ACCT 2000 LOWE-ARDOIN EXAM 1| LATEST 2026/2027 UPDATE] QUESTIONS & ANSWERS | GRADE A | 100% CORRECT
A. Increased difficulty of raising funds
B. Harder to transfer ownership
C. Reduced legal liability for investors
D. Most common form of organizationWhich is an advantage of corporations relative to partnerships and sole proprietorships? ✔️C. Reduced
legal liability for investors
Which forms of business organization are considered to be separate accounting entities?
A. Sole proprietorships and partnerships only
B. Partnerships and corps only
C. only corps
D. Sole proprietorships, corps, and partnerships ✔️D. Sole proprietorships, corps, and partnerships
Which of the following did not result from the Sarbanes-Oxley Act?
A. Top management must now certify the accuracy of financial information
B. Penalties for fraudulent activity increased.
C. Increased independence of the outside auditors
D. Tax rates on corps increased. ✔️D. Tax rates on corps increased
The payment of dividends is an example of a
A. operating activity
B. financing activity
C. investing activity
D. delivery activity ✔️B
What kind of classification is cost of goods sold?
A. Asset
B. Expense
C. Liability
D. Revenue ✔️B. Expense
What section of a cash flow statement shows the cash spent on new equipment during the past accounting period?
A. the investing section
B. the operating section
C. the financing section
D. the cash flow statement does not give this information ✔️A. the investing section
If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by
what amount and direction during that same period?
A. $20,000 increase
B. $10,000 decrease
,C $10,000 increase
D. $15,000 decrease ✔️B
Which is not one of the three forms of business organization?
A. sole proprietorship
B. creditorship
C. partnership
D. Corp ✔️B
What is an advantage of corps relative to partnerships and sole proprietorships?
A. increased difficulty of raising funds
B. harder to transfer ownership
C. reduced legal liability for investors
D. most common form of organization ✔️C
Ease of transferring ownership is a characteristic of which form of business organization?
A. sole proprietorship
B. partnership
C. Corp
D. All of the above ✔️C
In which forms of business organizations are the owners personally liable for all debts of the business?
A. sole proprietorships and corps
B. sole proprietorships and partnerships
C. Partnership and corp
D. All of the above ✔️B
The sole proprietorship form of business org
A. must have at least 2 owners in most states
B. generally receives favorable tax treatment relative to a corp
C. Combines the records of the business with the personal records of the owner
D. is classified as a separate legal entity ✔️B
Which forms of business org are considered to be separate accounting entities?
A. sole proprietorships and partnerships only
B. partnerships and corps only
C. only corps
D. sole proprietorships, corps, and partnerships ✔️D
To which of the following questions will internal users want answers?
A. what selling price for our product will maximize the company's net income?
B. Which product line is most profitable?
, C. Is cash sufficient to pay dividends to stockholders?
D. All of the above ✔️D
Which of the following is not an external user of accounting data?
A. labor unions
B. customers
C. economic planners
D. CFO ✔️D
Which statement about users of accounting info is incorrect?
A. Management is considered an internal user
B. Taxing authorities are considered external users
C. Present creditors are considered external users
D. Regulatory authorities are considered internal users ✔️D
Which of the following did not result from the Sarbanes-Oxley Act?
A. Top management must now certify the accuracy of financial information
B. Penalties for fraudulent activity increased.
C. Increased independence of the outside auditors.
D. Tax rates on corps increased ✔️D
Which of the following is the most appropriate definition of accounting?
A. the info system that identifies, records, and communicates the economic events of an organization to interested users
B. A means of collecting information
C. the interconnected network of subsystems necessary to operate a business
D. Electronic collection and organization of vast amounts of financial information ✔️A
Paying interest expense and receiving interest revenue are examples of
A. operating activities
B. financing activities
C, investing activities
D. delivery activities ✔️A
The payment of dividends is an example of a
A. operating activity
B. financing activity
C. investing activity
D. delivery activity ✔️B
Which of the following is not one of the three primary business activities?
