(Test Bank) Financial Accounting

Kemp,Waybright, 5

Business

Test Bank

5th Edition

• $15.00 $50.00

---

Description

Test Bank for Financial Accounting, The downloadable file consists of 669 pages, and the total size of the file is 5.35 MB. Purchase now only for highly discounted price.

Author(s): Kemp, Waybright

---

---

Study Note Preview

1 Copyright © 2019 Pearson Education, Inc. Financial Accounting, 5e Static (Kemp/Waybright) Chapter 1 Business, Accounting, and You 1.1 Understand the nature of business and the role of accounting in business 1) By taking accounting classes, the student is learning the "language of business." Answer: TRUE Diff: 1 Question Type: Concept EOC Ref: Discussion Question 1 AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 2) To manage a business effectively, an owner or manager woul d benefit greatly from having some knowledge of accounting. Answer: TRUE Diff: 1 Question Type: Application EOC Ref: Discussion Question 1 AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 3) Businesses primarily exist to generate sales. Answer: FALSE Diff: 1 Question Type: Concept EOC Ref: Written Communication AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 4) The value o f an item is determined by taking the revenue from a sale and deducting the cost of the sale. Answer: FALSE Diff: 1 Question Type: Concept EOC Ref: Key Points/Summary AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Fu nctional: Measurement 2 Copyright © 2019 Pearson Education, Inc. 5) Society is considered to be a stakeholder in a business. Answer: TRUE Diff: 2 Question Type: Concept EOC Ref: Case 1, Case 2 AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decisio n Modeling 6) The grocery checker at Kroger is considered a stakeholder of the company. Answer: TRUE Diff: 2 Question Type: Concept EOC Ref: Key Points/Summary AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 7) Accounting information is used to help managers and decision makers understand risk. Answer: TRUE Diff: 1 Question Type: Concept EOC Ref: Discussion Question 1 AACSB: Reflective Thinking AICPA Business: Strategic/Critical Think ing AICPA Functional: Decision Modeling 8) Risk increases value for a business. Answer: FALSE Diff: 1 Question Type: Concept EOC Ref: Discussion Question 1 AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 3 Copyright © 2019 Pearson Education, Inc. 9) What do we call the result obtained when revenue is less than cost? A) Loss B) Profit C) Value D) Risk Answer: A Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Business: Strategic/Crit ical Thinking AICPA Functional: Decision Modeling 10) Which of the following is NOT part of the accounting process as it relates to information? A) Measuring B) Recognizing C) Understanding D) Reporting Answer: C Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 11) According to the textbook, in order for an organization to be called a business it must: A) exchange a product with a custo mer. B) make money. C) be a corporation. D) provide a service. Answer: A Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 4 Copyright © 2019 Pearson Education, Inc. 12) Which of the following impacts the value of an item? A) Whether or not the item has sentimental value to the owner B) How much the owner sold the item for in previous years C) Whether the item is new or used D) What the owner expects to receive in exchange for the item Answer: D Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Measurement 13) When revenue exceeds cost, it is referred to as: A) loss. B) profit. C) value. D) risk. Answer: B Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Measurement 14) Tasha's Tutoring serves students in grades K -12. All of follow ing would be considered a stakeholder in this business EXCEPT: A) students who receive tutoring. B) the publisher who sells workbooks to Tasha's. C) the tutors who work for Tasha. D) Tasha's competitor Tim's Tutoring. Answer: D Diff: 2 Question Type: Con cept EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 5 Copyright © 2019 Pearson Education, Inc. 15) All of the following would be considered a stakeholder in a business EXCEPT: A) customers. B) lenders. C) competi tors. D) society. Answer: C Diff: 2 Question Type: Concept EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 16) The primary goal of any business is to: A) generate revenu e. B) sell products for a profit. C) create value for its owners. D) avoid too much debt. Answer: C Diff: 2 Question Type: Concept EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 1.2 Know how a business operates 1) Amounts owed to the business' owners as a result of an initial investment are called