Question 1

Profit is another term for revenue.

Accepted Answer

A) True 
 B)False  False

Question 2

A proprietorship is usually operated by the owner.

Accepted Answer

A) True 
 B)False  True

Question 3

Cost of goods sold is a(n):

Accepted Answer

A) liability. 
B) financing activity. 
C) asset. 
D) expense. 
A) liability. 
B) financing activity. 
C) asset. 
D) expense. D

Question 4

Which financial statement is prepared first?

Accepted Answer

A) Statement of financial position 
B) Income statement 
C) Statement of changes in equity 
D) Statement of cash flows 
A) Statement of financial position 
B) Income statement 
C) Statement of changes in equity 
D) Statement of cash flows

Question 5

The issue of shares and distribution of dividends are used in determining profit.

Accepted Answer

A) True 
 B)False

Question 6

The purchase of manufacturing equipment for a factory is what type of business activity?

Accepted Answer

A) Manufacturing 
B) Financing 
C) Investing 
D) Operating 
A) Manufacturing 
B) Financing 
C) Investing 
D) Operating

Question 7

Which form of business would have its shares listed on a stock exchange?

Accepted Answer

A) Proprietorship 
B) Partnership 
C) Private corporation 
D) Public corporation 
A) Proprietorship 
B) Partnership 
C) Private corporation 
D) Public corporation

Question 8

The partnership form of business organization:

Accepted Answer

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. 
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.

Question 9

The statement of changes in equity is not dependent on the results from the income statement.

Accepted Answer

A) True 
 B)False

Question 10

Accounting communicates financial information about a business to both internal and external users.

Accepted Answer

A) True 
 B)False

Question 11

The statement of financial position:

Accepted Answer

A) summarizes the changes in shareholders' equity for a specific period of time. 
B) reports the changes in assets, liabilities, and shareholders' equity over a period of time. 
C) reports the assets, liabilities, and shareholders' equity at a specific date. 
D) presents the revenues and expenses for a specific period of time. 
A) summarizes the changes in shareholders' equity for a specific period of time. 
B) reports the changes in assets, liabilities, and shareholders' equity over a period of time. 
C) reports the assets, liabilities, and shareholders' equity at a specific date. 
D) presents the revenues and expenses for a specific period of time.

Question 12

A corporation has which of the following set of characteristics?

Accepted Answer

A) Shareholder control, income tax disadvantages, increased skills and resources 
B) Simple to set up and maintains control with founder 
C) Harder to raise funds and gives shareholders control 
D) Easier to transfer ownership and raise funds, no personal liability 
A) Shareholder control, income tax disadvantages, increased skills and resources 
B) Simple to set up and maintains control with founder 
C) Harder to raise funds and gives shareholders control 
D) Easier to transfer ownership and raise funds, no personal liability

Question 13

Expenses are incurred:

Accepted Answer

A) only on rare occasions. 
B) to produce assets. 
C) to produce liabilities. 
D) to generate revenues. 
A) only on rare occasions. 
B) to produce assets. 
C) to produce liabilities. 
D) to generate revenues.

Question 14

Which of the following would not be considered an internal user of accounting data?

Accepted Answer

A) The president of a company 
B) The controller of a company 
C) A creditor of a company 
D) A salesperson of a company 
A) The president of a company 
B) The controller of a company 
C) A creditor of a company 
D) A salesperson of a company

Question 15

The accounting equation may be expressed as:

Accepted Answer

A) Assets = Shareholders' Equity - Liabilities. 
B) Assets = Liabilities + Shareholders' Equity. 
C) Assets + Liabilities = Shareholders' Equity. 
D) Assets + Shareholders' Equity = Liabilities. 
A) Assets = Shareholders' Equity - Liabilities. 
B) Assets = Liabilities + Shareholders' Equity. 
C) Assets + Liabilities = Shareholders' Equity. 
D) Assets + Shareholders' Equity = Liabilities.

Question 16

Profit results when:

Accepted Answer

A) Assets > Liabilities. B) Assets Expenses. D) Revenues < Expenses. A) Assets > Liabilities. B) Assets Expenses. D) Revenues < Expenses.

Question 17

An advantage of the corporate form of business is that:

Accepted Answer

A) it has limited life. 
B) its shareholders' personal resources are at stake. 
C) its ownership is easily transferable via the sale of shares. 
D) it is simple to establish. 
A) it has limited life. 
B) its shareholders' personal resources are at stake. 
C) its ownership is easily transferable via the sale of shares. 
D) it is simple to establish.

Question 18

Shareholder's equity consists of two parts: share capital and retained earnings.

Accepted Answer

A) True 
 B)False

Question 19

Common shares represent:

Accepted Answer

A) the creditors' claims on the company. 
B) the total profit of the company to date. 
C) the amount paid by investors for ownership in the company. 
D) the owners' claims on the company. 
A) the creditors' claims on the company. 
B) the total profit of the company to date. 
C) the amount paid by investors for ownership in the company. 
D) the owners' claims on the company.

Question 20

Accounting information is not important to marketing managers.

Accepted Answer

A) True 
 B)False

Profit is another term for revenue.

A proprietorship is usually operated by the owner.

Cost of goods sold is a(n):

Which financial statement is prepared first?

The issue of shares and distribution of dividends are used in determining profit.

The purchase of manufacturing equipment for a factory is what type of business activity?

Which form of business would have its shares listed on a stock exchange?

The partnership form of business organization:

The statement of changes in equity is not dependent on the results from the income statement.

Accounting communicates financial information about a business to both internal and external users.

The statement of financial position:

A corporation has which of the following set of characteristics?

Expenses are incurred:

Which of the following would not be considered an internal user of accounting data?

The accounting equation may be expressed as:

Profit results when:

An advantage of the corporate form of business is that:

Shareholder's equity consists of two parts: share capital and retained earnings.

Common shares represent:

Accounting information is not important to marketing managers.

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters

Exam 1: The Purpose and Use of Financial Statements

Profit is another term for revenue.

A proprietorship is usually operated by the owner.

Cost of goods sold is a(n):

Which financial statement is prepared first?

The issue of shares and distribution of dividends are used in determining profit.

The purchase of manufacturing equipment for a factory is what type of business activity?

Which form of business would have its shares listed on a stock exchange?

The partnership form of business organization:

The statement of changes in equity is not dependent on the results from the income statement.

Accounting communicates financial information about a business to both internal and external users.

The statement of financial position:

A corporation has which of the following set of characteristics?

Expenses are incurred:

Which of the following would not be considered an internal user of accounting data?

The accounting equation may be expressed as:

Profit results when:

An advantage of the corporate form of business is that:

Shareholder's equity consists of two parts: share capital and retained earnings.

Common shares represent:

Accounting information is not important to marketing managers.

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters