Accounting 7th Edition Horngren, Harrison, Bamber
(Test Bank All Chapters, 100% Original Verified A+ Grade)
Chapter 1: Accounting and the Business Environment
1) Accounting is the information system that measures business activity, processes the data into reports, and
communicates the results to decisions makers.
Answer: True False
Diff: 1 Page Ref: 4
Objective: 1-1
EOC Ref: E1-14
2) Accounting is "the language of business."
Answer: True False
Diff: 1 Page Ref: 4
Objective: 1-1
EOC Ref: E1-14
3) Managerial accounting focuses on information for decision makers outside the company.
Answer: True False
Diff: 1 Page Ref: 5
Objective: 1-1
EOC Ref: E1-14
4) Business owners use accounting information to set goals, evaluate progress toward those goals, and take
corrective action.
Answer: True False
Diff: 1 Page Ref: 5
Objective: 1-1
EOC Ref: E1-14
5) Outside investors often use accounting information to decide whether to invest in a business.
Answer: True False
Diff: 1 Page Ref: 5
Objective: 1-1
EOC Ref: E1-14
6) Generally accepted auditing standards are the rules that govern public accounting information.
Answer: True False
Diff: 1 Page Ref: 6
Objective: 1-1
EOC Ref: E1-14
7) The AICPA's Code of Professional Conduct for Accountants provides guidance to CPAs in the performance
of their work.
Answer: True False
Diff: 1 Page Ref: 7
Objective: 1-1
EOC Ref: EI1
8) Most companies set standards of ethical conduct for their employees.
Answer: True False
Diff: 1 Page Ref: 7
Objective: 1-1
EOC Ref: EI1
, 9) Accountants record transactions in inflation-adjusted dollars.
Answer: True False
Diff: 2 Page Ref: 10
Objective: 1-2
EOC Ref: S1-4
10) Cash, merchandise inventory, furniture, and land are all examples of assets.
Answer: True False
Diff: 1 Page Ref: 11
Objective: 1-2
EOC Ref: S1-2
11) Many liabilities have the word "receivable" in their titles.
Answer: True False
Diff: 1 Page Ref: 11
Objective: 1-2
EOC Ref: S1-2
12) The owners' claims to the assets of the business are called liabilities.
Answer: True False
Diff: 1 Page Ref: 11
Objective: 1-2
EOC Ref: S1-2
13) One purpose of business is to increase owner's equity.
Answer: True False
Diff: 3 Page Ref: 11, 12
Objective: 1-2
EOC Ref: S1-2
14) A business owner purchases equipment by executing a written promise for the future payment of $6, 000.
The written promise of future payment is an account payable to this business.
Answer: True False
Diff: 3 Page Ref: 28
Objective: 1-2
EOC Ref: E1-17
15) Liabilities are amounts owed to parties inside and outside the business.
Answer: True False
Diff: 2 Page Ref: 11, 12
Objective: 1-3
EOC Ref: S1-2
16) Claims to the assets of an entity come from two sources: liabilities and expenses.
Answer: True False
Diff: 2 Page Ref: 11, 12
Objective: 1-3
EOC Ref: S1-2
17) Owner withdrawals decrease owner's equity when the owner takes assets out of the business for personal
use.
Answer: True False
Diff: 1 Page Ref: 16
Objective: 1-4
EOC Ref: E1-17
,18) An expense transaction grows the business, increasing assets and owner's equity.
Answer: True False
Diff: 2 Page Ref: 14
Objective: 1-4
EOC Ref: E1-17
19) The income statement presents a summary of an entity's revenues and expenses for a period of time.
Answer: True False
Diff: 1 Page Ref: 19
Objective: 1-5
EOC Ref: S1-13
20) In the heading of a balance sheet, the date or time period covered is a year ending on the date of the financial
statements
Answer: True False
Diff: 1 Page Ref: 19
Objective: 1-5
EOC Ref: S1-13
21) Accounting is the information system that provides information to various users. What process(es) does this
include?
A) processing the data into reports
B) measuring business activity
C) communicating the results to decisions makers
D) all of the above
Answer: D
Diff: 1 Page Ref: 4
Objective: 1-1
EOC Ref: E1-14
22) Which of the following statements best describes managerial accounting?
