TEST BANK FOR ACCOUNTING, 25TH
EDITION
,Chapter 1--Introduction to Accounting and Business
Student: ___________________________________________________________________________
1. The main objective of a not-for-profit business is not to make a profit.
True False
2. An example of an external user of accounting information is the federal government.
True False
3. A corporation is a business that is legally separate and distinct from its owners.
True False
4. About 90% of the businesses in the United States are organized as corporations.
True False
5. The role of accounting is to provide many different users with financial information to make economic
decisions.
True False
6. Proprietorships are owned by one owner and provide only services to their customers.
True False
7. Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as
corporations.
True False
8. Accounting information users need reports about the economic activities and condition of businesses.
True False
,9. Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the
companies where they work.
True False
10. The primary role of accounting is to determine the amount of taxes a business will be required to pay to
taxing entities.
True False
11. An account receivable is typically classified as a revenue.
True False
12. Managerial accounting information is used by external and internal users equally.
True False
13. Financial accounting provides information to all users, while the main focus for managerial accounting is to
provide information to the management.
True False
14. Proper ethical conduct implies that you only consider what's in your best interest.
True False
15. Some of the major fraudulent acts by senior executives started as what they considered to be small ethical
lapses which grew out of control.
True False
16. Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.
True False
17. A business is an organization in where basic resources or inputs, like materials and labor, are assembled and
processed to provide outputs in the form of goods or services to customers.
True False
, 18. The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility
for developing accounting principles.
True False
19. The cost concept is the basis for entering the exchange price into the accounting records.
True False
20. The unit of measurement concept requires that economic data be recorded in a common unit of
measurement.
True False
21. 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.
True False
22. Generally accepted accounting principles regulate how and what financial information is reported by
businesses.
True False
23. The accounting equation can be expressed as Assets - Liabilities = Owner's Equity.
True False
24. The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of
owners.
True False
25. The owner’s rights to the assets rank ahead of the creditors' rights to the assets.
True False
26. If the liabilities owed by a business total $300,000 and owners equity is equal to $300,000, then the assets
also total $300,000.
True False
EDITION
,Chapter 1--Introduction to Accounting and Business
Student: ___________________________________________________________________________
1. The main objective of a not-for-profit business is not to make a profit.
True False
2. An example of an external user of accounting information is the federal government.
True False
3. A corporation is a business that is legally separate and distinct from its owners.
True False
4. About 90% of the businesses in the United States are organized as corporations.
True False
5. The role of accounting is to provide many different users with financial information to make economic
decisions.
True False
6. Proprietorships are owned by one owner and provide only services to their customers.
True False
7. Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as
corporations.
True False
8. Accounting information users need reports about the economic activities and condition of businesses.
True False
,9. Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the
companies where they work.
True False
10. The primary role of accounting is to determine the amount of taxes a business will be required to pay to
taxing entities.
True False
11. An account receivable is typically classified as a revenue.
True False
12. Managerial accounting information is used by external and internal users equally.
True False
13. Financial accounting provides information to all users, while the main focus for managerial accounting is to
provide information to the management.
True False
14. Proper ethical conduct implies that you only consider what's in your best interest.
True False
15. Some of the major fraudulent acts by senior executives started as what they considered to be small ethical
lapses which grew out of control.
True False
16. Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.
True False
17. A business is an organization in where basic resources or inputs, like materials and labor, are assembled and
processed to provide outputs in the form of goods or services to customers.
True False
, 18. The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility
for developing accounting principles.
True False
19. The cost concept is the basis for entering the exchange price into the accounting records.
True False
20. The unit of measurement concept requires that economic data be recorded in a common unit of
measurement.
True False
21. 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.
True False
22. Generally accepted accounting principles regulate how and what financial information is reported by
businesses.
True False
23. The accounting equation can be expressed as Assets - Liabilities = Owner's Equity.
True False
24. The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of
owners.
True False
25. The owner’s rights to the assets rank ahead of the creditors' rights to the assets.
True False
26. If the liabilities owed by a business total $300,000 and owners equity is equal to $300,000, then the assets
also total $300,000.
True False
