,TESTBANK For College Accounting 1st Edition
by Jerry J. Weygandt
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
, CHAPTER 1
WELCOME TO ACCOUNTING
TRUE-FALSE STATEMENTS
1. Identifying is the process of keeping a chronological diary of events measured in dollars
and cents.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
2. Management of a business enterprise is the major external user of information.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
3. Accounting communicates financial information about a business enterprise to both
internal and external users.
Ans: T LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
4. Accounting information is used only by external users with a financial interest in a
business enterprise.
Ans: F LO1 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
5. Bookkeeping and accounting are one and the same because the bookkeeping function
includes the accounting process.
Ans: F LO1 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
6. The origins of accounting are attributed to Luca Pacioli, a famous mathematician.
Ans: T LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
7. The study of accounting is not useful for a business career unless your career objective is
to become an accountant.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
8. A working knowledge of accounting is not relevant to a lawyer or an architect.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
9. Owners of business firms are the only people who need accounting information.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Who Uses Accounting
Information?
10. Transactions that can be measured in dollars and cents are recorded in the accounting
information system.
Ans: T LO1 BT: K Difficulty: Easy TOT: .5 min AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
11. A partnership must have more than one owner.
,1-2 Test Bank for College Accounting, First Edition
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
12. Even though a partnership is not a separate legal entity, for accounting purposes the
partnership affairs should be kept separate from the personal activities of the owners.
Ans: T LO2 BT: C Difficulty; Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
13. The economic entity assumption requires that the activities of an entity be kept separate
and distinct from the activities of its owner and all other economic entities.
Ans: T LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Principles and Assumptions
14. The monetary unit assumption states that transactions that can be measured in terms of
money should be recorded in the accounting records.
Ans: T LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Principles and Assumptions
15. Accountants rely on a fundamental business concept—ethical behavior—in reporting
financial information.
Ans: T LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Ethics in Financial Reporting
16. The primary accounting standard-setting body in the United States is the International
Accounting Standards Board.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Accounting Standards
17. The Financial Accounting Standards Board is a part of the Securities and Exchange
Commission.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Accounting Standards
18. Accountants do not have to worry about issues of ethics.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: Ethics AICPA PC: Professional Demeanor AICPA FC: Measurement
Analysis and Interpretation, IMA: Reporting Subtopic: Ethics in Financial Reporting
19. At the time an asset is acquired, cost and fair value should be the same.
Ans: T LO3 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Principles and Assumptions
20. The monetary unit assumption requires that all dollar amounts be rounded to the nearest
dollar.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Principles and Assumptions
21. The Securities and Exchange Commission oversees U.S. financial markets and
accounting standard-setting bodies.
Ans: T LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Accounting Standards
22. The cost and fair market value of an asset are the same at the time of acquisition and in
all subsequent periods.
FOR INSTRUCTOR USE ONLY
, Welcome to Accounting 1-3
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Principles and Assumptions
23. Financial statements are the major means of communicating accounting information to
interested parties.
Ans: T LO4 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: None
24. In the owner's equity statement, revenues are listed first, followed by expenses, and net
income (or net loss).
Ans: F LO4 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Owner’s Equity Statement
25. The primary purpose of the statement of cash flows is to provide information about the
cash receipts and cash payments of a company during a period.
Ans: T LO4 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Statement of Cash Flows
26. Net income for the period is determined by subtracting total expenses and drawings from
total revenues.
Ans: F LO4 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, Reporting, IMA:
Reporting Subtopic: Income Statement
27. The study of accounting will be useful only if a student is interested in working for a profit-
oriented business firm.
Ans: F LO5 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Private Accounting
28. Private accountants are accountants who are not employees of business enterprises.
Ans: F LO5 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Private Accounting
29. Expressing an opinion as to the fairness of the information presented in financial
statements is a service performed by CPAs.
Ans: T LO5 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Public Accounting
30. Management consulting includes examining the financial statements of companies and
expressing an opinion as to the fairness of their presentation.
Ans: F LO5 BT: K Difficulty; Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, Reporting, IMA:
Reporting Subtopic: Public Accounting
FOR INSTRUCTOR USE ONLY
,1-4 Test Bank for College Accounting, First Edition
MULTIPLE CHOICE QUESTIONS
31. The starting point of the accounting process is
a. communicating information to users.
b. identifying economic events.
c. recording economic events.
d. None of the above answers are correct.