A) Managerial accounting focuses on information for internal decision making.
B) Managerial accounting focuses on outside investors and lenders that are not part of day-to-day
management.
C) Managerial accounting provides information for people outside the company.
D) None of these statements is true of managerial accounting.
Answer: A
Diff: 1 Page Ref: 5
Objective: 1-1
EOC Ref: E1-14
23) Which of the following types of decision makers use accounting information to make business decisions?
A) investors
B) creditors
C) business owners
D) all of the above
Answer: D
Diff: 1 Page Ref: 5
Objective: 1-1
EOC Ref: E1-14
, 24) Many organizations have contributed to the process of creating and/or using generally accepted accounting
principles. Which of the following organizations has the primary responsibility for formulating accounting
standards?
A) FASB
B) CMA
C) AICPA
D) SEC
Answer: A
Diff: 2 Page Ref: 6
Objective: 1-1
EOC Ref: EI1
25) Which of the following is a licensed accountant who serves the general public rather than one particular
company?
A) CPA
B) CMA
C) SEC
D) FASB
Answer: A
Diff: 2 Page Ref: 6
Objective: 1-1
EOC Ref: EI1
26) Accountants often refer to GAAP. What do the letters GAAP stand for when discussing accounting?
A) Grandma's awesome apple pie.
B) Global accommodation accounting principles.
C) Generate accurate accounting policies.
D) Generally accepted accounting principles.
Answer: D
Diff: 1 Page Ref: 6, 9
Objective: 1-1
EOC Ref: EI1
27) Accounting information may be generated for a variety of purposes. The key product(s) of accounting is (are)
which of the following documents?
A) Financial statements
B) Remittance advices
C) Spreadsheets
D) Workpapers
Answer: A
Diff: 2 Page Ref: 17
Objective: 1-1
EOC Ref: S1-11
28) Businesses can be organized in a variety of forms. The types of business forms found in the U.S. include all of
the following except one. Which one is NOT included?
A) Corporation
B) Tax shelter
C) Partnership
D) Proprietorship
Answer: B
Diff: 1 Page Ref: 8, 9
Objective: 1-1
EOC Ref: QC1-2
(Test Bank All Chapters, 100% Original Verified A+ Grade)
Chapter 1: Accounting and the Business Environment
1) Accounting is the information system that measures business activity, processes the data into reports, and
communicates the results to decisions makers.
Answer: True False
Diff: 1 Page Ref: 4
Objective: 1-1
EOC Ref: E1-14
2) Accounting is "the language of business."
Answer: True False
Diff: 1 Page Ref: 4
Objective: 1-1
EOC Ref: E1-14
3) Managerial accounting focuses on information for decision makers outside the company.
Answer: True False
Diff: 1 Page Ref: 5
Objective: 1-1
EOC Ref: E1-14
4) Business owners use accounting information to set goals, evaluate progress toward those goals, and take
corrective action.
Answer: True False
Diff: 1 Page Ref: 5
Objective: 1-1
EOC Ref: E1-14
5) Outside investors often use accounting information to decide whether to invest in a business.
Answer: True False
Diff: 1 Page Ref: 5
Objective: 1-1
EOC Ref: E1-14
6) Generally accepted auditing standards are the rules that govern public accounting information.
Answer: True False
Diff: 1 Page Ref: 6
Objective: 1-1
EOC Ref: E1-14
7) The AICPA's Code of Professional Conduct for Accountants provides guidance to CPAs in the performance
of their work.
Answer: True False
Diff: 1 Page Ref: 7
Objective: 1-1
EOC Ref: EI1
8) Most companies set standards of ethical conduct for their employees.
Answer: True False
Diff: 1 Page Ref: 7
Objective: 1-1
EOC Ref: EI1
, 9) Accountants record transactions in inflation-adjusted dollars.
Answer: True False
Diff: 2 Page Ref: 10
Objective: 1-2
EOC Ref: S1-4
10) Cash, merchandise inventory, furniture, and land are all examples of assets.
Answer: True False
Diff: 1 Page Ref: 11
Objective: 1-2
EOC Ref: S1-2
11) Many liabilities have the word "receivable" in their titles.
