Test3Bank3for3Survey3of3Accounting310e310th3Edition3by3Carl3Warren,3Amanda3Farmer
Chap3 013 10e3 Warren
All3Chapters
Indicate3 whether3 the3 statement3 is3 true3 or3 false
.
3 1. 3The3popularity3of 3the3sole3proprietorship3is 3due 3to3the 3ease3and3low3cost3of3organizing.
a. True
b. False
ANSWER:3 True
3 2. 3A3corporation3is 3a3business3that3is3legally3separate3and3distinct3from3its 3owners.
a. True
b. False
ANSWER:3 True
3 3. 3Merchandising3businesses 3produce3products 3rather3than3provide3services 3to3customers.
a. True
b. False
ANSWER:3 False
3 4. 3A3partnership3is 3owned3by3two3or 3more3individuals.
a. True
b. False
ANSWER:3 True
3 5. 3A3limited3liability3company3combines 3attributes 3of3a3partnership3and3a3corporation.
a. True
b. False
ANSWER:3 True
3 6. 3The3ownership3of3a3proprietorship3is 3divided3into 3shares 3of3stock3owned3by 3its 3stockholders.
a. True
b. False
ANSWER:3 False
3 7. 3Accounting3is 3often3called3the3"language3of3business"3because3business 3information3is 3communicated
3to3stakeholders.
a. True
b. False
ANSWER:3 True
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Chap3 013 10e3 Warren
3 8. 3John3Deere3is 3a3leading3manufacturer3of3agricultural3machinery3in3the3world, 3producing3products 3that3serve
3unique3market3needs. 3Therefore, 3John3Deere3is 3an3example3of3a3company3that3uses 3a3premium-
price3approach3to3attract3customers.
a. True
b. False
ANSWER:3 True
3 9. 3Creditors 3have3preference3to3assets 3behind3stockholders 3if3a3business 3fails.
a. True
b. False
ANSWER:3 False
3 10. 3A3liability3is 3a3legal3obligation3to3repay3the3amount3borrowed3according3to3the3terms 3of3the3borrowing3agreement.
a. True
b. False
ANSWER:3 True
3 11. 3The3balance3sheet3represents 3the3accounting3equation.
a. True
b. False
ANSWER:3 True
3 12. 3A3primary3disadvantage3of3corporations 3is 3that3the3financial3resources 3available3to3them3are3limited.
a. True
b. False
ANSWER:3 False
3 13. 3Assets 3are3acquired3through3investing3activities 3when3resources 3are3purchased.
a. True
b. False
ANSWER:3 True
3 14. 3The3objective3of3most3businesses 3is 3to3maximize3profits.
a. True
b. False
ANSWER:3 True
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Chap3 013 10e3 Warren
3 15. 3The3stockholders'3equity3of3a3company3should3equal3the3sum3of3its 3total 3assets 3and3total3liabilities.
a. True
b. False
ANSWER:3 False
3 16. 3The3branch3of3accounting3related3to 3the3management's 3financial3decisions 3is 3known3as 3financial3accounting.
a. True
b. False
ANSWER:3 False
3 17. 3All3merchandising3businesses 3are3organized3as3corporations.
a. True
b. False
ANSWER:3 False
3 18. 3Stockholders 3of3a3corporation3are3its 3internal3stakeholders.
a. True
b. False
ANSWER:3 False
3 19. 3The3basic3type3of3stock3issued3to3owners 3is 3called3common3stock.
a. True
b. False
ANSWER:3 True
3 20. 3A3business 3stakeholder3has 3an3interest3in3the3economic3performance3of3a3company.
a. True
b. False
ANSWER:3 True
3 21. 3Manufacturing3businesses 3change3basic3inputs 3into3products 3that3are3sold3to3individual3customers.
a. True
b. False
ANSWER:3 True
3 22. 3Companies3using3a3low-cost3emphasis 3provide3products 3and3services 3that3compete3on3features 3other3than3price.
a. True
b. False
ANSWER:3 False
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, Name: Class: Date:
Chap3 013 10e3 Warren
Indicate3 the3 answer3 choice3 that3 best3 completes3 the3 statement3 or3 answers3 the3 question.
3 23. 3When3a3business 3borrows 3money, 3which3of3the3following3is 3incurred?
a. An3accumulated3depletion
b. A3liability
c. A3loss
d. An3accrued3expenditure
ANSWER:3 b
3 24. 3What3is 3the3primary3objective3of3most3businesses?
a. To3maximize3profits
b. To3pay3dividends3to3stockholders
c. To3provide3a3benefit3to3society
d. To3manufacture3a3quality3product
ANSWER:3 a
3 25. 3A3note3payable3requires 3payment3of3the3amount3borrowed3plus 3 .
a. interest
b. tax
c. overhead
d. dividend
ANSWER:3 a
3 26. 3If3there3are3no3beginning3retained3earnings, 3net3income3of3$31,200, 3and3ending3retained3earnings 3of3$9,000, 3h
ow3much3are3dividends?
a. $40,200
b. $9,000
c. $22,200
d. $4,500
ANSWER:3 c
3 27. 3Which3of3the3following3is 3not3an3example3of3a3capital3market3stakeholder?
a. Banks
b. Owners
c. Suppliers
d. Stockholders
ANSWER:3 c
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Chap3 013 10e3 Warren
All3Chapters
Indicate3 whether3 the3 statement3 is3 true3 or3 false
.