Ans: b LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
32. Communication of economic events is the part of the accounting process that involves
a. identifying economic events.
b. quantifying transactions into dollars and cents.
c. preparing accounting reports.
d. recording and classifying information.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
33. Which of the following is not an internal user of accounting information?
a. production supervisor
b. creditor
c. marketing manager
d. finance director
Ans: b LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Who Uses Accounting
Information?
34. Which of the following is not an external user of accounting information?
a. production supervisor
b. creditor
c. investor
d. supplier
Ans: a LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Who Uses Accounting
Information?
35. Which of the following questions is asked by internal users?
a. Is the company in which we invested making money?
b. Which company deserves more investment?
c. Should we eliminate any product lines?
d. Will this company be able to pay us back if we loan to them?
Ans: c LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Who Uses Accounting
Information?
36. Which of the following questions is asked by external users?
a. Is the company in which we invested making money?
b. Do we have enough money to pay our bills?
c. Should we eliminate any product lines?
d. Can we give our employees raises?
Ans: a LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Who Uses Accounting
Information?
37. Which of the following provides information primarily to external users?
a. Managerial accounting
FOR INSTRUCTOR USE ONLY
, Welcome to Accounting 1-5
b. Budgeting accounting
c. Financial accounting
d. Forecast accounting
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Who Uses Accounting
Information?
38. The accounting process involves all of the following except
a. identifying economic transactions that are relevant to the business.
b. communicating financial information to users by preparing financial reports.
c. recording nonquantifiable economic events.
d. analyzing and interpreting financial reports.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
39. The accounting process is correctly sequenced as
a. identification, communication, recording.
b. recording, communication, identification.
c. identification, recording, communication.
d. communication, recording, identification.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
40. Which of the following would not be considered an internal user of accounting data for the
LMN Company?
a. President of the company
b. Production manager
c. Merchandise inventory clerk
d. President of the employees' labor union
Ans: d LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
41. Which of the following would not be considered an external user of accounting data for
the LMN Company?
a. Internal Revenue Service Agent
b. Management
c. Creditors
d. Customers
Ans: b LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
42. The origins of accounting are generally attributed to the work of
a. Christopher Columbus.
b. Abner Doubleday.
c. Luca Pacioli.
d. Leonardo da Vinci.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
43. Financial accounting provides economic and financial information for all of the following
except
a. creditors.
b. investors.
c. managers.
d. other external users.
FOR INSTRUCTOR USE ONLY
,1-6 Test Bank for College Accounting, First Edition
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
44. Which of the following would not be considered internal users of accounting data for a
company?
a. The president of a company
b. The controller of a company
c. Creditors of a company
d. Salesmen of the company
Ans: c LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
45. Which of the following is an external user of accounting information?
a. Labor unions
b. Finance directors
c. Company officers
d. Managers
Ans: a LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
46. Which one of the following is not an external user of accounting information?
a. Regulatory agencies
b. Customers
c. Investors
d. All of these answers choices are external users.
Ans: d LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
47. Bookkeeping differs from accounting in that bookkeeping primarily involves which part of
the accounting process?
a. Identification
b. Communication
c. Recording
d. Analysis
Ans: c LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
48. Which of the following is not part of the accounting process?
a. Recording
b. Identifying
c. Financial decision-making
d. Communicating
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
49. The first part of the accounting process is
a. communicating.
b. identifying.
c. processing.
d. recording.
Ans: b LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
50. Keeping a systematic, chronological diary of events that are measured in dollars and
cents is called
FOR INSTRUCTOR USE ONLY
, Welcome to Accounting 1-7
a. communicating.
b. identifying.
c. processing.
d. recording.
Ans: d LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
51. Internal users of accounting information include all of the following except
a. company officers.
b. investors.
c. marketing managers.
d. production supervisors.
Ans: b LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
52. A proprietorship is a business
a. owned by one person.
b. owned by two or more persons.
c. organized as a separate legal entity under state corporation law.
d. owned by a governmental agency.
Ans: a LO2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
53. Which can have either one owner or thousands of owners?
a. Proprietorship
b. Corporation
c. Partnership
d. Proprietorship or partnership
Ans: b LO2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Types of Businesses
That Use Accounting
54. An accounting firm is an example of a
a. service company.
b. retail company.
c. merchandise company.
d. manufacturing company.
