TEST BANK
COLLEGE ACCOUNTING: A
CONTEMPORARY APPROACH
1
,Table of Contents
1. Accounting: The Language of Business
2. Analyzing Business Transactions
3. Analyzing Business Transactions Using T Accounts
4. The General Journal and the General Ledger
5. Adjustments and the Worksheet
6. Closing Entries and the Postclosing Trial Balance
7. Accounting for Sales, Accounts Receivable, and Cash Receipts
8. Accounting for Purchases, Accounts Payable, and Cash Payments
9. Cash
10. Payroll Computations, Records, and Payment
11. Payroll Taxes, Deposits, and Reports
12. Accruals, Deferrals, and the Worksheet
13. Financial Statements and Closing Procedure
2
, Test Bank College Accounting (A Contemporary Approach), 6th Edition By David
Haddock
Chap 01 Accounting: The Answers Included
Language of Business
1) The Purpose Of Accounting Is To Provide Financial Information About A Business.
⊚ True
⊚ False
2) A Firm’s Financial Affairs Are Summarized In Periodic Reports Called General Ledgers.
⊚ True
⊚ False
3) In A Sole Proprietorship, The Owner Is NOT Responsible For The Debts Of The
Business If The Company Is Unable To Pay.
⊚ True
⊚ False
4) Currently, Generally Accepted Accounting Principles Are Developed By The American
Institute Of Certified Public Accountants (AICPA).
⊚ True
⊚ False
5) The Securities And Exchange Commission (SEC) Requires That Publicly Owned
Corporations Submit Financial Statements To It At Least One Time Each Year.
⊚ True
⊚ False
6) Anyone Can Invest In A Closely Held Corporation.
⊚ True
⊚ False
7) Managerial Accounting Is Any Activity Associated With The Preparation Of Tax Returns
And The Audit Of Those Returns.
⊚ True
⊚ False
3
,8) When Developing GAAP, One Step Undertaken By The FASB Includes Holding Public
Hearings Where Interested Parties Can Express Their Opinions.
⊚ True
⊚ False
9) Public Accountants Work On The Staff Of Federal, State, Or Local Governmental Units.
⊚ True
⊚ False
10) The SEC Uses Financial Information To Determine A Company's Tax Base.
⊚ True
⊚ False
11) When A Partner Leaves The Company, The Partnership Is Dissolved And A New
Partnership May Be Formed With The Remaining Partners.
⊚ True
⊚ False
12) Accounting Is Used To Communicate Financial Information And Therefore Is Called The
“Language Of Data”.
⊚ True
⊚ False
13) Some Users Of The Financial Information Of A Business Are Employed By The
Business While Others Are Independent, Outside Parties.
⊚ True
⊚ False
14) The Certified Bookkeeper Designation Indicates That An Individual Possesses The Level
Of Knowledge And Skills Needed To Carry Out All Key Accounting Functions Through
The Adjusted Trial Balance, Including Payroll.
⊚ True
⊚ False
4
,15) Accountants Provide Financial Information To Various Parties So They Can Make
Business Decisions.
⊚ True
⊚ False
16) When A Business Is Organized As A Sole Proprietorship, The Owner Should Combine
His/Her Personal Financial Information With The Business Financial Information.
⊚ True
⊚ False
17) Which Of The Following Government Agencies Has The Authority To Suspend
Trading Of A Company’s Shares On Stock Exchanges?
A) Internal Revenue Service
B) Federal Trade Commission
C) Financial Accounting Standards Board
D) Securities And Exchange Commission
18) Which Of The Following Is Not One Of The Major Types Of Services Provided By
Public Accounting Firms?
A) Auditing
B) Bookkeeping
C) Tax Accounting
D) Management Advisory Services
19) Which Of The Following Is Not A Requirement For Becoming A Certified Bookkeeper?
A) Pass A National Exam
B) Obtain A Certain Number Of College Credits In Accounting Courses
C) Sign A Code Of Ethics
D) Submit Evidence Satisfying An Experience Requirement
5
,20) The Separate Entity Assumption Applies To Which Of The Following Corporate Forms?
A) Sole Proprietorship
B) Partnership
C) Corporation
D) All Of These Answers Are Correct
21) A Sole Proprietorship Has How Many Owners?
A) 1
B) 2
C) 3
D) 4
22) Accounting Is Often Referred To As The Language Of:
A) Business.
B) Finance.
C) Money.
D) Data.
23) The Results Of The Accounting Process Are Summarized In Periodic Reports Called:
A) Cash Budgets.
B) Bank Reconciliations.
C) Financial Statements.
D) Worksheets.
24) Which Of The Following Is Not A Goal Of The Internal Controls Implemented By
Owners And Managers?
