question

The main objective of a not-for-profit business is not to make a profit.

answer

false

question

The role of accounting is to provide many different users with financial information to make economic decisions.

answer

true

question

A corporation is a business that is legally separate and distinct from its owners.

answer

true

question

Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies where they work.

answer

false

question

The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities

answer

false

question

Managerial accounting information is used by external and internal users equally.

answer

false

question

Financial accounting provides information to all users, while the main focus for managerial accounting is to provide information to the management.

answer

true

question

Proper ethical conduct implies that you only consider what's in your best interest

answer

false

question

Some of the major fraudulent acts by senior executives started as what they considered to be small ethical lapses which grew out of control.

answer

true

question

Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.

answer

false

question

Accounting information users need reports about the economic activities and condition of businesses.

answer

true

question

An example of an external user of accounting information is the federal government

answer

true

question

An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.

answer

false

question

A business is an organization in which basic resources or inputs, like materials and labor, are assembled and processed to provide outputs in the form of goods or services to customers.

answer

true

question

The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.

answer

true

question

The main objective for all businesses is to maximize unrealized profits.

answer

false

question

The Sarbanes-Oxley Act prohibits CPAs from providing nonaudit investment banking services.

answer

true

question

About 90% of the businesses in the United States are organized as corporations.

answer

false

question

Proprietorships are owned by one owner and provide only services to their customers.

answer

false

question

Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as corporations.

answer

false

question

The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for developing accounting principles

answer

true

question

The unit of measurement concept requires that economic data be recorded in a common unit of measurement.

answer

true

question

No significant differences exist between the accounting standards issued by the FASB and the IASB.

answer

false

question

The cost concept is the basis for entering the exchange price into the accounting records.

answer

true

question

Generally accepted accounting principles regulate how and what financial information is reported by businesses.

answer

true

question

The accounting equation can be expressed as Assets - Liabilities = Owners' Equity.

answer

true

question

The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of owners.

answer

true

question

Owners' rights to assets rank ahead of creditors' rights to assets.

answer

false

question

An account receivable is typically classified as a revenue.

answer

false

question

An account receivable is a claim against a customer arising from a sale on account.

answer

true

question

Paying an account payable increases liabilities and decreases assets.

answer

false

question

Receiving payments on an account receivable increases both equity and assets.

answer

false

question

Cash dividends paid to stockholders decrease assets and increase equity.

answer

false

question

Purchasing supplies on account increases liabilities and decreases equity.

answer

false

question

Receiving a bill or otherwise being notified that an amount is owed is not recorded until the amount is paid.

answer

false

question

Revenue is earned only when money is received.

answer

false

question

Expenses are assets that are used up during the process of earning revenue.

answer

true

question

The excess of revenue over the expenses incurred in earning the revenue is called capital stock.

answer

false

question

The principal financial statements for a corporation are the income statement, the retained earnings statement, the balance sheet, and the budget.

answer

fasle

question

An income statement is a summary of the revenues and expenses of a business as of a specific date.

answer

fasle

question

A retained earnings statement reports all changes in cash for a period of time.

answer

false

question

The statement of cash flows consists of three sections: cash flows from operating activities, cash flows from income activities, and cash flows from equity activities.

answer

false

question

All financial statements are identified by the name of the business, the title of the statement, and the date or period of time

answer

true

question

The balance sheet represents the accounting equation.

answer

true

question

Net income and net profit do not mean the same thing.

answer

false

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