Test bank for survey of accounting, 7th edition by thomas edmonds 2024

Accounting Ch. 1-4 Test Bank 2024


1. T or F,
Owners of business firms are the only people who need accounting
information: F
2. T or F
Transactions that can be measured in dollars and cents are recorded in the
financial information system: T
3. T or F
The hiring of a new company president is an economic event recorded by
the financial information system: F
4. T or F
Management of a business enterprise is the major external user of
information: F
5. T or F
Accounting communicates financial information about a business enterprise
to both internal and external users: T
6. T or F
Accounting information is used only by external users with a financial
interest in a business enterprise: F
7. T or F
Financial statements are the major means of communicating accounting
information to interested parties: T
8. T or F
Bookkeeping and accounting are one and the same because the
bookkeeping function includes the accounting process: F
9. T or F
The origins of accounting are attributed to Luca Pacioli, a famous
mathematician: T
10. T or F
The State Administration of Taxation in the People's Republic of China is an
example of an internal user of accounting informa: F
11. T or F
The German Confederation of Trade Union is an example of an external user
of accounting information: T
12. T or F



,Accountants rely on a fundamental business concept - ethical behaviour - in
reporting financial information: T
13. T or F
The process of reducing the differences between GAAP and IFRS is known
as convergence: T
14
Even though a partnership is not a separate legal entity, for accounting
purposes the partnership affairs should be kept separate from the personal
activities of the owner: T
15. T or F
The economic entity assumption requires that the activities of an entity be
kept separate and distinct from the activities of its owner and all other
economic entities: T
16. T or F
The monetary unit assumption states that transactions that can be measured
in terms of money should be recorded in the accounting records: T 17. T or F
In order to possess future service potential, an asset must have physical
substance: F
18. T or F
Owners' claims to total business assets take precedence over the claims
of credits because owners invest assets in the business and are liable for
losses.: F
19. T or F
The basic accounting equation states that Assets = Liabilities: F
20. T or F
Share capital is the total amount paid in by shareholders for shares
purchased: T
21. T or F
The principal source of equity is amounts paid in by shareholders: F
22. T or F
Expenses are increases in equity that result from operating the business: F
23. T or F
The two components of equity are retained earnings and share capital: T
24. T or F




, The purchase of an asset on account increases assets and decreases
equity-
:F
25. T or F
Providing services for cash increases assets and equity: T
26. T or F
Accountants record both internal and external transactions: T
27. T or F
Internal transactions do not affect the basic accounting equations because
they are economic events that occur entirely within one company: F
28
The purchase of store equipment for cash reduces the equity by an equal
amount: F
29. T or F
The purchase of office equipment on credit increases total assets and total
liabilities: T
30. T or F
The primary purpose of the statement of cash flows is to provide
information about the cash receipts and cash payments of a company
during a period: T 31. T or F
Net income for the period is determined by subtracting total expenses and
dividends from total revenues: F
32. T or F
The ending retained earnings balance is reported on the statement of
financial position: T
33. T or F
The statement of financial position is also known as the balance sheet: T
34. T or F
Expressing an opinion as to the fairness of the information presented
statements is a service performed by CAs and CPAa: T
35. T or F
Identifying is the process of keeping a chronological diary of events
measured and cents: F
36. T or F