TEST BANK
Survey of Accounting
by Carl Warren, Amanda Farmer
10th Edition
N
U
R
SE
D
O
C
S
Page 1
,Chap 01 10e Warren
All Chapters
Indicate whether the statement is true or false.
1. The popularity of the sole proprietorship is due to the ease and low cost of organizing.
a. True
b. False
ANSWER: True
2. A corporation is a business that is legally separate and distinct from its owners.
N
a. True
b. False
ANSWER: True
U
3. Merchandising businesses produce products rather than provide services to customers.
a. True
R
b. False
ANSWER: False
SE
4. A partnership is owned by two or more individuals.
a. True
b. False
ANSWER: True
5. A limited liability company combines attributes of a partnership and a corporation.
D
a. True
b. False
O
ANSWER: True
6. The ownership of a proprietorship is divided into shares of stock owned by its stockholders.
a. True
C
b. False
ANSWER: False
S
7. Accounting is often called the "language of business" because business information is communicated to
stakeholders.
a. True
b. False
ANSWER: True
Page 2
,Name: Class: Date:
Chap 01 10e Warren
8. 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 approach
to attract customers.
a. True
b. False
ANSWER: True
9. Creditors have preference to assets behind stockholders if a business fails.
N
a. True
b. False
ANSWER: False
U
10. A liability is a legal obligation to repay the amount borrowed according to the terms of the borrowing agreement.
a. True
R
b. False
ANSWER: True
SE
11. The balance sheet represents the accounting equation.
a. True
b. False
ANSWER: True
D
12. A primary disadvantage of corporations is that the financial resources available to them are limited.
a. True
b. False
O
ANSWER: False
13. Assets are acquired through investing activities when resources are purchased.
a. True
C
b. False
ANSWER: True
S
14. The objective of most businesses is to maximize profits.
a. True
b. False
ANSWER: True
Page 3
, Name: Class: Date:
Chap 01 10e Warren
15. The stockholders' equity of a company should equal the sum of its total assets and total liabilities.
a. True
b. False
ANSWER: False
16. The branch of accounting related to the management's financial decisions is known as financial accounting.
a. True
b. False
N
ANSWER: False
17. All merchandising businesses are organized as corporations.
U
a. True
b. False
R
ANSWER: False
18. Stockholders of a corporation are its internal stakeholders.
a. True
SE
b. False
ANSWER: False
19. The basic type of stock issued to owners is called common stock.
a. True
D
b. False
ANSWER: True
O
20. A business stakeholder has an interest in the economic performance of a company.
a. True
b. False
C
ANSWER: True
21. Manufacturing businesses change basic inputs into products that are sold to individual customers.
S
a. True
b. False
ANSWER: True
22. Companies using a low-cost emphasis provide products and services that compete on features other than price.
a. True
b. False
ANSWER: False
Page 4
Survey of Accounting
by Carl Warren, Amanda Farmer
10th Edition
N
U
R
SE
D
O
C
S
Page 1
,Chap 01 10e Warren
All Chapters
Indicate whether the statement is true or false.
1. The popularity of the sole proprietorship is due to the ease and low cost of organizing.
a. True
b. False
ANSWER: True
2. A corporation is a business that is legally separate and distinct from its owners.
N
a. True
b. False
ANSWER: True
U
3. Merchandising businesses produce products rather than provide services to customers.
a. True
R
b. False
ANSWER: False
SE
4. A partnership is owned by two or more individuals.
a. True
b. False
ANSWER: True
5. A limited liability company combines attributes of a partnership and a corporation.
D
a. True
b. False
O
ANSWER: True
6. The ownership of a proprietorship is divided into shares of stock owned by its stockholders.
a. True
C
b. False
ANSWER: False
S
7. Accounting is often called the "language of business" because business information is communicated to
stakeholders.
a. True
b. False
ANSWER: True
Page 2
,Name: Class: Date:
Chap 01 10e Warren
8. 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 approach
to attract customers.
a. True
b. False
ANSWER: True
9. Creditors have preference to assets behind stockholders if a business fails.
N
a. True
b. False
ANSWER: False
U
10. A liability is a legal obligation to repay the amount borrowed according to the terms of the borrowing agreement.
a. True
R
b. False
ANSWER: True
SE
11. The balance sheet represents the accounting equation.
a. True
b. False
ANSWER: True
D
12. A primary disadvantage of corporations is that the financial resources available to them are limited.
a. True
b. False
O
ANSWER: False
13. Assets are acquired through investing activities when resources are purchased.
a. True
C
b. False
ANSWER: True
S
14. The objective of most businesses is to maximize profits.
a. True
b. False
ANSWER: True
Page 3
, Name: Class: Date:
Chap 01 10e Warren
15. The stockholders' equity of a company should equal the sum of its total assets and total liabilities.
a. True
b. False
ANSWER: False
16. The branch of accounting related to the management's financial decisions is known as financial accounting.
a. True
b. False
N
ANSWER: False
17. All merchandising businesses are organized as corporations.
U
a. True
b. False
R
ANSWER: False
18. Stockholders of a corporation are its internal stakeholders.
a. True
SE
b. False
ANSWER: False
19. The basic type of stock issued to owners is called common stock.
a. True
D
b. False
ANSWER: True
O
20. A business stakeholder has an interest in the economic performance of a company.
a. True
b. False
C
ANSWER: True
21. Manufacturing businesses change basic inputs into products that are sold to individual customers.
S
a. True
b. False
ANSWER: True
22. Companies using a low-cost emphasis provide products and services that compete on features other than price.
a. True
b. False
ANSWER: False
Page 4
