ACCT 200 EXAM 1 WILEY ADAPTIVE
PRACTICE QUESTIONS AND ANSWERS
100% CORRECT|LATEST UPDATED 2025
An owner who wants to have limited liability should form which type of business
enterprise?
A
a corporation
B
a partnership
C
a sole proprietorship
D
a proprietorship - ANSWER✔✔ A
Which of the following is true of a partnership?
A
A partnership must have more than one owner.
B
Partners are not personally liable for debts incurred by the business.
C
A partnership cannot be incorporated.
D
A partnership does not have the tax advantages that a sole proprietorship enjoys. -
ANSWER✔✔ A
Accounting activities
,A
require identifying and reporting economic events.
B
require identification of environmental activities.
C
are only performed in large corporations.
D
require reporting information on the next year's production plan. - ANSWER✔✔ A
Analysis of an ethical case is done by
A
finding the two best alternatives for ease of presentation.
B
finding the single best answer.
C
identifying all of the stakeholders and how alternatives impact each.
D
explaining what you would choose to do based on your personal experiences -
ANSWER✔✔ C
Ginni founded Waggstooth Manor Doggie Day Care and after a year in business,
formed a partnership with her husband, Warren. Their friend, Phebe, is a
shareholder with Networth Bank. In terms of personal liability, who is at greater
risk? Why?
A
Phebe, because shareholders are responsible for the company's debts, pro-rated
according to the percent of stocks owned.
,B
Ginni, because she founded the company as a sole proprietorship and so has
unlimited personal liability, whereas Warren's liability is limited to his percent
ownership in the company.
C
Warren, because he has the least investment in the business and therefore the
greater risk of liability.
D
Ginni and Warren, because both partners have unlimited personal liability,
regardless of who owns a larger percentage of the company. - ANSWER✔✔ D
Which of the following statements about accounting information is true?
A
Accounting information is used only by external users with a financial interest in a
business enterprise.
B
Accounting communicates financial information about a business enterprise to
both internal and external users.
C
Accounting information is used only by internal users who are responsible for
planning and organizing a business enterprise.
D
business enterprise's management is the major external user of information. -
ANSWER✔✔ B
Ethics are the principles of conduct that are used to judge whether decisions are
A
all of the choices are correct.
, B
right or wrong.
C
honest or dishonest.
D
moral or immoral. - ANSWER✔✔ A
The main purpose of operating activities is to
A
generate revenue to increase profits.
B
raise funds through borrowing or selling stocks and bonds.
C
raise funds for investments.
D
limit liabilities. - ANSWER✔✔ A
Companies can borrow money if they need a source of outside funds. Borrowing
money is called
A
creditors' claims
B
equity financing
C
debt financing
D
PRACTICE QUESTIONS AND ANSWERS
100% CORRECT|LATEST UPDATED 2025
An owner who wants to have limited liability should form which type of business
enterprise?
A
a corporation
B
a partnership
C
a sole proprietorship
D
a proprietorship - ANSWER✔✔ A
Which of the following is true of a partnership?
A
A partnership must have more than one owner.
B
Partners are not personally liable for debts incurred by the business.
C
A partnership cannot be incorporated.
D
A partnership does not have the tax advantages that a sole proprietorship enjoys. -
ANSWER✔✔ A
Accounting activities
,A
require identifying and reporting economic events.
B
require identification of environmental activities.
C
are only performed in large corporations.
D
require reporting information on the next year's production plan. - ANSWER✔✔ A
Analysis of an ethical case is done by
A
finding the two best alternatives for ease of presentation.
B
finding the single best answer.
C
identifying all of the stakeholders and how alternatives impact each.
D
explaining what you would choose to do based on your personal experiences -
ANSWER✔✔ C
Ginni founded Waggstooth Manor Doggie Day Care and after a year in business,
formed a partnership with her husband, Warren. Their friend, Phebe, is a
shareholder with Networth Bank. In terms of personal liability, who is at greater
risk? Why?
A
Phebe, because shareholders are responsible for the company's debts, pro-rated
according to the percent of stocks owned.
,B
Ginni, because she founded the company as a sole proprietorship and so has
unlimited personal liability, whereas Warren's liability is limited to his percent
ownership in the company.
C
Warren, because he has the least investment in the business and therefore the
greater risk of liability.
D
Ginni and Warren, because both partners have unlimited personal liability,
regardless of who owns a larger percentage of the company. - ANSWER✔✔ D
Which of the following statements about accounting information is true?
A
Accounting information is used only by external users with a financial interest in a
business enterprise.
B
Accounting communicates financial information about a business enterprise to
both internal and external users.
C
Accounting information is used only by internal users who are responsible for
planning and organizing a business enterprise.
D
business enterprise's management is the major external user of information. -
ANSWER✔✔ B
Ethics are the principles of conduct that are used to judge whether decisions are
A
all of the choices are correct.
, B
right or wrong.
C
honest or dishonest.
D
moral or immoral. - ANSWER✔✔ A
The main purpose of operating activities is to
A
generate revenue to increase profits.
B
raise funds through borrowing or selling stocks and bonds.
C
raise funds for investments.
D
limit liabilities. - ANSWER✔✔ A
Companies can borrow money if they need a source of outside funds. Borrowing
money is called
A
creditors' claims
B
equity financing
C
debt financing
D