liabilities. Answer: FALSE Diff: 1 Question Type: Concept EOC Ref: S1 -3 AACSB: Application of Knowledge AICPA Business : Strategic/Critical Thinking AICPA Functional: Decision Modeling 2) Net income and profit are the same thing. Answer: TRUE Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinki ng AICPA Functional: Decision Modeling 6 Copyright © 2019 Pearson Education, Inc. 3) The only way for business to get money is to borrow it. Answer: FALSE Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Fun ctional: Decision Modeling 4) Business owners expect to be compensated for both time and risk. Answer: TRUE Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Industry/Sector Perspective AICPA Functional: Decision Modeling 5) Business owners are paid interest on the money they have invested in the business. Answer: FALSE Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Industry/Sector Perspective AICPA Fu nctional: Decision Modeling 6) Employees are economic resources owned by the company and used to operate the business. Answer: FALSE Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Business: Strategic/Critica l Thinking AICPA Functional: Decision Modeling 7) The cost of money is a function of owner risk. Answer: TRUE Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functi onal: Decision Modeling 7 Copyright © 2019 Pearson Education, Inc. 8) Liabilities are defined as: A) earnings retained in the business. B) amounts owed to lenders or creditors. C) stockholders' claims to assets. D) future economic benefits of a company. Answer: B Diff: 1 Question Type: Concept EOC Ref: S1 -3 AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 9) Assets are defined as: A) earnings retained in the business. B) amounts owed to others. C) stockholders' claims to assets . D) economic resources of a company. Answer: D Diff: 1 Question Type: Concept EOC Ref: S1 -3 AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 10) Which of the following does NOT describe Stockholders' Equity? A) Profits retained in the business B) Money lent to a business C) The owners' claim on the assets of a company D) Money invested in a business by its owners Answer: B Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: App lication of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 8 Copyright © 2019 Pearson Education, Inc. 11) Which of the following is NOT an asset? A) Net income B) Inventory C) Buildings D) Cash Answer: A Diff: 1 Question Type: Concept EOC Ref: S1 -9 AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 12) Net income is defined as: A) revenue plus expenses. B) revenue less assets. C) expenses less revenue. D) revenue less expenses. Answer: D Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 13) The expense of using borrowed money for a period of time, is referred to as: A) net income. B) revenue. C) liability. D) interest. Answer: D Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 9 Copyright © 2019 Pearson Education, Inc. 14) What do we call amounts of money borrowed from lenders? A) Asset B) Liability C) Expense D) Revenue Answer: B Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 15) Stockholder's Equity represents: A) money borrowed from lenders. B) a fair distribution of wealth in the firm. C) retention of profits by a firm. D) an economic resource owned by the firm. Answer: C Diff: 2 Question Type: Concept EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 16) The cost of money is above all else a function of: A) interest rates. B) risk. C) exchange rates. D) rate of return. Answer: B Diff: 2 Question Type: Concept EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 10 Copyright © 2019 Pearson Education, Inc. 1.3 Know the different types and forms of businesses 1) All businesses are operated to generate a profit. Answer: FALSE Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 2) A business may be either a for -profit business or a not -for-profi t business. Answer: TRUE Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 3) A business with one owner is called a sole proprietorship and it must be a service business. Answer: FALSE Diff: 1 Question Type: Concept EOC Ref: S1 -3 AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 4) PetSmart is an example of a corporate mercha ndising businesses. Answer: TRUE Diff: 1 Question Type: Application EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 5) PricewaterhouseCoopers is an example of a service business. Answer: TRUE Diff: 1 Question Type: Application EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 11 Copyright © 2019 Pearson Education, Inc. 6) A pharmacy would be an example of a service business. Answer : FALSE Diff: 1 Question