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
PR
3. Merchandising businesses produce products rather than provide services to customers.
a. True
b. False
ANSWER: False
O
4. A partnership is owned by two or more individuals.
a. True
b. False
FD
ANSWER: True
5. A limited liability company combines attributes of a partnership and a corporation.
a. True
b. False
O
ANSWER: True
C
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
PR
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
O
11. The balance sheet represents the accounting equation.
a. True
b. False
FD
ANSWER: True
12. A primary disadvantage of corporations is that the financial resources available to them are limited.
a. True
b. False
O
ANSWER: False
C
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
PR
b. False
ANSWER: False
18. Stockholders of a corporation are its internal stakeholders.
a. True
O
b. False
ANSWER: False
FD
19. The basic type of stock issued to owners is called common stock.
a. True
b. False
ANSWER: True
O
20. A business stakeholder has an interest in the economic performance of a company.
a. True
C
b. False
ANSWER: True
21. Manufacturing businesses change basic inputs into products that are sold to individual customers.
a. True
b. False
ANSWER: True
22. Companies using a low-cost emphasis provide products and services that compete on features other than price.
a. True
b. False
ANSWER: False
Page 3
, Name: Class: Date:
Chap 01 10e Warren
Indicate the answer choice that best completes the statement or answers the question.
23. When a business borrows money, which of the following is incurred?
a. An accumulated depletion
b. A liability
c. A loss
d. An accrued expenditure
ANSWER: b
24. What is the primary objective of most businesses?
a. To maximize profits
b. To pay dividends to stockholders
PR
c. To provide a benefit to society
d. To manufacture a quality product
ANSWER: a
25. A note payable requires payment of the amount borrowed plus _____.
O
a. interest
b. tax
c. overhead
FD
d. dividend
ANSWER: a
26. If there are no beginning retained earnings, net income of $31,200, and ending retained earnings of $9,000, how
much are dividends?
O
a. $40,200
b. $9,000
C
c. $22,200
d. $4,500
ANSWER: c
27. Which of the following is not an example of a capital market stakeholder?
a. Banks
b. Owners
c. Suppliers
d. Stockholders
ANSWER: c
Page 4
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
PR
3. Merchandising businesses produce products rather than provide services to customers.
a. True
b. False
ANSWER: False
O
4. A partnership is owned by two or more individuals.
a. True
b. False
FD
ANSWER: True
5. A limited liability company combines attributes of a partnership and a corporation.
a. True
b. False
O
ANSWER: True
C
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
PR
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
O
11. The balance sheet represents the accounting equation.
a. True
b. False
FD
ANSWER: True
12. A primary disadvantage of corporations is that the financial resources available to them are limited.
a. True
b. False
O
ANSWER: False
C
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
PR
b. False
ANSWER: False
18. Stockholders of a corporation are its internal stakeholders.
a. True
O
b. False
ANSWER: False
FD
19. The basic type of stock issued to owners is called common stock.
a. True
b. False
ANSWER: True
O
20. A business stakeholder has an interest in the economic performance of a company.
a. True
C
b. False
ANSWER: True
21. Manufacturing businesses change basic inputs into products that are sold to individual customers.
a. True
b. False
ANSWER: True
22. Companies using a low-cost emphasis provide products and services that compete on features other than price.
a. True
b. False
ANSWER: False
Page 3
, Name: Class: Date:
Chap 01 10e Warren
Indicate the answer choice that best completes the statement or answers the question.
23. When a business borrows money, which of the following is incurred?
a. An accumulated depletion
b. A liability
c. A loss
d. An accrued expenditure
ANSWER: b
24. What is the primary objective of most businesses?
a. To maximize profits
b. To pay dividends to stockholders
PR
c. To provide a benefit to society
d. To manufacture a quality product
ANSWER: a
25. A note payable requires payment of the amount borrowed plus _____.
O
a. interest
b. tax
c. overhead
FD
d. dividend
ANSWER: a
26. If there are no beginning retained earnings, net income of $31,200, and ending retained earnings of $9,000, how
much are dividends?
O
a. $40,200
b. $9,000
C
c. $22,200
d. $4,500
ANSWER: c
27. Which of the following is not an example of a capital market stakeholder?
a. Banks
b. Owners
c. Suppliers
d. Stockholders
ANSWER: c
Page 4
