TEST BANK FOR FINANCIAL ACCOUNTING, 16TH EDITION, CARL WARREN, CHRISTINE JONICK, JENNIFER SCHNEIDER

True / False 1. A merchandising business buys products from other businesses to sell to customers. a. True b. False ANSWER: True 2. The role of accounting is to provide many different users with financial information to make economic decisions. a. True b. False ANSWER: True 3. Accounting information users need reports about the economic activities and condition of businesses. a. True b. False ANSWER: True 4. Managerial accounting information is used by external and internal users equally. a. True b. False ANSWER: False 5. Senior executives cannot be criminally prosecuted for the wrongdoings they commit on behalf of the companies where they work. a. True b. False ANSWER: False 6. Financial accounting provides information to all users, while the main focus for managerial accounting is to provide information to the management. a. True b. False ANSWER: True 7. Proper ethical conduct implies that you only consider what's in your best interest. a. True b. False ANSWER: False 8. Some of the major fraudulent acts committed by senior executives started as what they considered to be small ethical lapses that grew out of control. a. True b. False ANSWER: True 9. A business is an organization in which basic resources or inputs, such as materials and labor, are assembled and processed to provide outputs in the form of goods or services to customers. a. True b. False ANSWER: True 10. Two factors that typically lead to ethical violations are relevance and timeliness of accounting information. a. True b. False ANSWER: False 11. Financial accounting reports are relevant only to users within the business. a. True b. False ANSWER: False 12. The Sarbanes-Oxley Act established standards for corporate responsibility and disclosure. a. True b. False ANSWER: True 13. The main objective for all business is to maximize unrealized profits. a. True b. False ANSWER: False 14. The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities. a. True b. False ANSWER: False 15. The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers. a. True b. False ANSWER: True 16. An example of an external user of accounting information is the federal government. a. True b. False ANSWER: True 17. Proprietorships are owned by one owner and provide only services to their customers. a. True b. False ANSWER: False 18. About 90% of the businesses in the United States are organized as corporations. a. True b. False ANSWER: False 19. The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for developing accounting principles. a. True b. False ANSWER: True 20. The cost concept is the basis for entering the purchase price into the accounting records. a. True b. False ANSWER: True 21. The unit of measurement concept requires that economic data be recorded in dollars. a. True b. False ANSWER: True 22. If a building is appraised for $85,000, it is offered for sale at $90,000, and the buyer pays $80,000 cash for it, the buyer would record the building at $85,000. a. True b. False ANSWER: False 23. The financial statements of a proprietorship should include the owner's personal assets and l