TEST BANK
Page 1
,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
22. Companies using a low-cost emphasis provide products and services that compete on features
other than price.
a. True
Page 3
Page 1
,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
22. Companies using a low-cost emphasis provide products and services that compete on features
other than price.
a. True
Page 3
