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TEST BANK For Accounting 29th Edition By Carl Warren ( All Chapters ) Newest Version A+
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Created By : TestsBanksTest Bank for Accounting, 29th Edition by Carl Warren (All Chapters)
A+
Chapter 1: Introduction to Accounting And Business
Indicate whether the statement is true or false.
—1. An account receivable is a claim against a customer resulting from a sale on
account.
a. True
b. False
— 2. An example of an external user of accounting information is the federal
government.
a. True
b. False
— 3. A corporation is a business that is legally separate and distinct from its owners.
a. True
b. False
—-4. The role of accounting is to provide many different users with financial information
to make economic decisions.
a. True
b. False
— 5. The main objective for all businesses is to maximize unrealized profits.
a. True
b. False
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—-6. Financial accounting provides information to all users, while the main focus for
managerial accounting is to provide information to management.
a. True
b. False
—-7. Assets that are used up during the process of earning revenue are called
expenses.
a. True
b. False
—8. Withdrawals paid to owners decrease assets and increase equity.
a. True
b. False
—9. An example of a general-purpose financial statement would be a report about
projected price increases related to transportation costs.
a. True
b. False
—10. No significant differences exist between the accounting standards issued by the
FASB and the IASB.
a. True
b. False
— 11.The rights or claims to the assets of a business may be subdivided into rights of
creditors and rights of owners.
a. True
b. False
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—12. The accounting equation can be expressed as Assets – Liabilities = Owner's
Equity.
a. True
b. False
—13. The primary financial statements of a proprietorship are the income statement, the
statement of owners’ equity, the cash budget, and the balance sheet.
a. True
b. False
—14. Investing activities are those activities by which the company obtains funds to
start and operate the business.
a. True
b. False
— 15. Paying an account payable increases liabilities and decreases assets.
a. True
b. False
—16. Purchasing supplies on account increases liabilities and decreases equity.
a. True
b. False
—17. Senior executives cannot be criminally prosecuted for the wrongdoings they
commit on behalf of the companies where they work.
a. True
b. False
—18. An income statement is a summary of the revenues and expenses of a business
as of a specific date.
a. True
b. False
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—19. Managerial accounting information is used by external and internal users equally.
a. True
b. False
—20. The Sarbanes-Oxley Act established standards for corporate responsibility and
disclosure.
a. True
b. False
—21. The financial statements of a proprietorship should include the owner's personal
assets and liabilities.
a. True
b. False
—22. Some major fraudulent acts committed by senior executives started as what they
considered to be small ethical lapses that grew out of control.
a. True
b. False
—23. The basic difference between manufacturing and retail companies is the
completion level of the products they purchase for resale to customers.
a. True
b. False
—24. The Financial Accounting Standards Board (FASB) is the authoritative body that
has primary responsibility for developing accounting principles.
a. True
b. False
—25. The owner’s rights to the assets rank ahead of the creditors' rights to the assets.
a. True
b. False
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