Chapter 01 8ce
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Which of the following persons or groups have the ultimate control of a corporation? 1)
A) the board of directors B) the shareholders
C) the audit committee D) the chief executive officer
2) Financial statements are: 2)
A) standard documents that tell us how well a business is performing and where it stands in
financial terms
B) reports issued by outside consultants who are hired to analyze key operations of the
business
C) reports created by management that states it is responsible for the acts of the corporation
D) standard documents issued by outside consultants who are hired to analyze key
operations of the business in financial terms
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
3) Since they are both the same activities, the terms "accounting" and "bookkeeping" are 3)
synonymous and can be used interchangeably.
4) The three forms of business organizations are proprietorships, partnerships, and non-profit 4)
organizations.
5) Accounting is called an information system since it measures business activities, processes data 5)
into reports, and communicates results to decision makers.
6) From a legal perspective, proprietors, partners, and shareholders are personally liable for a 6)
corporation's debts.
7) From an accounting viewpoint, a proprietorship is a distinct and separate entity from the 7)
proprietor.
8) The owners' equity of proprietorships and partnerships is different. 8)
9) Financial accounting information is prepared exclusively for external users. 9)
10) Management accounting is prepared primarily for external users. 10)
11) One benefit of organizing a business as a proprietorship is that the proprietor is not required to 11)
pay income tax on the business' earnings.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
12) Accounting is often referred to as "the language of business." Why is accounting described this way? How is
accounting different from bookkeeping?
1
, 13) There are several types of decision makers who use accounting information. List five of these users of
accounting information and give an example of a decision each would make.
14) What are the three forms of business organizations? How do they differ?
15) There are many different stakeholders in National Hardware Ltd. Explain why the same information may not
be suitable or appropriate for all stakeholders.
16) National Hardware Ltd is a publicly owned corporation. How does it differ from a privately owned
corporation?
17) What is a not-for-profit organization?
18) Think about the impact accounting has on our economy and our nation. Name some external groups interested
in reviewing a company's financial statements.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
19) Accounting standards for accountants in Canada are established by: 19)
A) the International Accounting Standards Board
B) the Chartered Professional Accountants of Canada
C) the Canadian Public Accountability Board
D) the Canadian Securities Administrators
20) The accounting equation can be stated as: 20)
A) Assets + Liabilities = Shareholders' equity
B) Assets = Liabilities - Shareholders' equity
C) Assets = Liabilities + Shareholders' equity
D) Assets + Shareholders' equity = Liabilities
21) The owners' interest in the assets of a corporation is known as: 21)
A) revenues B) shareholders' equity
C) expenses D) assets
22) If liabilities increase $120,000 during a given period and shareholders' equity decreases $25,000 22)
during the same period, assets must:
A) increase $95,000 B) decrease $145,000
C) increase $145,000 D) decrease $95,000
23) Which of the following best describes a liability? 23)
A) Liabilities are economic obligations to creditors to be paid at some future date by the
company.
B) Liabilities are accounts receivable of the company.
C) Liabilities are a form of share capital.
D) Liabilities are future economic benefits to which a company is entitled.
2
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Which of the following persons or groups have the ultimate control of a corporation? 1)
A) the board of directors B) the shareholders
C) the audit committee D) the chief executive officer
2) Financial statements are: 2)
A) standard documents that tell us how well a business is performing and where it stands in
financial terms
B) reports issued by outside consultants who are hired to analyze key operations of the
business
C) reports created by management that states it is responsible for the acts of the corporation
D) standard documents issued by outside consultants who are hired to analyze key
operations of the business in financial terms
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
3) Since they are both the same activities, the terms "accounting" and "bookkeeping" are 3)
synonymous and can be used interchangeably.
4) The three forms of business organizations are proprietorships, partnerships, and non-profit 4)
organizations.
5) Accounting is called an information system since it measures business activities, processes data 5)
into reports, and communicates results to decision makers.
6) From a legal perspective, proprietors, partners, and shareholders are personally liable for a 6)
corporation's debts.
7) From an accounting viewpoint, a proprietorship is a distinct and separate entity from the 7)
proprietor.
8) The owners' equity of proprietorships and partnerships is different. 8)
9) Financial accounting information is prepared exclusively for external users. 9)
10) Management accounting is prepared primarily for external users. 10)
11) One benefit of organizing a business as a proprietorship is that the proprietor is not required to 11)
pay income tax on the business' earnings.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
12) Accounting is often referred to as "the language of business." Why is accounting described this way? How is
accounting different from bookkeeping?
1
, 13) There are several types of decision makers who use accounting information. List five of these users of
accounting information and give an example of a decision each would make.
14) What are the three forms of business organizations? How do they differ?
15) There are many different stakeholders in National Hardware Ltd. Explain why the same information may not
be suitable or appropriate for all stakeholders.
16) National Hardware Ltd is a publicly owned corporation. How does it differ from a privately owned
corporation?
17) What is a not-for-profit organization?
18) Think about the impact accounting has on our economy and our nation. Name some external groups interested
in reviewing a company's financial statements.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
19) Accounting standards for accountants in Canada are established by: 19)
A) the International Accounting Standards Board
B) the Chartered Professional Accountants of Canada
C) the Canadian Public Accountability Board
D) the Canadian Securities Administrators
20) The accounting equation can be stated as: 20)
A) Assets + Liabilities = Shareholders' equity
B) Assets = Liabilities - Shareholders' equity
C) Assets = Liabilities + Shareholders' equity
D) Assets + Shareholders' equity = Liabilities
21) The owners' interest in the assets of a corporation is known as: 21)
A) revenues B) shareholders' equity
C) expenses D) assets
22) If liabilities increase $120,000 during a given period and shareholders' equity decreases $25,000 22)
during the same period, assets must:
A) increase $95,000 B) decrease $145,000
C) increase $145,000 D) decrease $95,000
23) Which of the following best describes a liability? 23)
A) Liabilities are economic obligations to creditors to be paid at some future date by the
company.
B) Liabilities are accounts receivable of the company.
C) Liabilities are a form of share capital.
D) Liabilities are future economic benefits to which a company is entitled.
2
