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Accounting Ch. 1-4 Test Bank questions & answers.
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Accounting Ch. 1-4 Test Bank questions & answers.
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Accounting Ch. 1-4 Test Bank questions& answers.
T or F,
Owners of business firms are the only people who need accounting information ANS - F
T or F
Transactions that can be measured in dollars and cents are recorded in the financial information system
ANS - T
T or F
The hiring of a new company president is an economic event recorded by the financial information
system ANS - F
T or F
Management of a business enterprise is the major external user of information ANS - F
T or F
Accounting communicates financial information about a business enterprise to both internal and
external users ANS - T
T or F
Accounting information is used only by external users with a financial interest in a business enterprise
ANS - F
T or F
Financial statements are the major means of communicating accounting information to interested
parties ANS - T
T or F
,Bookkeeping and accounting are one and the same because the bookkeeping function includes the
accounting process ANS - F
T or F
The origins of accounting are attributed to Luca Pacioli, a famous mathematician ANS - T
T or F
The State Administration of Taxation in the People's Republic of China is an example of an internal user
of accounting informa ANS - F
T or F
The German Confederation of Trade Union is an example of an external user of accounting information
ANS - T
T or F
Accountants rely on a fundamental business concept - ethical behaviour - in reporting financial
information ANS - T
T or F
The process of reducing the differences between GAAP and IFRS is known as convergence ANS - T
T or F
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 owner ANS - T
T or F
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
T or F
, The monetary unit assumption states that transactions that can be measured in terms of money should
be recorded in the accounting records ANS - T
T or F
In order to possess future service potential, an asset must have physical substance ANS - F
T or F
Owners' claims to total business assets take precedence over the claims of credits because owners
invest assets in the business and are liable for losses. ANS - F
T or F
The basic accounting equation states that Assets = Liabilities ANS - F
T or F
Share capital is the total amount paid in by shareholders for shares purchased ANS - T
T or F
The principal source of equity is amounts paid in by shareholders ANS - F
T or F
Expenses are increases in equity that result from operating the business ANS - F
T or F
The two components of equity are retained earnings and share capital ANS - T
T or F
The purchase of an asset on account increases assets and decreases equity ANS - F
T or F
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