Test Bank for Accounting 29th Edition Warren All Chapters Included 100% Verified

, ACCESS Test Bank for Accounting 29th Edition Warren
Name: Class: Date:

Chapter 1 - Introduction to Accounting and Business
1. A corporation is a business that is legally separate and distinct from its owners.
a. True
b. False
ANSWER: True

2. The role of accounting is to provide many different users with financial information to make economic decisions.
a. True
b. False
ANSWER: True

3. Investing activities are those activities by which the company obtains funds to start and operate the business.
a. True
b. False
ANSWER: False

4. Managerial accounting information is used by external and internal users equally.
a. True
b. False
ANSWER: False

5. Senior executives cannot be criminally prosecuted for the wrongdoings they commit on behalf of the companies where
they work.
a. True
b. False
ANSWER: False

6. Financial accounting provides information to all users, while the main focus for managerial accounting is to provide
information to management.
a. True
b. False
ANSWER: True

7. Proper ethical conduct implies that you only consider what's in your best interest.
a. True
b. False
ANSWER: False

8. Some major fraudulent acts committed by senior executives started as what they considered to be small ethical lapses
that grew out of control.
a. True
b. False
ANSWER: True

9. A business is an organization in which basic resources or inputs, like materials and labor, are assembled and processed
to provide outputs in the form of goods or services to customers.

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, ACCESS Test Bank for Accounting 29th Edition Warren
Name: Class: Date:

Chapter 1 - Introduction to Accounting and Business

a. True
b. False
ANSWER: True

10. Operating activities are those activities by which a company generates revenues from customers.
a. True
b. False
ANSWER: True

11. An example of a general-purpose financial statement would be a report about projected price increases related to
transportation costs.
a. True
b. False
ANSWER: False

12. The Sarbanes-Oxley Act established standards for corporate responsibility and disclosure.
a. True
b. False
ANSWER: True

13. The main objective for all businesses is to maximize unrealized profits.
a. True
b. False
ANSWER: False

14. The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing
entities.
a. True
b. False
ANSWER: False

15. The basic difference between manufacturing and retail companies is the completion level of the products they
purchase for resale to customers.
a. True
b. False
ANSWER: True

16. Proprietorships have one owner and provide only services to their customers.
a. True
b. False
ANSWER: False

17. About 90% of the businesses in the United States are organized as corporations.
a. True
b. False
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, ACCESS Test Bank for Accounting 29th Edition Warren
Name: Class: Date:

Chapter 1 - Introduction to Accounting and Business

ANSWER: False

18. An example of an external user of accounting information is the federal government.
a. True
b. False
ANSWER: True

19. The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for
developing accounting principles.
a. True
b. False
ANSWER: True

20. The cost principle is the basis for entering the purchase price into the accounting records.
a. True
b. False
ANSWER: True

21. The monetary unit assumption requires that economic data be recorded in dollars for companies in the United States.
a. True
b. False
ANSWER: True

22. 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.
a. True
b. False
ANSWER: False

23. The financial statements of a proprietorship should include the owner's personal assets and liabilities.
a. True
b. False
ANSWER: False

24. No significant differences exist between the accounting standards issued by the FASB and the IASB.
a. True
b. False
ANSWER: False

25. Generally accepted accounting principles regulate how and what financial information is reported by businesses.
a. True
b. False
ANSWER: True

26. The accounting equation can be expressed as Assets – Liabilities = Owner's Equity.
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