Test Bank Fundamental Accounting Principles 22nd Edition by Wild, Shaw, Chiappetta

Test Bank Fundamental Accounting Principles 22nd Edition by Wild, Shaw, Chiappetta Chapter 01 Accounting in Business True / False Questions 1. Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities. True False 2. Bookkeeping is the recording of transactions and events and is only part of accounting. True False 3. An accounting information system communicates data to help users make better decisions. True False 4. Financial accounting is the area of accounting that provides internal reports to assist the decision making needs of internal users. True False 5. Internal operating activities include research and development, distribution, and human resources. True False 6. The primary objective of managerial accounting is to provide general purpose financial statements to help external users analyze and interpret an organization's activities. True False 7. External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles. True False 8. External users include lenders, shareholders, customers, and regulators. True False 9. Regulators often have legal authority over certain activities of organizations. True False 10. Internal users include lenders, shareholders, brokers and managers. True False 11. Opportunities in accounting include auditing, consulting, market research, and tax planning. True False 12. Identifying the proper ethical path is usually easy. True False 13. The Sarbanes-Oxley Act (SOX) requires each issuer of securities to disclose whether it has adopted a code of ethics for its senior financial officers and the contents of that code. True False 14. The fraud triangle asserts that the three factors that must exist for a person to commit fraud are opportunity, pressure, and rationalization. True False 15. The Sarbanes-Oxley Act (SOX) does not require public companies to apply both accounting oversight and stringent internal controls. True False 16. A partnership is a business owned by two or more people. True False 17. Owners of a corporation are called shareholders or stockholders. True False 18. In the partnership form of business, the owners are called stockholders. True False 19. The balance sheet shows a company's net income or loss due to earnings activities over a period of time. True False 20. The Financial Accounting Standards Board is the governmental agency that sets both broad and specific accounting principles. True False 21. The business entity principle means that accounting information reflects a presumption that the business will continue operating instead of being closed or sold. True False 22. Generally accepted accounting principles are the basic assumptions, concepts, and guidelines for preparing financial statements. True False 23. The business entity assumption means that a business is accounted for separately from other business entities, including its owner or owners. True False 24. As a general rule, revenues should not be recognized in the accounting records when earned, but rather when cash is received. True False 25. Specific accounting principles are basic assumptions, concepts, and guidelines for preparing financial statements and arise out of long-used accounting practice. True False 26. General accounting principles arise from long-used accounting practices. True False 27. A sole proprietorship is a business owned by one or more persons. True False 28. Unlimited liability and separate taxation of the business are advantages of a sole proprietorship. True False 29. Understanding generally accepted accounting principles is not necessary to effectively use and interpret financial statements. True False 30. The International Accounting Standards board (IASB) has the authority to impose its standards on companies around the world. True False