Type: Application EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 7) Shareholders must pay income tax on the dividends they have received from a corporation. Answer: TRUE Diff: 1 Question Type: Application EOC Ref: Discussion Question 6 AACSB: Analytical Thinking AICPA Business: Legal/Regulatory Perspective AICPA Functional: Measurement 8) A limited liability company (LLC) is a legal entity like a corporation, but the income is taxed like a sole proprietorship or partnership. Answer: TRUE Diff: 1 Question Type: Application EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Legal/Regulatory Perspective AICPA Functional: Dec ision Modeling 9) A tax preparation business is primarily a: A) merchandising operation. B) service operation. C) not -for-profit operation. D) manufacturing operation. Answer: B Diff: 1 Question Type: Application EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 12 Copyright © 2019 Pearson Education, Inc. 10) Which of the following types of organization would primarily sell goods? A) Merchandising business B) Service business C) Manufacturing business D) Both Merch andising and Manufacturing businesses sell goods. Answer: D Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 11) Which of the following typ es of organizations would produce goods? A) Merchandising business B) Service business C) Manufacturing business D) Both merchandising and manufacturing businesses produce goods. Answer: C Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Refle ctive Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 12) Which of the following is a disadvantage of the corporate form of business? A) Ease of raising capital B) Double taxation C) Limited resources D) Limited liability Answer: B Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Legal/Regulatory Perspective AICPA Functional: Decision Modeling 13 Copyright © 2019 Pearson Education, Inc. 13) Which of the following is an advantage of a sole proprietorship ? A) Ease of formation B) Limited liability of owner C) Ease of raising capital D) Unlimited life Answer: A Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Legal/Regulatory Perspective AICPA Functional: Decision Modeling 14) Which type of organization has stockholders? A) Partnerships B) Sole proprietorships C) Corporations D) Limited liability companies Answer: C Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICP A Business: Legal/Regulatory Perspective AICPA Functional: Decision Modeling 15) Which of the following business forms is similar to a corporation in regard to owner liability? A) All businesses are the same with regard to owner liability. B) Limited li ability company C) Sole proprietorship D) Partnership Answer: B Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Legal/Regulatory Perspective AICPA Functional: Decision Modeling 14 Copyright © 2019 Pearson Education, Inc. 16) Which of the followi ng do NOT pay taxes on the business income through their individual owners? A) S-corporation B) Sole proprietorship C) Partnership D) Corporation Answer: D Diff: 1 Question Type: Concept EOC Ref: Vocabulary AACSB: Application of Knowledge AICPA Busines s: Legal/Regulatory Perspective AICPA Functional: Reporting 17) One of the newer forms of business is a: A) corporation. B) sole proprietorship. C) partnership. D) limited liability company. Answer: D Diff: 1 Question Type: Concept EOC Ref: Vocabular y AACSB: Application of Knowledge AICPA Business: Legal/Regulatory Perspective AICPA Functional: Decision Modeling 18) Target would primarily be considered a: A) manufacturing business. B) merchandising business. C) service business. D) not -for-profit business. Answer: B Diff: 1 Question Type: Application EOC Ref: Vocabulary AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 15 Copyright © 2019 Pearson Education, Inc. 19) Which would NOT be an example of a for -profit business? A) Bu rger King B) PetCo C) Red Cross D) Kohls Answer: C Diff: 1 Question Type: Application EOC Ref: S1 -3 AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decision Modeling 20) Which type of organization is typical ly NOT considered a not -for-profit? A) Charities B) Churches C) Law firms D) Community colleges Answer: C Diff: 1 Question Type: Application EOC Ref: S1 -3 AACSB: Reflective Thinking AICPA Business: Strategic/Critical Thinking AICPA Functional: Decis ion Modeling 21) A hybrid business entity with characteristics of both a corporation and a partnership is called: A) S-Corporation. B) P-Corporation. C) LLC. D) CP. Answer: C Diff: 1 Question Type: Concept EOC Ref: Exhibit 1 -1 AACSB: Reflective Thinki ng AICPA Business: Legal/Regulatory Perspective AICPA Functional: Decision Modeling