Test Bank for College Accounting (A Contemporary Approach), 6th Edition by Haddock

Chap 01 6e Haddock
1) The purpose of accounting is to provide financial information about a business.
⊚ true
⊚ false



2) A firm’s financial affairs are summarized in periodic reports called general ledgers.
⊚ true
⊚ false



3) In a sole proprietorship, the owner is NOT responsible for the debts of the business if the
company is unable to pay.
⊚ true
⊚ false



4) Currently, generally accepted accounting principles are developed by the American Institute
of Certified Public Accountants (AICPA).
⊚ true
⊚ false



5) The Securities and Exchange Commission (SEC) requires that publicly owned corporations
submit financial statements to it at least one time each year.
⊚ true
⊚ false



6) Anyone can invest in a closely held corporation.
⊚ true
⊚ false



7) Managerial Accounting is any activity associated with the preparation of tax returns and the
audit of those returns.
⊚ true
⊚ false




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, 8) When developing GAAP, one step undertaken by the FASB includes holding public hearings
where interested parties can express their opinions.
⊚ true
⊚ false



9) Public accountants work on the staff of federal, state, or local governmental units.
⊚ true
⊚ false



10) The SEC uses financial information to determine a company's tax base.
⊚ true
⊚ false



11) When a partner leaves the company, the partnership is dissolved and a new partnership may
be formed with the remaining partners.
⊚ true
⊚ false



12) Accounting is used to communicate financial information and therefore is called the
“language of data”.
⊚ true
⊚ false



13) Some users of the financial information of a business are employed by the business while
others are independent, outside parties.
⊚ true
⊚ false



14) The certified bookkeeper designation indicates that an individual possesses the level of
knowledge and skills needed to carry out all key accounting functions through the adjusted
trial balance, including payroll.
⊚ true
⊚ false




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