ACCOUNTING 333 CHAPTER 1 PRACTICE QUIZ
The treasurer and the controller of a corporation generally report to the:
o president.
o board of directors.
o chief executive officer.
o chief financial officer.
o chairman of the board.
2. Which one of these best describes the key difference between the duties of the controller and
those of the treasurer?
o Separation of duties related to assets versus those related to debt and equity
o Separation of authority over tax records versus accounting records
o Separation of reporting to the Boards of Directors versus directly to investors.
o Separation of duties related to production versus marketing
o Separation of cash control from accounting records
3. Which position is generally directly responsible for financial planning and capital expenditures?
o Controller
o Treasurer
o Director
o Chairman of the board
o Chief operations officer
4. Which form(s) of business is a treated as a distinct legal entity separate from its owners?
o Limited partnership
o Sole proprietorship
o General partnership
o Corporation
o Both a limited partnership and a corporation
5. Which one of these is a corporate document that sets forth the intended life of the firm?
o Federal charter
o Articles of incorporation
o Corporate bylaws
o Indenture contract
o State charter
6. A general partner:
o cannot lose more than the amount of his/her equity investment.
o has less legal liability than a limited partner.
o faces double taxation whereas a limited partner does not.
o has more management responsibility than a limited partner.
o is the term applied only to corporations which invest in partnerships.
, 7. A limited partnership generally:
o has less of an ability to raise capital than a proprietorship.
o has ten or more limited partners and no general partners.
o permits limited partners to sell their ownership interest without the partnership terminating.
o is taxed the same as a corporation.
o provides for the transfer of a general partner's ownership interest to any outside party.
8. Which of the following are disadvantages of a general partnership?
I. Limited life of the firm
II. Personal liability for firm debt
III. Greater ability to raise capital than a sole proprietorship
IV. Lack of ability to transfer partnership interest
I and II only
o III and IV only
o II and III only
o I, II, and IV only
o I, III, and IV only
9. Art purchased 2,500 shares of Delta stock. His purchase represents ten percent ownership in the
firm. His shares have increased in value from the $12 a share he originally paid to today's market
value of $23 share. Assume Delta goes bankrupt and owes $450,000 more in debts than the firm can
pay after liquidating all of its assets. What is the maximum loss per share Art will incur on this
investment?
o $0 a share
o $12 a share
o $17.50 a share, computed as ($12 + 23)/2
o $23 a share
o $18 share, computed as (10% × $450,000)/2,500 shares
10. Which one of the following statements is correct?
o All types of business formations have limited lives.
o Partnerships are the most complicated type of business to form.
o Both sole proprietorships and partnerships are taxed in a similar fashion.
o Both partnerships and corporations have limited liability for general partners and shareholders.
o Both partnerships and corporations incur double taxation.
11. The articles of incorporation:
o can be used to remove company management.
o are amended annually by the company stockholders.
o set forth the number of shares of stock that can be issued.
o set forth the rules by which the corporation regulates its existence.
o can set forth the conditions under which the firm can avoid double taxation.
The treasurer and the controller of a corporation generally report to the:
o president.
o board of directors.
o chief executive officer.
o chief financial officer.
o chairman of the board.
2. Which one of these best describes the key difference between the duties of the controller and
those of the treasurer?
o Separation of duties related to assets versus those related to debt and equity
o Separation of authority over tax records versus accounting records
o Separation of reporting to the Boards of Directors versus directly to investors.
o Separation of duties related to production versus marketing
o Separation of cash control from accounting records
3. Which position is generally directly responsible for financial planning and capital expenditures?
o Controller
o Treasurer
o Director
o Chairman of the board
o Chief operations officer
4. Which form(s) of business is a treated as a distinct legal entity separate from its owners?
o Limited partnership
o Sole proprietorship
o General partnership
o Corporation
o Both a limited partnership and a corporation
5. Which one of these is a corporate document that sets forth the intended life of the firm?
o Federal charter
o Articles of incorporation
o Corporate bylaws
o Indenture contract
o State charter
6. A general partner:
o cannot lose more than the amount of his/her equity investment.
o has less legal liability than a limited partner.
o faces double taxation whereas a limited partner does not.
o has more management responsibility than a limited partner.
o is the term applied only to corporations which invest in partnerships.
, 7. A limited partnership generally:
o has less of an ability to raise capital than a proprietorship.
o has ten or more limited partners and no general partners.
o permits limited partners to sell their ownership interest without the partnership terminating.
o is taxed the same as a corporation.
o provides for the transfer of a general partner's ownership interest to any outside party.
8. Which of the following are disadvantages of a general partnership?
I. Limited life of the firm
II. Personal liability for firm debt
III. Greater ability to raise capital than a sole proprietorship
IV. Lack of ability to transfer partnership interest
I and II only
o III and IV only
o II and III only
o I, II, and IV only
o I, III, and IV only
9. Art purchased 2,500 shares of Delta stock. His purchase represents ten percent ownership in the
firm. His shares have increased in value from the $12 a share he originally paid to today's market
value of $23 share. Assume Delta goes bankrupt and owes $450,000 more in debts than the firm can
pay after liquidating all of its assets. What is the maximum loss per share Art will incur on this
investment?
o $0 a share
o $12 a share
o $17.50 a share, computed as ($12 + 23)/2
o $23 a share
o $18 share, computed as (10% × $450,000)/2,500 shares
10. Which one of the following statements is correct?
o All types of business formations have limited lives.
o Partnerships are the most complicated type of business to form.
o Both sole proprietorships and partnerships are taxed in a similar fashion.
o Both partnerships and corporations have limited liability for general partners and shareholders.
o Both partnerships and corporations incur double taxation.
11. The articles of incorporation:
o can be used to remove company management.
o are amended annually by the company stockholders.
o set forth the number of shares of stock that can be issued.
o set forth the rules by which the corporation regulates its existence.
o can set forth the conditions under which the firm can avoid double taxation.