A) To Safeguard Assets
B) To Ensure Reliability Of Accounting Data
C) To Promote Compliance With Management Policies And Applicable Laws
D) To Reduce Expenses Through The Use Of Efficient Processes
6
,25) The Three Major Legal Forms Of Business Entity Are The Sole Proprietorship, The
Partnership, And The:
A) Merchandiser.
B) Corporation.
C) Service Business.
D) Small Business.
26) How Many Owners Does A Partnership Have?
A) Zero
B) One
C) Two Or More
D) Either One Or Two
27) Ownership In A Corporation Is Evidenced By Shares Of:
A) Stock.
B) Assets.
C) Liabilities.
D) Profit.
28) The Securities And Exchange Commission (SEC) Regulates The Accounting Methods
And Financial Reporting Of Which Types Of Corporations?
A) All
B) Multimillion Dollar
C) Privately Held
D) Publicly Owned
29) Which Of The Following Must Be Done By An Independent Accountant To The
Financial Statements Submitted To The SEC By A Corporation To Ensure Their Fairness
And Adherence To Generally Accepted Accounting Principles?
A) They Must Be Audited
B) They Must Be Reviewed
C) They Must Be Created
D) They Must Be Read
7
,30) Accountants Normally Choose To Practice In One Of Three Areas: Public Accounting,
Managerial Accounting, Or:
A) Not-For-Profit Accounting.
B) Governmental Accounting.
C) Financial Accounting.
D) Tax Accounting.
31) A Form Of Business Entity Owned By One Person Is Called A:
A) Limited Liability Company.
B) Partnership.
C) Corporation.
D) Sole Proprietorship.
32) A Form Of Business Entity Owned By Two Or More People Is Called A:
A) Corporation.
B) Sole Proprietorship.
C) Partnership.
D) Limited Liability Company.
33) The People, Companies, Or Government Agencies To Whom A Firm Owes Money Are Called:
A) Creditors.
B) Debtors.
C) Purchasing Agents.
D) Partners.
34) The Process By Which Financial Information About A Business Is Recorded,
Classified, Summarized, Interpreted, And Communicated To Owners, Managers, And
Other Interested Parties Is Called:
A) Accounting.
B) Finance.
C) Economics.
D) Computer Science.
8
,35) Tax Accounting Is A Service Offered By Public Accounting Firms That Involves
Both Tax Planning And Which Of The Following?
A) Tax Payment
B) Tax Compliance
C) Tax Avoidance
D) Tax Elimination
36) GAAP Must Be Followed By Publicly Owned Companies And Are Changed And Refined
In Response To Changes In The Environment In Which Businesses Operate. What Does
GAAP Stand For?
A) General Accounting & Auditing Principles
B) Generally Accepted Auditing Principles
C) Governmental Accounting & Auditing Principles
D) Generally Accepted Accounting Principles
37) The Owners Of A Corporation Are Called:
A) Officers.
B) Employees.
C) Stockholders Or Shareholders.
D) Employers.
38) Which Of The Following Is NOT An Occupation With Similar Job Duties To
Accountants And Auditors?
A) Budget Analyst
B) Cost Estimator
C) Actuary
D) Personal Financial Advisor
39) Managerial Accountants Usually Do Which Of The Following?
A) Audit Financial Statements
B) Prepare And Audit Tax Returns
C) Prepare Internal Reports For Management
D) Investigate Companies For Possible Violations Of Law
9
, 40) Identify Which Of The Following Parties Would Not Be Involved In Maintaining
Internal Controls.
A) Employees
B) Managers
C) Owners
D) Banks
41) An Example Of An Economic Entity Is:
A) A Town.
B) A Business.
C) A Politician.
D) A Church.
42) The Form Of A Business Organization That Is Not Affected By The Withdrawal Or
Death Of An Owner And Can Continue Indefinitely Is The:
A) Sole Proprietorship.
B) Partnership.
C) Corporation.
D) Nonprofit Organization.
43) Which Of The Following Is NOT A Goal Of An Accounting System?
A) To Accumulate Data About A Firm’s Financial Affairs
B) To Classify Data About A Firm’s Financial Affairs In A Meaningful Way
C) To Interpret The Relative Success Of A Business Through The Examination Of Data
About Its Financial Affairs
D) To Summarize Data About A Firm’s Financial Affairs In Periodic Reports Called
Financial Statements
44) Which Of The Following Is NOT A Task Undertaken By The Accountant Within An Organization?
