Site MapHelpFeedbackTrue or False
True or False
(See related pages)

1
Accounting is an information system and measurement system that identifies, classifies, records, and communicates relevant information to people to help them make better decisions.
A)True
B)False
2
Bookkeeping is the part of accounting that involves recording economic transactions and events, either electronically or manually (also known as record keeping).
A)True
B)False
3
Managerial Accounting is the area of accounting aimed at serving external users by providing them with financial statements.
A)True
B)False
4
The amounts earned from selling products or services are called revenues or sales.
A)True
B)False
5
Profit is determined by subtracting sales from the total expenses of the business.
A)True
B)False
6
A loss occurs when revenues exceed the expenses.
A)True
B)False
7
A controller is an example of an internal user of accounting.
A)True
B)False
8
The majority of accounting opportunities are in public accounting.
A)True
B)False
9
A C.P.A. is the designation for a certified payroll accountant.
A)True
B)False
10
Social responsibility can be demonstrated by a company donating to a charitable organization.
A)True
B)False
11
GAAP stands for generally acceptable auditing standards.
A)True
B)False
12
Some building blocks of GAAP include conservatism, full disclosure, and objectivity.
A)True
B)False
13
The organization responsible for setting accounting rules in the United States is the American Institute of Certified Public Accountants.
A)True
B)False
14
A sole proprietorship is a separate legal entity.
A)True
B)False
15
A business that is a separate legal entity under state or federal laws with owners that are called shareholders or stockholders is known as a corporation.
A)True
B)False
16
A partnership is a business that is owned by two or more people, and that is not organized as a corporation.
A)True
B)False
17
Partnership income may be subject to double taxation.
A)True
B)False
18
The three main forms of business are sole proprietorship, partnership, and corporation.
A)True
B)False
19
Corporations have limited liability while proprietorships and partnerships have unlimited liability.
A)True
B)False
20
With the exception of S corporations, the earnings of a corporation are subject to double taxation.
A)True
B)False
21
When a corporation issues only one class of stock it is called common stock or capital stock.
A)True
B)False
22
Congress passed the Sarbanes-Oxley Act to help control the interest rates set by the federal government.
A)True
B)False
23
The three major activities in business organizations include financing, investing, and planning.
A)True
B)False
24
The means organizations use to pay for resources such as land, building, and machines are called operating activities.
A)True
B)False
25
The buying and selling of production equipment is an example of an investing activity.
A)True
B)False
26
Assets are the economic resources that are expected to produce future benefits.
A)True
B)False
27
The owner's claim to an organization's assets is called equity.
A)True
B)False
28
Liabilities are creditors' claims on an organization's assets.
A)True
B)False
29
The balance sheet reports the changes that occurred in assets, liabilities, and owner's equity over a period of time.
A)True
B)False
30
The statement of cash flows reports on cash flows for operating, investing, and financing activities over a period of time.
A)True
B)False
31
There is no connecting link between the income statement and the statement of retained earnings.
A)True
B)False
32
External users of accounting information include banks, shareholders, creditors, suppliers, and customers.
A)True
B)False
33
The area of accounting aimed at serving external users is called financial accounting.
A)True
B)False
34
Internal users of accounting information include banks, shareholders, and customers.
A)True
B)False
35
Managerial accounting provides information to the organization's decision makers.
A)True
B)False
36
Ethics are beliefs that distinguish right from wrong.
A)True
B)False
37
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
38
Some states license certified public accountants or CPAs.
A)True
B)False
39
Accountants employed in the field of private accounting generally work in auditing, and provide management services and tax services.
A)True
B)False
40
Generally accepted accounting principles are set by the internal revenue service.
A)True
B)False
41
Accountants who work for a single employer other than the government are called public accountants.
A)True
B)False
42
The return on investment ratio is a measure of how well the total assets of the business exceed the total liabilities of the business.
A)True
B)False
43
Return on investment is calculated by dividing the sales for the period by the average total assets of the period.
A)True
B)False
44
The sales of the business totals $400,000 and the net income totals $50,000. If the average assets for the period total $500,000, the return on investment or return on assets is 10% or 10 cents for each dollar of investment.
A)True
B)False
45
The Federal Accounting Standards Board is the primary authoritative source of GAAP.
A)True
B)False
46
The cost principle requires that $5,000 spent for equipment with a market value of $6,000 should be recorded at the actual cost of $5,000.
A)True
B)False
47
The business entity principle requires every business to be accounted for separately from its owner or owners.
A)True
B)False
48
The accounting guideline that requires financial statement information to be supported by independent, unbiased evidence rather than someone's opinion is the called the subjectivity principle.
A)True
B)False
49
The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is called the going-concern principle.
A)True
B)False
50
The monetary unit principle is based on the notion that transactions and events should be measured and recorded in monetary units.
A)True
B)False
51
Assets are equal to liabilities plus equity.
A)True
B)False
52
If assets total $21,000 and liabilities total $6,000, equity is $27,000.
A)True
B)False
53
An economic event that changes the financial position of an organization, and that often takes the form of an exchange of economic consideration between two parties, is called a business transaction.
A)True
B)False
54
After every business transaction is correctly recorded and reported, the accounting equation will be in balance.
A)True
B)False
55
Under the revenue recognition principle, revenue is recognized only after services have been provided and cash has been received.
A)True
B)False
56
When cash is received in payment of an account receivable, the account receivable increases.
A)True
B)False
57
An investment made into a new business by stockholders would increase assets and liabilities.
A)True
B)False
58
Expenses do not affect stockholders' equity.
A)True
B)False
59
A balance sheet differs from the other financial statements as it is prepared for a point in time.
A)True
B)False
60
The accounting equation can be expanded as: Assets = Liabilities + Common Stock - Dividends - Revenues + Expenses.
A)True
B)False
61
Investing activities include using resources to research, develop, purchase, produce, distribute, and market products and services.
A)True
B)False





To learn more about the book this website supports, please visit its Information Center.
(c)2007 McGraw-Hill Higher Education
Any use is subject to the Terms of Use and Privacy Policy.
McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.


Wild FAFOnline Learning Center

Home > Chapter 1 > True or False