliabilityadvantagestotheowners.  d. Allarecorrect. ANSWER: d 70.OnMay20,WhiteRepairServiceextendedanofferof$108,000forlandthathadbeenpricedforsaleat$140,000. OnMay30,WhiteRepairServiceacceptedtheseller’scounterofferof$115,000.OnJune20,thelandwasassessedata valueof$95,000forpropertytaxpurposes.OnJuly4,WhiteRepairServicewasoffered$150,000forthelandbya nationalretailchain.AtwhatvalueshouldthelandberecordedinWhiteRepairService’srecords?  a. $108,000  b. $95,000  c. $140,000  d. $115,000 ANSWER: d 71.Selectthetypeofbusinessthatismostlikelytoobtainlargeamountsofresourcesbyissuingstock.  a. partnership  b. corporation  c. proprietorship  d. governmententity ANSWER: b 72.Whichofthefollowingisnotacharacteristicofacorporation?  a. Corporationsareorganizedasaseparatelegaltaxableentity.  b. Ownershipisdividedintosharesofstock.  c. Corporationsexperienceaneaseinobtaininglargeamountsofresourcesbyissuingstock.  d. Acorporation’sresourcesarelimitedtoitsindividualowners’resources. ANSWER: d 73.WithintheUnitedStates,thedominantbodyintheprimarydevelopmentofaccountingprinciplesisthe  a. AmericanInstituteofCertifiedPublicAccountants(AICPA)  b. AmericanAccountingAssociation(AAA)  c. FinancialAccountingStandardsBoard(FASB)  d. InstituteofManagementAccountants(IMA) ANSWER: c