. A corporation is a business that is legally separate and distinct from its owners.
a.
True
b.
False
ANSWER:
POINTS:
1
DIFFICULTY:
EasyBloom's: Remembering
QUESTION TYPE:
True / False
HAS VARIABLES:
LEARNING OBJECTIVES:
FNMN.WAJO.19.01-01 - LO: 01-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.03 - Business FormsACCT.AICPA.BB.01 - IndustryACCT.AICPA.FN.03 - MeasurementBUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
2. The role of accounting is to provide many different users with financial information to make economic decisions.
ModerateBloom's: Remembering
ACCT.ACBSP.APC.01 - PurposeACCT.AICPA.FN.03 - MeasurementBUSPROG: Analytic
3. Accounting information users need reports about the economic activities and condition of businesses.
ACCT.ACBSP.APC.01 - PurposeACCT.AICPA.BB.01 - IndustryACCT.AICPA.FN.03 - MeasurementBUSPROG: Analytic
4. Managerial accounting information is used by external and internal users equally.
ACCT.ACBSP.APC.01 - PurposeACCT.ACBSP.APC.25 - Managerial Characteristics/TerminologyACCT.AICPA.FN.03 - MeasurementBUSPROG: Analytic
5. Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies where they work.
ACCT.ACBSP.APC.01 - PurposeACCT.AICPA.BB.03 - LegalACCT.AICPA.FN.03 - MeasurementBUSPROG: Ethics
6. Financial accounting provides information to all users, while the main focus for managerial accounting is to provide information to the management.
7. Proper ethical conduct implies that you only consider what's in your best interest.
ACCT.ACBSP.APC.02 - GAAPACCT.AICPA.BB.03 - LegalACCT.AICPA.FN.03 - MeasurementBUSPROG: Ethics
8. Some of the major fraudulent acts by senior executives started as what they considered to be small ethical lapses which grew out of control.
9. 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.
ACCT.ACBSP.APC.03 - Business FormsACCT.AICPA.BB.01 - IndustryACCT.AICPA.BB.06 - Resource ManagementBUSPROG: Analytic
10. Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.
ACCT.ACBSP.APC.02 - GAAPACCT.AICPA.BB.01 - IndustryACCT.AICPA.FN.03 - MeasurementBUSPROG: Analytic
11. An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.
ACCT.ACBSP.APC.06 - Recording TransactionsACCT.ACBSP.APC.09 - Financial StatementsACCT.AICPA.FN.03 - MeasurementBUSPROG: Analytic
12. The Sarbanes-Oxley Act established standards for corporate responsibility and disclosure.
ACCT.ACBSP.APC.20 - Accounting for CorporationsACCT.AICPA.BB.01 - IndustryACCT.AICPA.FN.03 - MeasurementBUSPROG: Ethics
13. The main objective for all businesses is to maximize unrealized profits.
14. The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities.
15. The basic difference between manufacturing and retail companies is the completion level of the products they purchase for resale to customers.
16. Proprietorships are owned by one owner and provide only services to their customers.
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17. About 90% of the businesses in the United States are organized as corporations.
18. An example of an external user of accounting information is the federal government.
19. The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for developing accounting principles.
ACCT.ACBSP.APC.02 - GAAPACCT.AICPA.FN.03 - MeasurementBUSPROG: Analytic
20. The cost principle is the basis for entering the purchase price into the accounting records.
21. The monetary unit assumption requires that economic data be recorded in dollars for companies in the United States.
22. If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for it, the buyer would record the building at $85,000.
23. The financial statements of a proprietorship should include the owner's personal assets and liabilities.
ACCT.ACBSP.APC.09 - Financial StatementsACCT.AICPA.FN.03 - MeasurementBUSPROG: Analytic
24. No significant differences exist between the accounting standards issued by the FASB and the IASB.
25. Generally accepted accounting principles regulate how and what financial information is reported by businesses.
26. The accounting equation can be expressed as Assets – Liabilities = Stockholder's Equity.
FNMN.WAJO.19.01-03 - LO: 01-03
ACCT.ACBSP.APC.06 - Recording TransactionsACCT.AICPA.FN.03 - MeasurementBUSPROG: Analytic
27. The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of stockholders.
ChallengingBloom's: Remembering
ACCT.ACBSP.APC.01 - PurposeACCT.ACBSP.APC.06 - Recording TransactionsACCT.AICPA.FN.03 - MeasurementBUSPROG: Analytic
28. The stockholders' rights to the assets rank ahead of the creditors' rights to the assets.
29. If the liabilities owed by a business total $300,000 and stockholders' equity is equal to $300,000, then the assets also total $300,000.
RATIONALE:
Assets = Liabilities + Stockholders’ Equity = $300,000 + $300,000 = $600,000
30. If total assets decreased by $30,000 during a specific period and stockholders' equity decreased by $35,000 during the same period, the period's change in total liabilities was a $65,000 increase.
Assets = Liabilities + Stockholders’ Equity
–$30,000 = Liabilities + (–$35,000)
Liabilities = +$5,000
31. If total assets increased by $190,000 during a specific period and liabilities decreased by $10,000 during the same period, the period's change in total stockholders' equity was a $200,000 increase.
+$190,000 = –10,000 + Stockholders’ Equity
Stockholders’ Equity = +$200,000
ModerateBloom's: Applying
32. If net income for a company was $50,000, $20,000 in cash dividends were paid and the shareholders invested $10,000 in cash, the stockholders' equity increased by $40,000.
Increase in the stockholders' equity = Net income for the year – Cash dividends + Shareholders' investment = $50,000 – $20,000 + $10,000 = $40,000
cBloom's: Applying
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33. An account receivable is typically classified as a revenue.
ACCT.ACBSP.APC.15 - Current Assets ReportingACCT.AICPA.FN.03 - MeasurementBUSPROG: Analytic
34. An account receivable is a claim against a customer resulting from a sale on account.
ACCT.ACBSP.APC.12 - Receivables ReportingACCT.AICPA.FN.03 - MeasurementBUSPROG: Analytic
35. Paying an account payable increases liabilities and decreases assets.
ACCT.ACBSP.APC.06 - Recording TransactionsACCT.ACBSP.APC.16 - Current Liabilities ReportingACCT.AICPA.FN.03 - MeasurementBUSPROG: Analytic
36. Receiving payments on an account receivable increases both equity and assets.
37. Dividends paid to stockholders decrease assets and increase equity.
38. Purchasing supplies on account increases liabilities and decreases equity.
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