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1. Ownership of a corporation is divided into units called shares or stock. True False 2. An owner's investment in a business always creates an asset (cash), a liability (note payable) and an equity (common stock). True False 3. Which of the following statements is true of external information users? They are directly involved in managing the organization Their needs are met by the managerial area of accounting They have limited access to an organization's accounting information They use accounting information to help improve the efficiency and effectiveness of an organization They are the only users of accounting information who rely on internal controls to monitor company activities 4. An Asset is: only acquired with cash something the company owns only contributed by stockholders a company's obligation to pay is also called contributed capital 5. A parcel of land is: offered for sale at $150,000, assessed for tax purposes at $95,000, recognized by its purchasers as being worth $140,000 and purchased for $137,000. The land should be recorded in the purchaser's books at: $95,000 $137,000 $138,500 $140,000 $150,000 6. Recording the items on the financial statements in dollars is: Objectivity principle Monetary unit principle Revenue recognition principle Going-concern principle Cost principle 7. On December 15, 2008, Myers Legal Services signed a $50,000 contract with a client to provide legal services to the client in 2009. Which accounting principle would require Myers Legal Services to record the legal fees revenue in 2009 and not 2008? Monetary unit principle Going-concern principle Cost principle Business entity principle Revenue recognition principle 8. Congress passed the Sarbanes-Oxley Act to Provide jobs to U.S. accountants and limit the number of jobs sent outside the country Impose penalties on CEO's and CFO's who knowingly sign off on bogus accounting reports, although at this time the penalties are token amounts Help curb financial abuses at companies that issue their stock to the public... View Full Document

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