accounting chapter 1 test – Flashcards

________ are professional accountants who serve the general public, not one particular company. A. certified public accountants B. certified management accountants C. cost accountants D. controllers

Which of the following is an external user of a business' financial information? A. customers B. cost accountant C. company manager D. the board of directors

Which of the following users would rely on management accounting information for decision-making purposes? A. potential investors B. creditors C. customers D. company managers

The field of accounting that focuses on providing information for internal decision makers is: A. managerial accounting B. financial accounting C. non monetary accounting D. governmental accounting

Which of the following statements best describes financial statements? A. financial statements are the information systems that record monetary and nonmonetary business transactions B. financial statements are the verbal statements made to business news organizations by chief financial officers C. Financial statements are documents that report on a business in monetary terms, providing information to help people make informed business decisions D. Financial statements are plans and forecasts for future time periods based on information from past financial periods

The field of accounting that focuses on providing information for external decision makers is: A. managerial accounting B. financial accounting C. cost accounting D. non monetary accounting

Managerial accounting provides information to: A. internal decision makers B. outside investors and lenders C. auditors D. taxing authorities

The Sarbanes-Oxley Act (SOX) made it a criminal offense to: A. transfer share of stocks B. issue debentures C. declare bankruptcy D. falsify financial information

Which of the following organizations requires publicly owned companies to be audited by independent accountants (CPAs)? A. Securities and Exchange Commission (SEC) B. Public Company Accounting Oversight Board (PCAOB) C. Financial Accounting Standards Board (FASB) D. American Institute of Certified Public Accountants (AICPA)

Which of the following organizations is responsible for the creation and governance of accounting standards in the United States? A. Financial Accounting Standards Board B. Institute of Management Accountants C. American Institute of Certified Public Accountants D. Securities and Exchange commission

GAAP are the rules that govern accounting in the United States. The acronym GAAP in this statement refers to: A. Globally Accepted and Accurate Policies B. Global Accommodation Accounting Principles C. Generally Accredited Accounting Policies D. Generally Accepted Accounting Principles

Which of the following is a characteristic of a corporation? A. A corporation is owned by stockholders B. Lenders of a corporation do not have the right to claim the corporation's assets to satisfy their obligations C. All shares of a corporation must be held by a single individual D. Each stockholder has the authority to commit the corporation to a binding contract through his actions

The formation of a partnership firm requires a minimum of: A. four partners B. three partners C. one partner D. two partners

Corporate ownership is a very popular type of ownership in the United States. Which of the following is a major reason that corporate ownership is popular? A. stockholders have limited liability for the debts of the corporation B. most corporations are small or medium sized C. The title of the corporation is limited by the death of the owner D. a corporation is usually managed by the owners

Which of the following is a characteristic of a limited liability company (LLC)? A. An LLC's life is terminated at any member's choice or death B. each member of an LLC is liable only for his or her actions C. an LLC must have more than five members D. the income of members from an LLC is not taxed

Caleb Brown is the sole owner of a bicycle sales and repair shop from several years. Which of the following business types would limit Caleb's personal liability exposure to the entity's debts? A. partnership B. limited liability company C. sole proprietorship D. limited liability partnership

Which of the following statements is true of sole proprietorship? A. A sole proprietorship joins two or more individuals as co-owners B. The sole proprietorship is personally liable for the liabilities of the business C. A sole proprietorship is taxed separately from the other D. A sole proprietorship does not terminate at the choice or death of the owner

The economic resources of a business such as furniture, building, and land are its: A. liabilities B. revenues C. assets D. withdrawals

Which of the following is an asset account? A. cash B. notes payable C. owner's withdrawals D. expenses