Name: Class: Date:
Test Bank For
Survey of Accounting 10e Carl Warren, Amanda Farmer, Jefferson P. Jones
Chapter 1-14 Answers are at the End of Each Chapter
chapter 1
Indicate whether the statement is true or false.
1. A business stakeholder has an interest in the economic performance of a company.
a. True
b. False
2. The ownership of a proprietorship is divided into shares of stock owned by its stockholders.
a. True
b. False
3. Creditors have preference to assets behind stockholders if a business fails.
a. True
b. False
4. Manufacturing businesses change basic inputs into products that are sold to individual customers.
a. True
b. False
5. The stockholders' equity of a company should equal the sum of its total assets and total liabilities.
a. True
b. False
6. Assets are acquired through investing activities when resources are purchased.
a. True
b. False
7. A primary disadvantage of corporations is that the financial resources available to them are limited.
a. True
b. False
8. A limited liability company combines attributes of a partnership and a corporation.
a. True
b. False
9. John Deere is a leading manufacturer of agricultural machinery in the world, producing products that serve unique
market needs. Therefore, John Deere is an example of a company that uses a premium-price approach to attract customers.
a. True
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,Name: Class: Date:
b. False
10. A corporation is a business that is legally separate and distinct from its owners.
a. True
b. False
11. Stockholders of a corporation are its internal stakeholders.
a. True
b. False
12. A partnership is owned by two or more individuals.
a. True
b. False
13. The balance sheet represents the accounting equation.
a. True
b. False
14. The popularity of the sole proprietorship is due to the ease and low cost of organizing.
a. True
b. False
15. Accounting is often called the "language of business" because business information is communicated to stakeholders.
a. True
b. False
16. The basic type of stock issued to owners is called common stock.
a. True
b. False
17. A liability is a legal obligation to repay the amount borrowed according to the terms of the borrowing agreement.
a. True
b. False
18. All merchandising businesses are organized as corporations.
a. True
b. False
19. The objective of most businesses is to maximize profits.
a. True
b. False
20. The branch of accounting related to the management's financial decisions is known as financial accounting.
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,Name: Class: Date:
a. True
b. False
21. Merchandising businesses produce products rather than provide services to customers.
a. True
b. False
22. Companies using a low-cost emphasis provide products and services that compete on features other than price.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
23. Under a _____, a business designs products that possess unique attributes or characteristics for which customers are
willing to pay more.
a. premium-price approach
b. outreach approach
c. low-cost approach
d. customer approach
24. The performance evaluation of the managers of a company is dependent on the company's _____.
a. common stock
b. volatility
c. economic performance
d. nonrecurring activities
25. _____ is the increase in assets from selling products or providing services.
a. Revenue
b. Interest income
c. Equity
d. Cost of goods sold
26. A financial statement that summarizes the cash receipts and cash payments of a company for a specific period of time
is _____.
a. the cash analysis statement
b. the bank reconciliation statement
c. the statement of cash flows
d. the statement of retained and nonretained cash earnings
27. Simmon's Inc., had the following account balances on June 30, 20Y9. What is Simmon's net income for the month of
June?
Accounts Payable $ 8,900
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, Name: Class: Date:
Common Stock 16,000
Cash 20,500
Equipment 19,000
Fees Earned 65,000
Miscellaneous Expense 18,500
Rent Expense 5,000
Retained Earnings 8,000
Wages Expense 17,500
a. $24,000
b. $41,000
c. $39,500
d. 65,000
28. The "rules" of accounting are referred to as _____.
a. income tax regulations
b. SEC regulations
c. internet rules
d. Generally Accepted Accounting Principles
29. Which of the following is not an example of a capital market stakeholder?
a. Banks
b. Owners
c. Suppliers
d. Stockholders
30. Which of the following is true of return on assets?
a. It is a measure of a company's profitability.
b. It is used to evaluate a company's ability to pay off its short-term debts.
c. It is used to determine the financial leverage of a company.
d. It is a measure of the optimum capital structure.
31. Given the following list of accounts, calculate Total Assets.
Accounts Receivable $ 12,000
Common Stock 25,000
Cash 25,500
Equipment 16,900
Fees Earned 45,400
Miscellaneous Expense 18,800
Rent Expense 3,250
Retained Earnings 8,850
Salaries Expense 15,500
Wages Expense 15,000
Copyright Cengage Learning. Powered by Cognero. Page 4
Test Bank For
Survey of Accounting 10e Carl Warren, Amanda Farmer, Jefferson P. Jones
Chapter 1-14 Answers are at the End of Each Chapter
chapter 1
Indicate whether the statement is true or false.
