Accounting 25th Editon Test Bank Chapter 1-26
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
27. If total assets decreased by $30,000 during a specific period and owner's equity decreased by
$35,000 during the same period, the period's change in total liabilities was an $65,000 increase.
True False
28. 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 owner's equity was a $200,000
increase.
True False
29. If net income for a proprietorship was $50,000, the owner withdrew $20,000 in cash and the
owner invested $10,000 in cash, the capital of the owner increased by $40,000.
True False
30. An account receivable is a claim against a customer arising from a sale on account.
True False
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
27. If total assets decreased by $30,000 during a specific period and owner's equity decreased by
$35,000 during the same period, the period's change in total liabilities was an $65,000 increase.
True False
28. 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 owner's equity was a $200,000
increase.
True False
29. If net income for a proprietorship was $50,000, the owner withdrew $20,000 in cash and the
owner invested $10,000 in cash, the capital of the owner increased by $40,000.
True False
30. An account receivable is a claim against a customer arising from a sale on account.
True False
