EXAM QUESTIONS
Chapter 1
True False
1.Napoleon found the Italian system of accounting to be inefficient.
2.Venice’s commerce was driven by sea traffic.
3.The Genoese system was the first to imply that unlike items could be compared in terms
of a common monetary unit.
4.Double entry bookkeeping quickly had world-wide acceptance, as the British accepted it
in the 1400s.
5.When hyperinflation exists, alternative systems to historical cost become necessary.
6. The International Accounting Standards Board, an international organization dedicated to
the diversity of accounting standards worldwide.
7. One trend in European securities markets is consolidation.
8. The continental accounting system is closely linked to the tax collection system.
,9. The first step into international business is usually the creation of a foreign subsidiary.
10. If a firm is not involved in international commercial transactions, knowledge of
international business is unnecessary.
Multiple Choice
Learning Objective #1.1: Identify the key trends in the development of accounting
through history
1. The Crusades were important in the development of accounting, because
__a. the Arabs first developed double entry accounting, which was then adopted by the
Italians.
__b. the Christians needed double entry accounting to keep track of the relative profitability
of the different Crusades.
__c. the trade routes shifted the commercial center from Italy to Constantinople
__d. none of the above.
2. The major Genoese influence on accounting was
__a. the establishment of Luca Pacioli’s first accounting program at the University of Genoa.
__b. the development of large associations and partnerships that pooled capital.
__c. the development of the gold florin, the standard gold piece used in Europe.
__d. the double entry books of the Massari (treasury officials), which date from 1340.
3.Luca Pacioli (or Paciolo) is best known for
,__a. developing an accounting system based on the banks rather than non-bank commercial
enterprises.
__b. developing the printing press.
__c. publishing a mathematics book that contains a chapter on double entry accounting.
__d. developing the commercial activities of the Franciscan monks, which resulted in the
development of double entry accounting.
4. Which of the following is not true about Luca Pacioli?
__a. He did not claim that he developed double entry accounting.
__b. He started the first accounting program in Italy.
__c. He was a Franciscan monk.
__d. He was not a merchant or bookkeeper.
5. Where would Pacioli first record a transaction?
__a. Journal
__b. Memorandum book
__c. Financial notes
__d. Ledger
Learning Objective #1.2: Highlight the evolution of business to modern times
6. The major early Venetian influence on the development of accounting was
__a. the development of the gold florin, the standard gold piece used in Europe.
__b. the spread of double entry accounting.
__c. the initial development of double entry accounting.
__d. the establishment of the first banking institutions.
, 7. The major early influence of Florin, Italy, on accounting was
__a. the double entry books of the Massari (treasury officials), which date from 1340.
__b. the spread of double entry accounting.
__c. the development of large associations and partnerships that pooled capital.
__d. accounting records with pretty pictures.
8.Which of the following is not a part of Pacioli’s initial contributions to accounting?
__a. His objective was to publish a detailed, mathematical approach to accounting rather
than a popular version of accounting that could be used by all.
__b. He believed that all transactions required both a debit and a credit in order for
transactions to remain in equilibrium.
__c. He introduced the memorandum book, the journal and the ledger.
__d. The center for the accounting system was the ledger.
9. In the compagnie accounting system developed in Florence,Italy in the 1200s,
__a. deferrals and accruals were common.
__b. quarterly financial statements were required.
__c. double entry accounting was unknown, so companies only recorded one side of a
transaction.
__d. provisions were made for the division of profits and losses.
10. As a result of the industrial revolution in the 19th and early 20th centuries,
__a. governments got together and decided to require firms to draw up balance sheets every
two years.
__b. it was finally necessary to develop double entry accounting.
__c. the basic form of business organization shifted to limited liability and joint stock
companies.
__d. fixed assets diminished in importance.
Chapter 1
True False
1.Napoleon found the Italian system of accounting to be inefficient.
2.Venice’s commerce was driven by sea traffic.
3.The Genoese system was the first to imply that unlike items could be compared in terms
of a common monetary unit.
4.Double entry bookkeeping quickly had world-wide acceptance, as the British accepted it
in the 1400s.
5.When hyperinflation exists, alternative systems to historical cost become necessary.
6. The International Accounting Standards Board, an international organization dedicated to
the diversity of accounting standards worldwide.
7. One trend in European securities markets is consolidation.
8. The continental accounting system is closely linked to the tax collection system.
,9. The first step into international business is usually the creation of a foreign subsidiary.
10. If a firm is not involved in international commercial transactions, knowledge of
international business is unnecessary.
Multiple Choice
Learning Objective #1.1: Identify the key trends in the development of accounting
through history
1. The Crusades were important in the development of accounting, because
__a. the Arabs first developed double entry accounting, which was then adopted by the
Italians.
__b. the Christians needed double entry accounting to keep track of the relative profitability
of the different Crusades.
__c. the trade routes shifted the commercial center from Italy to Constantinople
__d. none of the above.
2. The major Genoese influence on accounting was
__a. the establishment of Luca Pacioli’s first accounting program at the University of Genoa.
__b. the development of large associations and partnerships that pooled capital.
__c. the development of the gold florin, the standard gold piece used in Europe.
__d. the double entry books of the Massari (treasury officials), which date from 1340.
3.Luca Pacioli (or Paciolo) is best known for
,__a. developing an accounting system based on the banks rather than non-bank commercial
enterprises.
__b. developing the printing press.
__c. publishing a mathematics book that contains a chapter on double entry accounting.
__d. developing the commercial activities of the Franciscan monks, which resulted in the
development of double entry accounting.
4. Which of the following is not true about Luca Pacioli?
__a. He did not claim that he developed double entry accounting.
__b. He started the first accounting program in Italy.
__c. He was a Franciscan monk.
__d. He was not a merchant or bookkeeper.
5. Where would Pacioli first record a transaction?
__a. Journal
__b. Memorandum book
__c. Financial notes
__d. Ledger
Learning Objective #1.2: Highlight the evolution of business to modern times
6. The major early Venetian influence on the development of accounting was
__a. the development of the gold florin, the standard gold piece used in Europe.
__b. the spread of double entry accounting.
__c. the initial development of double entry accounting.
__d. the establishment of the first banking institutions.
, 7. The major early influence of Florin, Italy, on accounting was
__a. the double entry books of the Massari (treasury officials), which date from 1340.
__b. the spread of double entry accounting.
__c. the development of large associations and partnerships that pooled capital.
__d. accounting records with pretty pictures.
8.Which of the following is not a part of Pacioli’s initial contributions to accounting?
__a. His objective was to publish a detailed, mathematical approach to accounting rather
than a popular version of accounting that could be used by all.
__b. He believed that all transactions required both a debit and a credit in order for
transactions to remain in equilibrium.
__c. He introduced the memorandum book, the journal and the ledger.
__d. The center for the accounting system was the ledger.
9. In the compagnie accounting system developed in Florence,Italy in the 1200s,
__a. deferrals and accruals were common.
__b. quarterly financial statements were required.
__c. double entry accounting was unknown, so companies only recorded one side of a
transaction.
__d. provisions were made for the division of profits and losses.
10. As a result of the industrial revolution in the 19th and early 20th centuries,
__a. governments got together and decided to require firms to draw up balance sheets every
two years.
__b. it was finally necessary to develop double entry accounting.
__c. the basic form of business organization shifted to limited liability and joint stock
companies.
__d. fixed assets diminished in importance.