1. A business stakeholder has an interest in the economic performance of a company.
a. True
b. False
2. The ownership of a proprietorship is divided into shares of stock owned by its stockholders.
a. True
b. False
3. Creditors have preference to assets behind stockholders if a business fails.
a. True
b. False
4. Manufacturing businesses change basic inputs into products that are sold to individual customers.
a. True
b. False
5. The stockholders' equity of a company should equal the sum of its total assets and total liabilities.
a. True
b. False
6. Assets are acquired through investing activities when resources are purchased.
a. True
b. False
7. A primary disadvantage of corporations is that the financial resources available to them are limited.
a. True
b. False
8. A limited liability company combines attributes of a partnership and a corporation.
a. True
b. False
9. John Deere is a leading manufacturer of agricultural machinery in the world, producing products that serve unique
market needs. Therefore, John Deere is an example of a company that uses a premium-price approach to attract customers.
a. True
Copyright Cengage Learning. Powered by Cognero. Page 1
,Name: Class: Date:
b. False
10. A corporation is a business that is legally separate and distinct from its owners.
a. True
b. False
11. Stockholders of a corporation are its internal stakeholders.
a. True
b. False
12. A partnership is owned by two or more individuals.
a. True
b. False
13. The balance sheet represents the accounting equation.
a. True
b. False
14. The popularity of the sole proprietorship is due to the ease and low cost of organizing.
a. True
b. False
15. Accounting is often called the "language of business" because business information is communicated to stakeholders.
a. True
b. False
16. The basic type of stock issued to owners is called common stock.
a. True
b. False
17. A liability is a legal obligation to repay the amount borrowed according to the terms of the borrowing agreement.
a. True
b. False
18. All merchandising businesses are organized as corporations.
a. True
b. False
19. The objective of most businesses is to maximize profits.
a. True
b. False
20. The branch of accounting related to the management's financial decisions is known as financial accounting.
Copyright Cengage Learning. Powered by Cognero. Page 2
,Name: Class: Date:
a. True
b. False
21. Merchandising businesses produce products rather than provide services to customers.
a. True
b. False
22. Companies using a low-cost emphasis provide products and services that compete on features other than price.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
23. Under a _____, a business designs products that possess unique attributes or characteristics for which customers are
willing to pay more.
a. premium-price approach
b. outreach approach
c. low-cost approach
d. customer approach
24. The performance evaluation of the managers of a company is dependent on the company's _____.
a. common stock
b. volatility
c. economic performance
d. nonrecurring activities
25. _____ is the increase in assets from selling products or providing services.
a. Revenue
b. Interest income
c. Equity
d. Cost of goods sold
26. A financial statement that summarizes the cash receipts and cash payments of a company for a specific period of time
is _____.
a. the cash analysis statement
b. the bank reconciliation statement
c. the statement of cash flows
d. the statement of retained and nonretained cash earnings
27. Simmon's Inc., had the following account balances on June 30, 20Y9. What is Simmon's net income for the month of
June?
Accounts Payable $ 8,900
Copyright Cengage Learning. Powered by Cognero. Page 3
, Name: Class: Date:
Common Stock 16,000
Cash 20,500
Equipment 19,000
Fees Earned 65,000
Miscellaneous Expense 18,500
Rent Expense 5,000
Retained Earnings 8,000
Wages Expense 17,500
a. $24,000
b. $41,000
c. $39,500
d. 65,000
28. The "rules" of accounting are referred to as _____.
a. income tax regulations
b. SEC regulations
c. internet rules
d. Generally Accepted Accounting Principles
29. Which of the following is not an example of a capital market stakeholder?
a. Banks
b. Owners
c. Suppliers
d. Stockholders
30. Which of the following is true of return on assets?
a. It is a measure of a company's profitability.
b. It is used to evaluate a company's ability to pay off its short-term debts.
c. It is used to determine the financial leverage of a company.
d. It is a measure of the optimum capital structure.
31. Given the following list of accounts, calculate Total Assets.
Accounts Receivable $ 12,000
Common Stock 25,000
Cash 25,500
Equipment 16,900
Fees Earned 45,400
Miscellaneous Expense 18,800
Rent Expense 3,250
Retained Earnings 8,850
Salaries Expense 15,500
Wages Expense 15,000
Copyright Cengage Learning. Powered by Cognero. Page 4
