Accounting Unit 1 Questions With
Correctly Assured Answers
The primary purpose of financial accounting is to:
a) measure and record business transactions
b) prepare federal and state tax returns
c) communicate financial results to investors and creditors
d) both measure and communicate financial information to external parties - ANSD
Which business form has the advantage of limited liability?
a) corporation
b) sole proprietorship
c) partnership
d) all businesses forms share equal limited liability - ANSA
Limited liability means:
a) stockholders of a corporation are not obligated to pay the corporations debts out of their own
pockets
b) liabilities of a company cannot exceed its assets
c) companies are not allowed to borrow unless they are profitable
d) companies are less likely to be sued if they are formed as a corporation - ANSA
One disadvantage of the corporate form of business is:
a) limited liability
b) access to more capital
c) smaller in size
, d) double taxation - ANSd
Which of the following is an operating activity?
a) issuing common stock
b) paying dividends
c) borrowing cash from a bank to acquire a building
d) paying electricity bills for the month - ANSd
Stimpleton Company engages in the following cash payments:
Purchase equipment: 2,000
Pay rent: 500
Repay loan to the bank: 5,000
Pay workers' salaries: 1,000
What is the total amount of cash paid for operating activities?
1) $6,000.
2) $2,000.
3) $7,000.
4) $1,500. - ANSd
Financing activities include
a) the purchase of a building
b) issuing common stock to stockholders
c) transactions with company emplyees
d) selling goods or services to customers - ANSb
The accounting equation is defined by - ANSAssests= Liabilites + Stocky holders equity
Which statement below best discuses the accounting equation?
Correctly Assured Answers
The primary purpose of financial accounting is to:
a) measure and record business transactions
b) prepare federal and state tax returns
c) communicate financial results to investors and creditors
d) both measure and communicate financial information to external parties - ANSD
Which business form has the advantage of limited liability?
a) corporation
b) sole proprietorship
c) partnership
d) all businesses forms share equal limited liability - ANSA
Limited liability means:
a) stockholders of a corporation are not obligated to pay the corporations debts out of their own
pockets
b) liabilities of a company cannot exceed its assets
c) companies are not allowed to borrow unless they are profitable
d) companies are less likely to be sued if they are formed as a corporation - ANSA
One disadvantage of the corporate form of business is:
a) limited liability
b) access to more capital
c) smaller in size
, d) double taxation - ANSd
Which of the following is an operating activity?
a) issuing common stock
b) paying dividends
c) borrowing cash from a bank to acquire a building
d) paying electricity bills for the month - ANSd
Stimpleton Company engages in the following cash payments:
Purchase equipment: 2,000
Pay rent: 500
Repay loan to the bank: 5,000
Pay workers' salaries: 1,000
What is the total amount of cash paid for operating activities?
1) $6,000.
2) $2,000.
3) $7,000.
4) $1,500. - ANSd
Financing activities include
a) the purchase of a building
b) issuing common stock to stockholders
c) transactions with company emplyees
d) selling goods or services to customers - ANSb
The accounting equation is defined by - ANSAssests= Liabilites + Stocky holders equity
Which statement below best discuses the accounting equation?