A. Financing
B. Operating
A. Increased difficulty of raising funds
B. Harder to transfer ownership
C. Reduced legal liability for investors
D. Most common form of organizationWhich is an advantage of corporations relative to partnerships and sole proprietorships? ✔️C. Reduced
legal liability for investors
Which forms of business organization are considered to be separate accounting entities?
A. Sole proprietorships and partnerships only
B. Partnerships and corps only
C. only corps
D. Sole proprietorships, corps, and partnerships ✔️D. Sole proprietorships, corps, and partnerships
Which of the following did not result from the Sarbanes-Oxley Act?
A. Top management must now certify the accuracy of financial information
B. Penalties for fraudulent activity increased.
C. Increased independence of the outside auditors
D. Tax rates on corps increased. ✔️D. Tax rates on corps increased
The payment of dividends is an example of a
A. operating activity
B. financing activity
C. investing activity
D. delivery activity ✔️B
What kind of classification is cost of goods sold?
A. Asset
B. Expense
C. Liability
D. Revenue ✔️B. Expense
What section of a cash flow statement shows the cash spent on new equipment during the past accounting period?
A. the investing section
B. the operating section
C. the financing section
D. the cash flow statement does not give this information ✔️A. the investing section
If total liabilities decreased by $15,000 and stockholders' equity increased by $5,000 during a period of time, then total assets must change by
what amount and direction during that same period?
A. $20,000 increase
B. $10,000 decrease
,C $10,000 increase
D. $15,000 decrease ✔️B
Which is not one of the three forms of business organization?
A. sole proprietorship
B. creditorship
C. partnership
D. Corp ✔️B
What is an advantage of corps relative to partnerships and sole proprietorships?
A. increased difficulty of raising funds
B. harder to transfer ownership
C. reduced legal liability for investors
D. most common form of organization ✔️C
Ease of transferring ownership is a characteristic of which form of business organization?
A. sole proprietorship
B. partnership
C. Corp
D. All of the above ✔️C
In which forms of business organizations are the owners personally liable for all debts of the business?
A. sole proprietorships and corps
B. sole proprietorships and partnerships
C. Partnership and corp
D. All of the above ✔️B
The sole proprietorship form of business org
A. must have at least 2 owners in most states
B. generally receives favorable tax treatment relative to a corp
C. Combines the records of the business with the personal records of the owner
D. is classified as a separate legal entity ✔️B
Which forms of business org are considered to be separate accounting entities?
A. sole proprietorships and partnerships only
B. partnerships and corps only
C. only corps
D. sole proprietorships, corps, and partnerships ✔️D
To which of the following questions will internal users want answers?
A. what selling price for our product will maximize the company's net income?
B. Which product line is most profitable?
, C. Is cash sufficient to pay dividends to stockholders?
D. All of the above ✔️D
Which of the following is not an external user of accounting data?
A. labor unions
B. customers
C. economic planners
D. CFO ✔️D
Which statement about users of accounting info is incorrect?
A. Management is considered an internal user
B. Taxing authorities are considered external users
C. Present creditors are considered external users
D. Regulatory authorities are considered internal users ✔️D
Which of the following did not result from the Sarbanes-Oxley Act?
A. Top management must now certify the accuracy of financial information
B. Penalties for fraudulent activity increased.
C. Increased independence of the outside auditors.
D. Tax rates on corps increased ✔️D
Which of the following is the most appropriate definition of accounting?
A. the info system that identifies, records, and communicates the economic events of an organization to interested users
B. A means of collecting information
C. the interconnected network of subsystems necessary to operate a business
D. Electronic collection and organization of vast amounts of financial information ✔️A
Paying interest expense and receiving interest revenue are examples of
A. operating activities
B. financing activities
C, investing activities
D. delivery activities ✔️A
The payment of dividends is an example of a
A. operating activity
B. financing activity
C. investing activity
D. delivery activity ✔️B
Which of the following is not one of the three primary business activities?
A. Financing
B. Operating