Ans: a LO2 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Business
Classifications
55. The proprietorship form of business organization
a. must have at least three owners in most states.
b. represents the largest number of businesses in the United States.
c. combines the records of the business with the personal records of the owner.
d. is characterized by a legal distinction between the business as an economic
unit and the owner.
Ans: b LO2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
56. A business organized as a corporation
a. is not a separate legal entity in most states.
b. requires that stockholders be personally liable for the debts of the business.
c. is owned by its stockholders.
FOR INSTRUCTOR USE ONLY
, 1-8 Test Bank for College Accounting, First Edition
d. terminates when one of its original stockholders dies.
Ans: c LO2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
57. The partnership form of business organization
a. is a separate legal entity.
b. is a common form of organization for service-type businesses.
c. enjoys an unlimited life.
d. has limited liability.
Ans: b LO2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
58. Which of the following is not an advantage of the corporate form of business organization?
a. Limited liability of stockholders
b. Transferability of ownership
c. Unlimited personal liability for stockholders
d. Unlimited life
Ans: c LO2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
59. A small neighborhood barber shop that is operated by its owner would likely be organized
as a
a. joint venture.
b. partnership.
c. corporation.
d. proprietorship.
Ans: d LO2 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
60. George and Ringo met at law school and decide to start a small law practice after
graduation. They agree to split revenues and expenses evenly. The most common form of
business organization for a business such as this would be a
a. joint venture.
b. partnership.
c. corporation.
d. proprietorship.
Ans: b LO2 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
61. Which of the following is true regarding the corporate form of business organization?
a. Corporations are the most prevalent form of business organization.
b. Corporate businesses are generally smaller in size than partnerships and proprietorships.
c. The revenues of corporations are greater than the combined revenues of partnerships
and proprietorships.
d. Corporations are separate legal entities organized exclusively under federal law.
Ans: c LO2 BT: K Difficulty: Medium TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA:
Reporting Subtopic: Types of Businesses That Use Accounting
62. A business whose owners enjoy limited liability is a
a. proprietorship.
b. partnership.
FOR INSTRUCTOR USE ONLY
by Jerry J. Weygandt
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
, CHAPTER 1
WELCOME TO ACCOUNTING
TRUE-FALSE STATEMENTS
1. Identifying is the process of keeping a chronological diary of events measured in dollars
and cents.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
2. Management of a business enterprise is the major external user of information.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
3. Accounting communicates financial information about a business enterprise to both
internal and external users.
Ans: T LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
4. Accounting information is used only by external users with a financial interest in a
business enterprise.
Ans: F LO1 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
5. Bookkeeping and accounting are one and the same because the bookkeeping function
includes the accounting process.
Ans: F LO1 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
6. The origins of accounting are attributed to Luca Pacioli, a famous mathematician.
Ans: T LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
7. The study of accounting is not useful for a business career unless your career objective is
to become an accountant.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
8. A working knowledge of accounting is not relevant to a lawyer or an architect.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
9. Owners of business firms are the only people who need accounting information.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Who Uses Accounting
Information?
10. Transactions that can be measured in dollars and cents are recorded in the accounting
information system.
Ans: T LO1 BT: K Difficulty: Easy TOT: .5 min AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
11. A partnership must have more than one owner.
,1-2 Test Bank for College Accounting, First Edition
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
12. Even though a partnership is not a separate legal entity, for accounting purposes the
partnership affairs should be kept separate from the personal activities of the owners.
Ans: T LO2 BT: C Difficulty; Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
13. The economic entity assumption requires that the activities of an entity be kept separate
and distinct from the activities of its owner and all other economic entities.
Ans: T LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Principles and Assumptions
14. The monetary unit assumption states that transactions that can be measured in terms of
money should be recorded in the accounting records.
Ans: T LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Principles and Assumptions
15. Accountants rely on a fundamental business concept—ethical behavior—in reporting
financial information.
Ans: T LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Ethics in Financial Reporting
16. The primary accounting standard-setting body in the United States is the International
Accounting Standards Board.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Accounting Standards
17. The Financial Accounting Standards Board is a part of the Securities and Exchange
Commission.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Accounting Standards
18. Accountants do not have to worry about issues of ethics.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: Ethics AICPA PC: Professional Demeanor AICPA FC: Measurement
Analysis and Interpretation, IMA: Reporting Subtopic: Ethics in Financial Reporting
19. At the time an asset is acquired, cost and fair value should be the same.
Ans: T LO3 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Principles and Assumptions
20. The monetary unit assumption requires that all dollar amounts be rounded to the nearest
dollar.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Principles and Assumptions
21. The Securities and Exchange Commission oversees U.S. financial markets and
accounting standard-setting bodies.
