Accounting Review Problems Test 1

Accounting Review Problems Test 1 - CHAPTER 1 True/ False...

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Unformatted text preview: CHAPTER 1 True/ False _____ 1. The majority of U.S. business is transacted by proprietorships. _____ 2. Financing activities for corporations include borrowing money and selling shares of their own stock. _____ 3. Investing activities involve collecting the necessary funds to support the business. _____ 4. Operating activities involve putting the resources of the business into action to generate a profit. _____ 5. Net income for the period is determined by subtracting total expenses and dividends from revenues. _____ 6. The primary purpose of the statement of cash flows is to provide information about the cash receipts and cash payments of a company for a specific period of time. _____ 7. The balance sheet reports assets and claims to those assets at a specific point in time. _____ 8. If the assets owned by a business total $100,000 and liabilities total $70,000, stockholders equity totals $30,000. _____ 9. Claims of creditors and owners on the assets of a business are called liabilities. _____ 10. All publicly traded U.S. companies must provide their shareholders with an annual report each year. _____ 11. Information in the notes to the financial statements have to be quantifiable (numeric). ______12. An auditor is an accounting professional who conducts an independent examination of the accounting data presented by a company. _____ 13. Examples of notes are descriptions of the significant accounting policies and methods used in preparing the statements, explanations of contingencies, and various statistics. Multiple Choice 1. The proprietorship form of business organization a. must have at least two owners in most states. b. generally receives favorable tax treatment relative to a corporation. c. combines the records of the business with the personal records of the owner. d. is classified as a separate legal entity. 2. 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. 3. A corporation has which of the following set of characteristics? a. Shared control, tax advantages, increased skills and resources b. Simple to set up and maintains control with founder c. Easier to transfer ownership and raise funds, no personal liability d. Harder to raise funds and gives owner control 4. Which of the following would not be considered an internal user of accounting data for the XYZ Company? a. President of the company b. Production manager c. Merchandise inventory clerk d. President of the employees' labor union 5.The group of users of accounting information charged with achieving the goals of the business is its a. auditors....
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Accounting Review Problems Test 1 - CHAPTER 1 True/ False...

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