ACCOUNTING 333 CHAPTER 1 PRACTICE QUIZ

ACCOUNTING 333 CHAPTER 1 PRACTICE QUIZ The treasurer and the controller of a corporation generally report to the: o o o o o president. board of directors. chief executive officer. chief financial officer. 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 o o o o Separation of duties related to assets versus those related to debt and equity Separation of authority over tax records versus accounting records Separation of reporting to the Boards of Directors versus directly to investors. Separation of duties related to production versus marketing Separation of cash control from accounting records 3. Which position is generally directly responsible for financial planning and capital expenditures? o o o o o Controller Treasurer Director Chairman of the board Chief operations officer 4. Which form(s) of business is a treated as a distinct legal entity separate from its owners? o o o o o Limited partnership Sole proprietorship General partnership Corporation 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 o o o o Federal charter Articles of incorporation Corporate bylaws Indenture contract State charter 6. A general partner: o o o o o cannot lose more than the amount of his/her equity investment. has less legal liability than a limited partner. faces double taxation whereas a limited partner does not. has more management responsibility than a limited partner. is the term applied only to corporations which invest in partnerships.7. A limited partnership generally: o o o o o has less of an ability to raise capital than a proprietorship. has ten or more limited partners and no general partners. permits limited partners to sell their ownership interest without the partnership terminating. is taxed the same as a corporation. 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 o o o III and IV only II and III only I, II, and IV only 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 o o o o $0 a share $12 a share $17.50 a share, computed as ($12 + 23)/2 $23 a share $18 share, computed as (10% × $450,000)/2,500 shares 10. Which one of the following statements is correct? o o o o o All types of business formations have limited lives. Partnerships are the most complicated type of business to form. Both sole proprietorships and partnerships are taxed in a similar fashion. Both partnerships and corporations have limited liability for general partners and shareholders. Both partnerships and corporations incur double taxation. 11. The articles of incorporation: o o o o o can be used to remove company management. are amended annually by the company stockholders. set forth the number of shares of stock that can be issued. set forth the rules by which the corporation regulates its existence. can set forth the conditions under which the firm can avoid double taxation.