3 1. 3The3popularity3of 3the3sole3proprietorship3is 3due 3to3the 3ease3and3low3cost3of3organizing.
a. True
b. False
ANSWER:3 True
3 2. 3A3corporation3is 3a3business3that3is3legally3separate3and3distinct3from3its 3owners.
a. True
b. False
ANSWER:3 True
3 3. 3Merchandising3businesses 3produce3products 3rather3than3provide3services 3to3customers.
a. True
b. False
ANSWER:3 False
3 4. 3A3partnership3is 3owned3by3two3or 3more3individuals.
a. True
b. False
ANSWER:3 True
3 5. 3A3limited3liability3company3combines 3attributes 3of3a3partnership3and3a3corporation.
a. True
b. False
ANSWER:3 True
3 6. 3The3ownership3of3a3proprietorship3is 3divided3into 3shares 3of3stock3owned3by 3its 3stockholders.
a. True
b. False
ANSWER:3 False
3 7. 3Accounting3is 3often3called3the3"language3of3business"3because3business 3information3is 3communicated
3to3stakeholders.
a. True
b. False
ANSWER:3 True
Page31
,Name: Class: Date:
Chap3 013 10e3 Warren
3 8. 3John3Deere3is 3a3leading3manufacturer3of3agricultural3machinery3in3the3world, 3producing3products 3that3serve
3unique3market3needs. 3Therefore, 3John3Deere3is 3an3example3of3a3company3that3uses 3a3premium-
price3approach3to3attract3customers.
a. True
b. False
ANSWER:3 True
3 9. 3Creditors 3have3preference3to3assets 3behind3stockholders 3if3a3business 3fails.
a. True
b. False
ANSWER:3 False
3 10. 3A3liability3is 3a3legal3obligation3to3repay3the3amount3borrowed3according3to3the3terms 3of3the3borrowing3agreement.
a. True
b. False
ANSWER:3 True
3 11. 3The3balance3sheet3represents 3the3accounting3equation.
a. True
b. False
ANSWER:3 True
3 12. 3A3primary3disadvantage3of3corporations 3is 3that3the3financial3resources 3available3to3them3are3limited.
a. True
b. False
ANSWER:3 False
3 13. 3Assets 3are3acquired3through3investing3activities 3when3resources 3are3purchased.
a. True
b. False
ANSWER:3 True
3 14. 3The3objective3of3most3businesses 3is 3to3maximize3profits.
a. True
b. False
ANSWER:3 True
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,Name: Class: Date:
Chap3 013 10e3 Warren
3 15. 3The3stockholders'3equity3of3a3company3should3equal3the3sum3of3its 3total 3assets 3and3total3liabilities.
a. True
b. False
ANSWER:3 False
3 16. 3The3branch3of3accounting3related3to 3the3management's 3financial3decisions 3is 3known3as 3financial3accounting.
a. True
b. False
ANSWER:3 False
3 17. 3All3merchandising3businesses 3are3organized3as3corporations.
a. True
b. False
ANSWER:3 False
3 18. 3Stockholders 3of3a3corporation3are3its 3internal3stakeholders.
a. True
b. False
ANSWER:3 False
3 19. 3The3basic3type3of3stock3issued3to3owners 3is 3called3common3stock.
a. True
b. False
ANSWER:3 True
3 20. 3A3business 3stakeholder3has 3an3interest3in3the3economic3performance3of3a3company.
a. True
b. False
ANSWER:3 True
3 21. 3Manufacturing3businesses 3change3basic3inputs 3into3products 3that3are3sold3to3individual3customers.
a. True
b. False
ANSWER:3 True
3 22. 3Companies3using3a3low-cost3emphasis 3provide3products 3and3services 3that3compete3on3features 3other3than3price.
a. True
b. False
ANSWER:3 False
Page33
, Name: Class: Date:
Chap3 013 10e3 Warren
Indicate3 the3 answer3 choice3 that3 best3 completes3 the3 statement3 or3 answers3 the3 question.
3 23. 3When3a3business 3borrows 3money, 3which3of3the3following3is 3incurred?
a. An3accumulated3depletion
b. A3liability
c. A3loss
d. An3accrued3expenditure
ANSWER:3 b
3 24. 3What3is 3the3primary3objective3of3most3businesses?
a. To3maximize3profits
b. To3pay3dividends3to3stockholders
c. To3provide3a3benefit3to3society
d. To3manufacture3a3quality3product
ANSWER:3 a
3 25. 3A3note3payable3requires 3payment3of3the3amount3borrowed3plus 3 .
a. interest
b. tax
c. overhead
d. dividend
ANSWER:3 a
3 26. 3If3there3are3no3beginning3retained3earnings, 3net3income3of3$31,200, 3and3ending3retained3earnings 3of3$9,000, 3h
ow3much3are3dividends?
a. $40,200
b. $9,000
c. $22,200
d. $4,500
ANSWER:3 c
3 27. 3Which3of3the3following3is 3not3an3example3of3a3capital3market3stakeholder?
a. Banks
b. Owners
c. Suppliers
d. Stockholders
ANSWER:3 c
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