Test Bank for Survey of Accounting 10th Edition by Warren Accounting Exam Questions

Test Bank for Survey of Accounting 10e 10th Edition by Carl Warren,
Amanda Farmer


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. a. True
b. False

ANSWER: True

3. Merchandising businesses produce products rather than provide
services to customers. a. True
b. False

ANSWER: False

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. a. True
b. False

ANSWER: True

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

ANSWER: False

7. Accounting is often called the "language of business" because business
information is communicated to stakeholders.
a. True
b. False

ANSWER: True




Page 1

,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.
a. True
b. False
ANSWER: False
10. A liability is a legal obligation to repay the amount borrowed according to the terms
of the borrowing agreement.
a. True
b. False
ANSWER: True
11. The balance sheet represents the
accounting equation.
a. True
b. False
ANSWER: True
12. A primary disadvantage of corporations is that the financial resources
available to them are limited.
a. True
b. False
ANSWER: False
13. Assets are acquired through investing activities when
resources are purchased.
a. True
b. False
ANSWER: True
14. The objective of most businesses is to
maximize profits.
a. True
b. False

,ANSWER:
True




Page 2

, 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
ANSWER: False
17. All merchandising businesses are organized as
corporations.
a. True
b. False
ANSWER: False
18. Stockholders of a corporation are its internal
stakeholders.
a. True
b. False
ANSWER: False
19. The basic type of stock issued to owners is called
common stock.
a. True
b. False
ANSWER: True
20. A business stakeholder has an interest in the economic
performance of a company.
a. True
b. False
ANSWER: True
21. Manufacturing businesses change basic inputs into products that are sold
to individual customers.
a. True
b. False
ANSWER: True