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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
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.03 - Business Forms
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic

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

ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.01 - Purpose
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic

3. Accounting information users need reports about the economic activities and condition of businesses.
a. True
b. False

ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.01 - Purpose
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic

,Chapter 1: Introduction to Accounting and Business

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

ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.01 - Purpose
ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic

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

ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.01 - Purpose
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Ethics

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

ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.01 - Purpose
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic

,Chapter 1: Introduction to Accounting and Business

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

ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 - GAAP
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Ethics

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

ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 - GAAP
ACCT.AICPA.BB.03 - Legal
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Ethics

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.
a. True
b. False

ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.03 - Business Forms
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.BB.06 - Resource Management
BUSPROG: Analytic

, Chapter 1: Introduction to Accounting and Business

10. Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.
a. True
b. False

ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.02 - GAAP
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic

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
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.06 - Recording Transactions
ACCT.ACBSP.APC.09 - Financial Statements
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic

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

ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.20 - Accounting for Corporations
ACCT.AICPA.BB.01 - Industry
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Ethics