Survey of Accounting 9th Edition By Carl Warren, Amanda Farmer (Test Bank, 100% Original Verified, A+ Grade)

Survey of Accounting, 9e Carl Warren, Amanda Farmer (Test Bank All Chapters)
Name: Class: Date:

Chapter 01: The Role of Accounting in Business
1. The objective of most businesses is to maximize profits.
a. True
b. False
ANSWER: True

2. A limited liability company combines attributes of a partnership and a corporation.
a. True
b. False
ANSWER: True

3. A partnership is owned by two or more individuals.
a. True
b. False
ANSWER: True

4. Manufacturing businesses change basic inputs into products that are sold to individual customers.
a. True
b. False
ANSWER: True

5. Merchandising businesses produce products rather than provide services to customers.
a. True
b. False
ANSWER: False

6. A corporation is a business that is legally separate and distinct from its owners.
a. True
b. False
ANSWER: True

7. The popularity of the sole proprietorship is due to the ease and low cost of organizing.
a. True
b. False
ANSWER: True

8. A primary disadvantage of corporations is that the financial resources available to them are limited.
a. True
b. False
ANSWER: False

9. The ownership of a proprietorship is divided into shares of stock owned by its stockholders.
a. True
b. False
ANSWER: False

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,Name: Class: Date:

Chapter 01: The Role of Accounting in Business
10. All merchandising businesses are organized as corporations.
a. True
b. False
ANSWER: False

11. Stockholders of a corporation are its internal stakeholders.
a. True
b. False
ANSWER: False

12. John Deere is a leading manufacturer of agricultural machinery in the world, producing products that serve unique
market needs. Therefore, John Deere is an example of a company that uses a premium-price emphasis to attract
customers.
a. True
b. False
ANSWER: True

13. A business stakeholder has an interest in the economic performance of a business.
a. True
b. False
ANSWER: True

14. Companies using a low-cost emphasis provide products and services that compete on features other than price.
a. True
b. False
ANSWER: False

15. The basic type of stock issued to owners is called common stock.
a. True
b. False
ANSWER: True

16. Assets are acquired through investing activities when resources are purchased.
a. True
b. False
ANSWER: True

17. Creditors have preference to assets behind stockholders if a business fails.
a. True
b. False
ANSWER: False

18. A liability is a legal obligation to repay the amount borrowed according to the terms of the borrowing agreement.
a. True
b. False
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,Name: Class: Date:

Chapter 01: The Role of Accounting in Business
ANSWER: True

19. Accounting is thought to be the "language of business" because business information is communicated to stakeholders.
a. True
b. False
ANSWER: True

20. The branch of accounting related to the management's financial decisions is known as financial accounting.
a. True
b. False
ANSWER: False

21. The stockholders' equity of a company should equal the sum of its total assets and total liabilities.
a. True
b. False
ANSWER: False

22. The balance sheet represents the accounting equation.
a. True
b. False
ANSWER: True

23. What is the primary objective of most businesses?
a. To maximize profits
b. To pay dividends to stockholders
c. To provide a benefit to society
d. To manufacture a quality product
ANSWER: a

24. Which of the following businesses buys products from other businesses wholesale to sell them to customers at a retail
price?
a. A merchandising business
b. A manufacturing business
c. A service business
d. An investment business
ANSWER: a

25. Which of the items below is not a business organization form?
a. Multi-venture
b. Proprietorship
c. Partnership
d. Corporation
ANSWER: a

26. Which of the following types of organizational forms is popular for its ease of formation and low cost of organizing?
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, Name: Class: Date:

Chapter 01: The Role of Accounting in Business
a. Not-for-profit
b. Corporation
c. Partnership
d. Proprietorship
ANSWER: d

27. Which of the following statements is true about a limited liability company?
a. It is organized under state or federal statutes as a separate legal entity.
b. Many professional practices such as lawyers, doctors, and accountants are organized as limited liability
companies.
c. Its financial resources are limited to the individual owner's resources.
d. The frequency of this form is due to the ease and low cost of organizing.
ANSWER: b

28. Under a _____, a business design's products that possess unique attributes or characteristics for which customers are
willing to pay more.
a. premium-price emphasis
b. outreach emphasis
c. low-cost emphasis
d. customer emphasis
ANSWER: a

29. Which of the following is not a characteristic of a corporation?
a. Corporations are organized as a separate legal taxable entity.
b. Ownership is divided into shares of stock.
c. Corporations experience an ease in obtaining large amounts of resources by issuing stock.
d. A corporation can elect to be taxed as a partnership.
ANSWER: d

30. A corporation is an entity _____.
a. that is organized according to state or federal statutes and in which ownership is divided into shares of stock
b. that is known for its ease of formation
c. that terminates its existence with the death of the owner
d. that pays tax on the owner's tax returns
ANSWER: a

31. A low-cost emphasis strives to provide _____.
a. no-frills, standardized products and services
b. products and services that provide unique market needs
c. products and services that provide prestige and image for customers
d. products and services that compete on features other than price
ANSWER: a

32. Which of the following businesses use a premium-price emphasis?
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