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| 1.
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The primary function of accounting is to determine whether the business entity is profitable or nonprofitable in its operations. |
| | A) | True |
| | B) | False |
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| 2.
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The business entity principle applies to sole proprietorships but not to corporations, since corporations have many owners known as shareholders. |
| | A) | True |
| | B) | False |
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| 3.
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Unlike a partnership, when a sole proprietorship is unable to meet its debts, the creditors can secure the personal assets of the proprietor to satisfy the debt. |
| | A) | True |
| | B) | False |
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| 4.
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An accountant employed in the field of private accounting generally works in auditing, providing management services, and tax services. |
| | A) | True |
| | B) | False |
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| 5.
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Bookkeeping is the clerical part of the accounting process. |
| | A) | True |
| | B) | False |
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| 6.
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The CA, CGA, and CMA accounting designations are awarded in recognition of the education and practical experience of an individual. The designations allow the individual to practice accounting as a Chartered Accountant, Certified General Accountant, or a Certified Management Accountant. |
| | A) | True |
| | B) | False |
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| 7.
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The purpose of an audit is to uncover theft and fraud so that the users of the financial statements can have a high level of assurance that all money is accounted for. |
| | A) | True |
| | B) | False |
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| 8.
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Profit is determined by subtracting sales from the total expenses of the business. |
| | A) | True |
| | B) | False |
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| 9.
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Corporations have limited liability while sole proprietorships and partnerships have unlimited liability. |
| | A) | True |
| | B) | False |
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| 10.
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Shareholders are the owners of a corporation and have little or no risk to their personal assets. |
| | A) | True |
| | B) | False |
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| 11.
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External users of the accounting information include banks, shareholders, creditors, suppliers, and customers. |
| | A) | True |
| | B) | False |
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| 12.
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Internal users of accounting information include banks, shareholders, and customers. |
| | A) | True |
| | B) | False |
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| 13.
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Good ethics is good business. |
| | A) | True |
| | B) | False |
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| 14.
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Ethics and ethical behaviour are important. Ethics are beliefs that separate right from wrong. |
| | A) | True |
| | B) | False |
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| 15.
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Managerial accounting provides information to the organization's decision makers. |
| | A) | True |
| | B) | False |
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| 16.
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Ethics are crucial in accounting. Providers of accounting information do not face ethical choices as they prepare financial reports, because business transactions are straightforward. |
| | A) | True |
| | B) | False |
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| 17.
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The difference between financial and managerial accounting is that financial accounting serves the needs of internal users by providing financial statements, while managerial accounting serves the needs of external users. |
| | A) | True |
| | B) | False |
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| 18.
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The difference between private and public accountants is that private accountants work for a single employer, which is often a business, while a public accountant provides services to many different clients. |
| | A) | True |
| | B) | False |
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| 19.
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Internal controls are procedures set up to protect assets, e.g. cash, equipment, ensure that accounting reports are reliable, promote efficiency, and ensure that company policies are followed. |
| | A) | True |
| | B) | False |
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| 20.
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Sole proprietorship is a business owned by one person. Partnership and corporation are owned by two or more persons. |
| | A) | True |
| | B) | False |
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