ACG 2021 Midterm Questions with All
Complete Solutions 2025-2026
Updated.
Accounting is the information system that
A.
measures business activity.
B.
communicates the results to decision makers.
C.
processes information into reports.
D.
All of the above - Answer all of the above
Which of the following is not an external user of a business's financial information?
A.
Taxing authorities
B.
Customers
C.
Employee
D.
Investors - Answer employee
Generally Accepted Accounting Principles (GAAP) are currently formulated by the
A.
Financial Accounting Standards Board (FASB).
B.
Securities and Exchange Commission (SEC).
C.
Institute of Management Accountants (IMA).
D.
American Institute of Certified Public Accountants (AICPA). - Answer Financial Accounting
Standards Board (FASB).
,Which type of business organization is owned by only one owner?
A.
Corporation
B.
Partnership
C.
Sole proprietorship
D.
Items a, b, and c are all correct. - Answer Sole proprietorship
Which of the following characteristics best describes a corporation?
A.
A business with a single owner
B.
Is not taxed
C.
Stockholders not personally liable for entity's debts
D.
Not a separate taxable entity - Answer Stockholders not personally liable for entity's debts
Which of the following requires accounting information to be complete, neutral, and free from
material error?
A.
Faithful representation concept
B.
Cost principle
C.
Economic entity assumption
D.
Going concern assumption - Answer Faithful representation concept
At the end of a recent year, Global Cleaning Service, a full-service house and office cleaning
service, had total assets of $ 3,630 and equity of $ 2,280. How much were Global Cleaning
Service's liabilities? - Answer 1350
, Consider the overall effects on Global Cleaning Service from selling and performing services on
account for $ 6,400 and paying expenses totaling $ 2,500. What is Global Cleaning Service's net
income or net loss? - Answer net income of 3900
The balance sheet reports the
A.
financial position on a specific date.
B.
results of operations on a specific date.
C.
financial position for a specific period.
D.
results of operations for a specific period. - Answer financial position on a specific date.
wishes to organize her business with unlimited life and wants owners of the business to not be
held personally liable for the business's debts. Additionally, Chloe wants the business to be a
separate taxable entity. Which type of business organization will meet Chloe's needs best? -
Answer corporation
a. Michael's personal assets are not recorded on the company's balance sheet: - Answer the
economic entity assumption.
b. The company records furniture at its cost of $9,000, not its market value of $13,000: - Answer
the cost principle
c. The company records its financial statements in U.S. dollars: - Answer monetary unit
assumption
d. Michael expects the company to remain in operations for the foreseeable future: - Answer
going concern assumption
assets equation - Answer assets= liabilities+equity
Liabilities: (NATU) - Answer accounts payable
notes payable
taxes payable
unearned revenue
Complete Solutions 2025-2026
Updated.
Accounting is the information system that
A.
measures business activity.
B.
communicates the results to decision makers.
C.
processes information into reports.
D.
All of the above - Answer all of the above
Which of the following is not an external user of a business's financial information?
A.
Taxing authorities
B.
Customers
C.
Employee
D.
Investors - Answer employee
Generally Accepted Accounting Principles (GAAP) are currently formulated by the
A.
Financial Accounting Standards Board (FASB).
B.
Securities and Exchange Commission (SEC).
C.
Institute of Management Accountants (IMA).
D.
American Institute of Certified Public Accountants (AICPA). - Answer Financial Accounting
Standards Board (FASB).
,Which type of business organization is owned by only one owner?
A.
Corporation
B.
Partnership
C.
Sole proprietorship
D.
Items a, b, and c are all correct. - Answer Sole proprietorship
Which of the following characteristics best describes a corporation?
A.
A business with a single owner
B.
Is not taxed
C.
Stockholders not personally liable for entity's debts
D.
Not a separate taxable entity - Answer Stockholders not personally liable for entity's debts
Which of the following requires accounting information to be complete, neutral, and free from
material error?
A.
Faithful representation concept
B.
Cost principle
C.
Economic entity assumption
D.
Going concern assumption - Answer Faithful representation concept
At the end of a recent year, Global Cleaning Service, a full-service house and office cleaning
service, had total assets of $ 3,630 and equity of $ 2,280. How much were Global Cleaning
Service's liabilities? - Answer 1350
, Consider the overall effects on Global Cleaning Service from selling and performing services on
account for $ 6,400 and paying expenses totaling $ 2,500. What is Global Cleaning Service's net
income or net loss? - Answer net income of 3900
The balance sheet reports the
A.
financial position on a specific date.
B.
results of operations on a specific date.
C.
financial position for a specific period.
D.
results of operations for a specific period. - Answer financial position on a specific date.
wishes to organize her business with unlimited life and wants owners of the business to not be
held personally liable for the business's debts. Additionally, Chloe wants the business to be a
separate taxable entity. Which type of business organization will meet Chloe's needs best? -
Answer corporation
a. Michael's personal assets are not recorded on the company's balance sheet: - Answer the
economic entity assumption.
b. The company records furniture at its cost of $9,000, not its market value of $13,000: - Answer
the cost principle
c. The company records its financial statements in U.S. dollars: - Answer monetary unit
assumption
d. Michael expects the company to remain in operations for the foreseeable future: - Answer
going concern assumption
assets equation - Answer assets= liabilities+equity
Liabilities: (NATU) - Answer accounts payable
notes payable
taxes payable
unearned revenue
