, Chapter 01 Accounting: The Language of Business
MULTIPLE CHOICE QUESTIONS
1) The purpose of accounting is to provide financial information about an economic or social entity.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: What is Accounting
Learning Objective: 01-01 Define accounting.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making
2) An accounting system is designed to accumulate and classify data about a company's financial
activities and summarize them in the general journal.
A) True
B) False
Answer: B
Explanation:
Diff: 1
Topic: What is Accounting; Defining Accounting Terms
Learning Objective: 01-01 Define accounting.; 01-06 Define the accounting terms new to this chapter.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making
3) In a sole proprietorship, the owner is NOT responsible for the debts of the business if the company
is unable to pay.
A) True
B) False
Answer: B
Explanation:
Diff: 1
Topic: Business and Accounting; Defining Accounting Terms
Learning Objective: 01-06 Define the accounting terms new to this chapter.; 01-04 Compare and contrast the three types of business
entities.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: FN Decision Making; BB Legal
1
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
, 4) Laws passed by Congress in 1933 and 1934 gave the Securities and Exchange Commission (SEC)
final say on matters of financial reporting by publicly owned corporations.
A) True
B) False
Answer: A
Explanation:
Diff: 2
Topic: What is Accounting
Learning Objective: 01-03 Identify the users of financial information.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making; BB Legal
5) Currently, generally accepted accounting principles are developed by the American Institute of
Certified Public Accountants (AICPA).
A) True
B) False
Answer: B
Explanation:
Diff: 1
Topic: Business and Accounting
Learning Objective: 01-05 Describe the process used to develop generally accepted accounting principles.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making; BB Legal
6) The Securities and Exchange Commission (SEC) requires that publicly owned corporations submit
financial statements to it at least one time each year.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: Business and Accounting
Learning Objective: 01-05 Describe the process used to develop generally accepted accounting principles.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making; BB Legal
2
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
, 7) Public accounting firms provide three major types of services: auditing, tax accounting, and
management advisory services.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: What is Accounting
Learning Objective: 01-02 Identify and discuss career opportunities in accounting.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making
8) The financial statements and the auditor's report must be made available to stockholders of publicly
owned corporations.
A) True
B) False
Answer: A
Explanation:
Diff: 2
Topic: Business and Accounting
Learning Objective: 01-05 Describe the process used to develop generally accepted accounting principles.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; BB Legal; FN Reporting
9) Anyone can invest in a closely held corporation.
A) True
B) False
Answer: B
Explanation:
Diff: 2
Topic: Business and Accounting
Learning Objective: 01-04 Compare and contrast the three types of business entities.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making; BB Legal
3
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
MULTIPLE CHOICE QUESTIONS
1) The purpose of accounting is to provide financial information about an economic or social entity.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: What is Accounting
Learning Objective: 01-01 Define accounting.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making
2) An accounting system is designed to accumulate and classify data about a company's financial
activities and summarize them in the general journal.
A) True
B) False
Answer: B
Explanation:
Diff: 1
Topic: What is Accounting; Defining Accounting Terms
Learning Objective: 01-01 Define accounting.; 01-06 Define the accounting terms new to this chapter.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making
3) In a sole proprietorship, the owner is NOT responsible for the debts of the business if the company
is unable to pay.
A) True
B) False
Answer: B
Explanation:
Diff: 1
Topic: Business and Accounting; Defining Accounting Terms
Learning Objective: 01-06 Define the accounting terms new to this chapter.; 01-04 Compare and contrast the three types of business
entities.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: FN Decision Making; BB Legal
1
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
, 4) Laws passed by Congress in 1933 and 1934 gave the Securities and Exchange Commission (SEC)
final say on matters of financial reporting by publicly owned corporations.
A) True
B) False
Answer: A
Explanation:
Diff: 2
Topic: What is Accounting
Learning Objective: 01-03 Identify the users of financial information.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making; BB Legal
5) Currently, generally accepted accounting principles are developed by the American Institute of
Certified Public Accountants (AICPA).
A) True
B) False
Answer: B
Explanation:
Diff: 1
Topic: Business and Accounting
Learning Objective: 01-05 Describe the process used to develop generally accepted accounting principles.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making; BB Legal
6) The Securities and Exchange Commission (SEC) requires that publicly owned corporations submit
financial statements to it at least one time each year.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: Business and Accounting
Learning Objective: 01-05 Describe the process used to develop generally accepted accounting principles.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making; BB Legal
2
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
, 7) Public accounting firms provide three major types of services: auditing, tax accounting, and
management advisory services.
A) True
B) False
Answer: A
Explanation:
Diff: 1
Topic: What is Accounting
Learning Objective: 01-02 Identify and discuss career opportunities in accounting.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making
8) The financial statements and the auditor's report must be made available to stockholders of publicly
owned corporations.
A) True
B) False
Answer: A
Explanation:
Diff: 2
Topic: Business and Accounting
Learning Objective: 01-05 Describe the process used to develop generally accepted accounting principles.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; BB Legal; FN Reporting
9) Anyone can invest in a closely held corporation.
A) True
B) False
Answer: B
Explanation:
Diff: 2
Topic: Business and Accounting
Learning Objective: 01-04 Compare and contrast the three types of business entities.
Bloom's: Remember
AACSB: Analytical Thinking
AICPA: BB Industry; FN Decision Making; BB Legal
3
Copyright © McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