A) Establish The Records And Procedures That Make Up The Accounting System
B) Supervise The Operations Of The Accounting System
C) Interpret The Financial Information That Results From The Accounting System
D) Create Generally Accepted Accounting Principles Upon Which The Accounting
System Is Based
10
COLLEGE ACCOUNTING: A
CONTEMPORARY APPROACH
1
,Table of Contents
1. Accounting: The Language of Business
2. Analyzing Business Transactions
3. Analyzing Business Transactions Using T Accounts
4. The General Journal and the General Ledger
5. Adjustments and the Worksheet
6. Closing Entries and the Postclosing Trial Balance
7. Accounting for Sales, Accounts Receivable, and Cash Receipts
8. Accounting for Purchases, Accounts Payable, and Cash Payments
9. Cash
10. Payroll Computations, Records, and Payment
11. Payroll Taxes, Deposits, and Reports
12. Accruals, Deferrals, and the Worksheet
13. Financial Statements and Closing Procedure
2
, Test Bank College Accounting (A Contemporary Approach), 6th Edition By David
Haddock
Chap 01 Accounting: The Answers Included
Language of Business
1) The Purpose Of Accounting Is To Provide Financial Information About A Business.
⊚ True
⊚ False
2) A Firm’s Financial Affairs Are Summarized In Periodic Reports Called General Ledgers.
⊚ True
⊚ False
3) In A Sole Proprietorship, The Owner Is NOT Responsible For The Debts Of The
Business If The Company Is Unable To Pay.
⊚ True
⊚ False
4) Currently, Generally Accepted Accounting Principles Are Developed By The American
Institute Of Certified Public Accountants (AICPA).
⊚ True
⊚ False
5) The Securities And Exchange Commission (SEC) Requires That Publicly Owned
Corporations Submit Financial Statements To It At Least One Time Each Year.
⊚ True
⊚ False
6) Anyone Can Invest In A Closely Held Corporation.
⊚ True
⊚ False
7) Managerial Accounting Is Any Activity Associated With The Preparation Of Tax Returns
And The Audit Of Those Returns.
⊚ True
⊚ False
3
,8) When Developing GAAP, One Step Undertaken By The FASB Includes Holding Public
Hearings Where Interested Parties Can Express Their Opinions.
⊚ True
⊚ False
9) Public Accountants Work On The Staff Of Federal, State, Or Local Governmental Units.
⊚ True
⊚ False
10) The SEC Uses Financial Information To Determine A Company's Tax Base.
⊚ True
⊚ False
11) When A Partner Leaves The Company, The Partnership Is Dissolved And A New
Partnership May Be Formed With The Remaining Partners.
⊚ True
⊚ False
12) Accounting Is Used To Communicate Financial Information And Therefore Is Called The
“Language Of Data”.
⊚ True
⊚ False
13) Some Users Of The Financial Information Of A Business Are Employed By The
Business While Others Are Independent, Outside Parties.
⊚ True
⊚ False
14) The Certified Bookkeeper Designation Indicates That An Individual Possesses The Level
Of Knowledge And Skills Needed To Carry Out All Key Accounting Functions Through
The Adjusted Trial Balance, Including Payroll.
⊚ True
⊚ False
4
,15) Accountants Provide Financial Information To Various Parties So They Can Make
Business Decisions.
⊚ True
⊚ False
16) When A Business Is Organized As A Sole Proprietorship, The Owner Should Combine
His/Her Personal Financial Information With The Business Financial Information.
⊚ True
⊚ False
17) Which Of The Following Government Agencies Has The Authority To Suspend
Trading Of A Company’s Shares On Stock Exchanges?
A) Internal Revenue Service
B) Federal Trade Commission
C) Financial Accounting Standards Board
D) Securities And Exchange Commission
18) Which Of The Following Is Not One Of The Major Types Of Services Provided By
Public Accounting Firms?
A) Auditing
B) Bookkeeping
C) Tax Accounting
D) Management Advisory Services
19) Which Of The Following Is Not A Requirement For Becoming A Certified Bookkeeper?
A) Pass A National Exam
B) Obtain A Certain Number Of College Credits In Accounting Courses
C) Sign A Code Of Ethics
D) Submit Evidence Satisfying An Experience Requirement
5
,20) The Separate Entity Assumption Applies To Which Of The Following Corporate Forms?
A) Sole Proprietorship
B) Partnership
C) Corporation
D) All Of These Answers Are Correct
21) A Sole Proprietorship Has How Many Owners?
A) 1
B) 2
C) 3
D) 4
22) Accounting Is Often Referred To As The Language Of:
A) Business.
B) Finance.
C) Money.
D) Data.
23) The Results Of The Accounting Process Are Summarized In Periodic Reports Called:
A) Cash Budgets.
B) Bank Reconciliations.
C) Financial Statements.
D) Worksheets.
24) Which Of The Following Is Not A Goal Of The Internal Controls Implemented By
Owners And Managers?