Ans: T LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Accounting Standards
22. The cost and fair market value of an asset are the same at the time of acquisition and in
all subsequent periods.
FOR INSTRUCTOR USE ONLY
, Welcome to Accounting 1-3
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Principles and Assumptions
23. Financial statements are the major means of communicating accounting information to
interested parties.
Ans: T LO4 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: None
24. In the owner's equity statement, revenues are listed first, followed by expenses, and net
income (or net loss).
Ans: F LO4 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Owner’s Equity Statement
25. The primary purpose of the statement of cash flows is to provide information about the
cash receipts and cash payments of a company during a period.
Ans: T LO4 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Statement of Cash Flows
26. Net income for the period is determined by subtracting total expenses and drawings from
total revenues.
Ans: F LO4 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, Reporting, IMA:
Reporting Subtopic: Income Statement
27. The study of accounting will be useful only if a student is interested in working for a profit-
oriented business firm.
Ans: F LO5 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Private Accounting
28. Private accountants are accountants who are not employees of business enterprises.
Ans: F LO5 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Private Accounting
29. Expressing an opinion as to the fairness of the information presented in financial
statements is a service performed by CPAs.
Ans: T LO5 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Public Accounting
30. Management consulting includes examining the financial statements of companies and
expressing an opinion as to the fairness of their presentation.
Ans: F LO5 BT: K Difficulty; Easy TOT: .5 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, Reporting, IMA:
Reporting Subtopic: Public Accounting
FOR INSTRUCTOR USE ONLY
,1-4 Test Bank for College Accounting, First Edition
MULTIPLE CHOICE QUESTIONS
31. The starting point of the accounting process is
a. communicating information to users.
b. identifying economic events.
c. recording economic events.
d. None of the above answers are correct.
Ans: b LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
32. Communication of economic events is the part of the accounting process that involves
a. identifying economic events.
b. quantifying transactions into dollars and cents.
c. preparing accounting reports.
d. recording and classifying information.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
33. Which of the following is not an internal user of accounting information?
a. production supervisor
b. creditor
c. marketing manager
d. finance director
Ans: b LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Who Uses Accounting
Information?
34. Which of the following is not an external user of accounting information?
a. production supervisor
b. creditor
c. investor
d. supplier
Ans: a LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Who Uses Accounting
Information?
35. Which of the following questions is asked by internal users?
a. Is the company in which we invested making money?
b. Which company deserves more investment?
c. Should we eliminate any product lines?
d. Will this company be able to pay us back if we loan to them?
Ans: c LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Who Uses Accounting
Information?
36. Which of the following questions is asked by external users?
a. Is the company in which we invested making money?
b. Do we have enough money to pay our bills?
c. Should we eliminate any product lines?
d. Can we give our employees raises?
Ans: a LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Who Uses Accounting
Information?
37. Which of the following provides information primarily to external users?
a. Managerial accounting
FOR INSTRUCTOR USE ONLY
, Welcome to Accounting 1-5
b. Budgeting accounting
c. Financial accounting
d. Forecast accounting
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Who Uses Accounting
Information?
38. The accounting process involves all of the following except
a. identifying economic transactions that are relevant to the business.
b. communicating financial information to users by preparing financial reports.
c. recording nonquantifiable economic events.
d. analyzing and interpreting financial reports.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
39. The accounting process is correctly sequenced as
a. identification, communication, recording.
b. recording, communication, identification.
c. identification, recording, communication.
d. communication, recording, identification.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
40. Which of the following would not be considered an internal user of accounting data for the
LMN Company?
a. President of the company
b. Production manager
c. Merchandise inventory clerk
d. President of the employees' labor union
Ans: d LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
41. Which of the following would not be considered an external user of accounting data for
the LMN Company?
a. Internal Revenue Service Agent
b. Management
c. Creditors
d. Customers
Ans: b LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
42. The origins of accounting are generally attributed to the work of
a. Christopher Columbus.
b. Abner Doubleday.
c. Luca Pacioli.
d. Leonardo da Vinci.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
43. Financial accounting provides economic and financial information for all of the following
except
a. creditors.
b. investors.
c. managers.
d. other external users.
