Acg 2021 Chapter 1

Front 1

Accounting:
A) measures business activities.
B) processes data into reports and communicates the data to decision makers.
C) is often called the language of business.
D) is all of the above.

Back 1

D) is all of the above.

Front 2

The two types of accounting are:
A) profit and nonprofit.
B) financial and managerial.
C) internal and external.
D) bookkeeping and decision-oriented.

Back 2

B) financial and managerial.

Front 3

Management accounting:
A) includes information such as budgets and forecasts.
B) is used to make strategic decisions for the entity.
C) must be relevant to decision makers within the entity.
D) is all of the above.

Back 3

D) is all of the above.

Front 4

What type of accounting provides information for decision makers outside the entity?
A) Bookkeeping
B) Managerial accounting.
C) Internal auditing.
D) Financial accounting.

Back 4

D) Financial accounting.

Front 5

Who ultimately controls a corporation?
A) Board of Directors
B) The Chief Executive Officer (CEO)
C) The stockholders
D) The President

Back 5

C) The stockholders

Front 6

Financial statements are:
A) standard documents issued by outside consultants who are hired to analyze key operations of the business in financial terms.
B) the business documents that companies use to report the results of their financial activities to various user groups.
C) reports created by management that states it is responsible for the acts of the corporation.
D) the mechanical part of accounting.

Back 6

B) the business documents that companies use to report the results of their financial activities to various user groups.

Front 7

For which form of business ownership are the owners of a business legally distinct from the business?
A) Corporation
B) Partnership
C) Proprietorship
D) All of the above

Back 7

A) Corporation

Front 8

Characteristics of a sole proprietor include:
A) multiple owners.
B) limited personal liability for all business debts.
C) a distinct entity, separate from its owner for accounting purposes.
D) formation under state law.

Back 8

C) a distinct entity, separate from its owner for accounting purposes.

Front 9

A partnership:
A) is a taxpaying entity.
B) is not a distinct entity, separate from its owners for accounting purposes.
C) has mutual agency.
D) has limited liability for the partners.

Back 9

C) has mutual agency.

Front 10

Owners of an LLC are called:
A) partners.
B) sole proprietors.
C) members.
D) stockholders.

Back 10

C) members.

Front 11

Advantages of a corporation include:
A) a single owner.
B) the double taxation of distributed profits.
C) limited liability of the stockholders.
D) mutual agency.

Back 11

C) limited liability of the stockholders.

Front 12

All of the following are forms of business organizations EXCEPT for the:
A) proprietorship.
B) limited liability partnership.
C) limited proprietorship.
D) limited liability company.

Back 12

C) limited proprietorship.

Front 13

An entity that is organized according to state law and in which ownership units are called stock is a:
A) proprietorship.
B) corporation.
C) partnership.
D) limited liability company.

Back 13

B) corporation.

Front 14

For accounting purposes, the business entity should be considered separate from its owners if the business is organized as a:
A) proprietorship.
B) corporation.
C) partnership.
D) any of the above.

Back 14

D) any of the above.

Front 15

The Financial Accounting Standards Board is responsible for establishing:
A) the code of professional conduct for accountants.
B) the Securities and Exchange Commission.
C) generally accepted accounting principles.
D) the American Institute of Certified Public Accountants.

Back 15

C) generally accepted accounting principles.

Front 16

The acronym GAAP stands for:
A) generally acceptable authorized pronouncements.
B) government authorized accountant principles.
C) generally accepted accounting principles.
D) government audited accounting pronouncements.

Back 16

C) generally accepted accounting principles.

Front 17

Accountants follow guidelines for professional measurement and disclosure of financial information called:
A) IASB.
B) GAAP.
C) FASB.
D) SEC.

Back 17

B) GAAP.

Front 18

International financial reporting standards are set by the:
A) IASB.
B) GAAP.
C) FASB.
D) SEC.

Back 18

A) IASB.

Front 19

To be useful, accounting information must have the fundamental qualitative characteristics of:
A) comparability and relevance.
B) relevance and faithful representation.
C) materiality and understandability.
D) faithful representation and timeliness.

Back 19

B) relevance and faithful representation.

Front 20

All of the following are characteristics of useful accounting information EXCEPT:
A) comparability.
B) timeliness
C) informative.
D) verifiability.

Back 20

C) informative.