Answer: True False
Diff: 1 Page Ref: 11
Objective: 1-2
EOC Ref: S1-2
12) The owners' claims to the assets of the business are called liabilities.
Answer: True False
Diff: 1 Page Ref: 11
Objective: 1-2
EOC Ref: S1-2
13) One purpose of business is to increase owner's equity.
Answer: True False
Diff: 3 Page Ref: 11, 12
Objective: 1-2
EOC Ref: S1-2
14) A business owner purchases equipment by executing a written promise for the future payment of $6, 000.
The written promise of future payment is an account payable to this business.
Answer: True False
Diff: 3 Page Ref: 28
Objective: 1-2
EOC Ref: E1-17
15) Liabilities are amounts owed to parties inside and outside the business.
Answer: True False
Diff: 2 Page Ref: 11, 12
Objective: 1-3
EOC Ref: S1-2
16) Claims to the assets of an entity come from two sources: liabilities and expenses.
Answer: True False
Diff: 2 Page Ref: 11, 12
Objective: 1-3
EOC Ref: S1-2
17) Owner withdrawals decrease owner's equity when the owner takes assets out of the business for personal
use.
Answer: True False
Diff: 1 Page Ref: 16
Objective: 1-4
EOC Ref: E1-17
,18) An expense transaction grows the business, increasing assets and owner's equity.
Answer: True False
Diff: 2 Page Ref: 14
Objective: 1-4
EOC Ref: E1-17
19) The income statement presents a summary of an entity's revenues and expenses for a period of time.
Answer: True False
Diff: 1 Page Ref: 19
Objective: 1-5
EOC Ref: S1-13
20) In the heading of a balance sheet, the date or time period covered is a year ending on the date of the financial
statements
Answer: True False
Diff: 1 Page Ref: 19
Objective: 1-5
EOC Ref: S1-13
21) Accounting is the information system that provides information to various users. What process(es) does this
include?
A) processing the data into reports
B) measuring business activity
C) communicating the results to decisions makers
D) all of the above
Answer: D
Diff: 1 Page Ref: 4
Objective: 1-1
EOC Ref: E1-14
22) Which of the following statements best describes managerial accounting?
A) Managerial accounting focuses on information for internal decision making.
B) Managerial accounting focuses on outside investors and lenders that are not part of day-to-day
management.
C) Managerial accounting provides information for people outside the company.
D) None of these statements is true of managerial accounting.
Answer: A
Diff: 1 Page Ref: 5
Objective: 1-1
EOC Ref: E1-14
23) Which of the following types of decision makers use accounting information to make business decisions?
A) investors
B) creditors
C) business owners
D) all of the above
Answer: D
Diff: 1 Page Ref: 5
Objective: 1-1
EOC Ref: E1-14
, 24) Many organizations have contributed to the process of creating and/or using generally accepted accounting
principles. Which of the following organizations has the primary responsibility for formulating accounting
standards?
A) FASB
B) CMA
C) AICPA
D) SEC
Answer: A
Diff: 2 Page Ref: 6
Objective: 1-1
EOC Ref: EI1
25) Which of the following is a licensed accountant who serves the general public rather than one particular
company?
A) CPA
B) CMA
C) SEC
D) FASB
Answer: A
Diff: 2 Page Ref: 6
Objective: 1-1
EOC Ref: EI1
26) Accountants often refer to GAAP. What do the letters GAAP stand for when discussing accounting?
A) Grandma's awesome apple pie.
B) Global accommodation accounting principles.
C) Generate accurate accounting policies.
D) Generally accepted accounting principles.
Answer: D
Diff: 1 Page Ref: 6, 9
Objective: 1-1
EOC Ref: EI1
27) Accounting information may be generated for a variety of purposes. The key product(s) of accounting is (are)
which of the following documents?
A) Financial statements
B) Remittance advices
C) Spreadsheets
D) Workpapers
Answer: A
Diff: 2 Page Ref: 17
Objective: 1-1
EOC Ref: S1-11
28) Businesses can be organized in a variety of forms. The types of business forms found in the U.S. include all of
the following except one. Which one is NOT included?
A) Corporation
B) Tax shelter
C) Partnership
D) Proprietorship
Answer: B
Diff: 1 Page Ref: 8, 9
Objective: 1-1
EOC Ref: QC1-2