A) To Safeguard Assets
B) To Ensure Reliability Of Accounting Data
C) To Promote Compliance With Management Policies And Applicable Laws
D) To Reduce Expenses Through The Use Of Efficient Processes
6
,25) The Three Major Legal Forms Of Business Entity Are The Sole Proprietorship, The
Partnership, And The:
A) Merchandiser.
B) Corporation.
C) Service Business.
D) Small Business.
26) How Many Owners Does A Partnership Have?
A) Zero
B) One
C) Two Or More
D) Either One Or Two
27) Ownership In A Corporation Is Evidenced By Shares Of:
A) Stock.
B) Assets.
C) Liabilities.
D) Profit.
28) The Securities And Exchange Commission (SEC) Regulates The Accounting Methods
And Financial Reporting Of Which Types Of Corporations?
A) All
B) Multimillion Dollar
C) Privately Held
D) Publicly Owned
29) Which Of The Following Must Be Done By An Independent Accountant To The
Financial Statements Submitted To The SEC By A Corporation To Ensure Their Fairness
And Adherence To Generally Accepted Accounting Principles?
A) They Must Be Audited
B) They Must Be Reviewed
C) They Must Be Created
D) They Must Be Read
7
,30) Accountants Normally Choose To Practice In One Of Three Areas: Public Accounting,
Managerial Accounting, Or:
A) Not-For-Profit Accounting.
B) Governmental Accounting.
C) Financial Accounting.
D) Tax Accounting.
31) A Form Of Business Entity Owned By One Person Is Called A:
A) Limited Liability Company.
B) Partnership.
C) Corporation.
D) Sole Proprietorship.
32) A Form Of Business Entity Owned By Two Or More People Is Called A:
A) Corporation.
B) Sole Proprietorship.
C) Partnership.
D) Limited Liability Company.
33) The People, Companies, Or Government Agencies To Whom A Firm Owes Money Are Called:
A) Creditors.
B) Debtors.
C) Purchasing Agents.
D) Partners.
34) The Process By Which Financial Information About A Business Is Recorded,
Classified, Summarized, Interpreted, And Communicated To Owners, Managers, And
Other Interested Parties Is Called:
A) Accounting.
B) Finance.
C) Economics.
D) Computer Science.
8
,35) Tax Accounting Is A Service Offered By Public Accounting Firms That Involves
Both Tax Planning And Which Of The Following?
A) Tax Payment
B) Tax Compliance
C) Tax Avoidance
D) Tax Elimination
36) GAAP Must Be Followed By Publicly Owned Companies And Are Changed And Refined
In Response To Changes In The Environment In Which Businesses Operate. What Does
GAAP Stand For?
A) General Accounting & Auditing Principles
B) Generally Accepted Auditing Principles
C) Governmental Accounting & Auditing Principles
D) Generally Accepted Accounting Principles
37) The Owners Of A Corporation Are Called:
A) Officers.
B) Employees.
C) Stockholders Or Shareholders.
D) Employers.
38) Which Of The Following Is NOT An Occupation With Similar Job Duties To
Accountants And Auditors?
A) Budget Analyst
B) Cost Estimator
C) Actuary
D) Personal Financial Advisor
39) Managerial Accountants Usually Do Which Of The Following?
A) Audit Financial Statements
B) Prepare And Audit Tax Returns
C) Prepare Internal Reports For Management
D) Investigate Companies For Possible Violations Of Law
9
, 40) Identify Which Of The Following Parties Would Not Be Involved In Maintaining
Internal Controls.
A) Employees
B) Managers
C) Owners
D) Banks
41) An Example Of An Economic Entity Is:
A) A Town.
B) A Business.
C) A Politician.
D) A Church.
42) The Form Of A Business Organization That Is Not Affected By The Withdrawal Or
Death Of An Owner And Can Continue Indefinitely Is The:
A) Sole Proprietorship.
B) Partnership.
C) Corporation.
D) Nonprofit Organization.
43) Which Of The Following Is NOT A Goal Of An Accounting System?
A) To Accumulate Data About A Firm’s Financial Affairs
B) To Classify Data About A Firm’s Financial Affairs In A Meaningful Way
C) To Interpret The Relative Success Of A Business Through The Examination Of Data
About Its Financial Affairs
D) To Summarize Data About A Firm’s Financial Affairs In Periodic Reports Called
Financial Statements
44) Which Of The Following Is NOT A Task Undertaken By The Accountant Within An Organization?
A) Establish The Records And Procedures That Make Up The Accounting System
B) Supervise The Operations Of The Accounting System
C) Interpret The Financial Information That Results From The Accounting System
D) Create Generally Accepted Accounting Principles Upon Which The Accounting
System Is Based
10