FOR INSTRUCTOR USE ONLY
,1-6 Test Bank for College Accounting, First Edition
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
44. Which of the following would not be considered internal users of accounting data for a
company?
a. The president of a company
b. The controller of a company
c. Creditors of a company
d. Salesmen of the company
Ans: c LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
45. Which of the following is an external user of accounting information?
a. Labor unions
b. Finance directors
c. Company officers
d. Managers
Ans: a LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
46. Which one of the following is not an external user of accounting information?
a. Regulatory agencies
b. Customers
c. Investors
d. All of these answers choices are external users.
Ans: d LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
47. Bookkeeping differs from accounting in that bookkeeping primarily involves which part of
the accounting process?
a. Identification
b. Communication
c. Recording
d. Analysis
Ans: c LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
48. Which of the following is not part of the accounting process?
a. Recording
b. Identifying
c. Financial decision-making
d. Communicating
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
49. The first part of the accounting process is
a. communicating.
b. identifying.
c. processing.
d. recording.
Ans: b LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
50. Keeping a systematic, chronological diary of events that are measured in dollars and
cents is called
FOR INSTRUCTOR USE ONLY
, Welcome to Accounting 1-7
a. communicating.
b. identifying.
c. processing.
d. recording.
Ans: d LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Why Study Accounting?
51. Internal users of accounting information include all of the following except
a. company officers.
b. investors.
c. marketing managers.
d. production supervisors.
Ans: b LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Who Uses Accounting Information?
52. A proprietorship is a business
a. owned by one person.
b. owned by two or more persons.
c. organized as a separate legal entity under state corporation law.
d. owned by a governmental agency.
Ans: a LO2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
53. Which can have either one owner or thousands of owners?
a. Proprietorship
b. Corporation
c. Partnership
d. Proprietorship or partnership
Ans: b LO2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Types of Businesses
That Use Accounting
54. An accounting firm is an example of a
a. service company.
b. retail company.
c. merchandise company.
d. manufacturing company.
Ans: a LO2 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Reporting, IMA: Reporting Subtopic: Business
Classifications
55. The proprietorship form of business organization
a. must have at least three owners in most states.
b. represents the largest number of businesses in the United States.
c. combines the records of the business with the personal records of the owner.
d. is characterized by a legal distinction between the business as an economic
unit and the owner.
Ans: b LO2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
56. A business organized as a corporation
a. is not a separate legal entity in most states.
b. requires that stockholders be personally liable for the debts of the business.
c. is owned by its stockholders.
FOR INSTRUCTOR USE ONLY
, 1-8 Test Bank for College Accounting, First Edition
d. terminates when one of its original stockholders dies.
Ans: c LO2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
57. The partnership form of business organization
a. is a separate legal entity.
b. is a common form of organization for service-type businesses.
c. enjoys an unlimited life.
d. has limited liability.
Ans: b LO2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
58. Which of the following is not an advantage of the corporate form of business organization?
a. Limited liability of stockholders
b. Transferability of ownership
c. Unlimited personal liability for stockholders
d. Unlimited life
Ans: c LO2 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
59. A small neighborhood barber shop that is operated by its owner would likely be organized
as a
a. joint venture.
b. partnership.
c. corporation.
d. proprietorship.
Ans: d LO2 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
60. George and Ringo met at law school and decide to start a small law practice after
graduation. They agree to split revenues and expenses evenly. The most common form of
business organization for a business such as this would be a
a. joint venture.
b. partnership.
c. corporation.
d. proprietorship.
Ans: b LO2 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA: Reporting
Subtopic: Types of Businesses That Use Accounting
61. Which of the following is true regarding the corporate form of business organization?
a. Corporations are the most prevalent form of business organization.
b. Corporate businesses are generally smaller in size than partnerships and proprietorships.
c. The revenues of corporations are greater than the combined revenues of partnerships
and proprietorships.
d. Corporations are separate legal entities organized exclusively under federal law.
Ans: c LO2 BT: K Difficulty: Medium TOT: 1.0 min. AACSB: None AICPA FC: Measurement Analysis and Interpretation, IMA:
Reporting Subtopic: Types of Businesses That Use Accounting
62. A business whose owners enjoy limited liability is a
a. proprietorship.
b. partnership.
FOR INSTRUCTOR USE ONLY
