Name: Class: Date:
Chapter 01: Introduction to Accounting
True / False
1. The purpose of accounting is to provide financial information about the current operations and financial conditions of a
business to individuals and organizations.
a. True
b. False
ANSWER: True
2. Because financial information is communicated in accounting terms, accounting is said to be the "language of
business."
a. True
b. False
ANSWER: True
3. Interpreting refers to reviewing events that have taken place and determining how they affect a business.
a. True
b. False
ANSWER: False
4. A partnership is owned by stockholders or shareholders and is managed by them.
a. True
b. False
ANSWER: False
5. A business that makes a product to sell is called a manufacturing business.
a. True
b. False
ANSWER: True
6. A public accountant can achieve professional recognition as a Certified Public Accountant by meeting certain
educational and experience requirements as determined by each state.
a. True
b. False
ANSWER: True
7. The six major steps of the accounting process are analyzing, recording, classifying, summarizing, reporting, and
interpreting.
a. True
b. False
ANSWER: True
8. Generally accepted accounting principles are procedures and guidelines to be followed in the accounting/reporting
process.
a. True
b. False
Page 1
,Name: Class: Date:
Chapter 01: Introduction to Accounting
ANSWER: True
9. Accountants design accounting information systems and analyze and interpret information.
a. True
b. False
ANSWER: True
10. Writing or using one of the latest technological advances to enter a transaction in the accounting records is
called summarizing.
a. True
b. False ANSWER: False
11. The Financial Accounting Standards Board develops generally accepted accounting principles to provide
some assurance that companies are reporting business activities in a similar manner.
a. True
b. False
ANSWER: True
12. Stockholders may have very little influence on business decisions.
a. True
b. False
ANSWER: True
13. Cost accounting is used to develop a financial plan for a company.
a. True
b. False ANSWER: False
14. The principal accounting officer of a company is called a public accountant.
a. True
b. False ANSWER: False
15. A CMA is a Certified Marketing Auditor.
a. True
b. False ANSWER: False
16. Creditors need detailed measures of business performance.
a. True
b. False ANSWER: False
17. Owners are most interested in a company's profitability and current financial performance.
Page 2
,Name: Class: Date:
Chapter 01: Introduction to Accounting
a. True
b. False
ANSWER: True
Multiple Choice
18. Which of the following types of businesses is owned by stockholders?
a. Proprietorship
b. Corporation
c. Partnership with more than ten partners
d. Partnership with only two partners
ANSWER: b
19. A business that purchases a product from another business to sell to customers is called a
a. service business.
b. manufacturing business.
c. merchandising business.
d. nonprofit business.
ANSWER: c
20. A person who reviews the operating and accounting control procedures adopted by management to make sure the
controls are adequate and are being followed may be referred to as a(n)
a. bookkeeper.
b. accountant.
c. information processor.
d. internal auditor.
ANSWER: d
21. A person who records, sorts, and files accounting information in accounting records may be referred to as a(n)
a. budgeter.
b. journalist.
c. accounting clerk.
d. scribe.
ANSWER: c
22. An internal auditor can achieve professional recognition in internal auditing by receiving which of the following
certificates?
a. GAAP
b. CIA
c. CMA
d. CLU
ANSWER: b
23. The accounting function of classifying is
Page 3
, Name: Class: Date:
Chapter 01: Introduction to Accounting
a. thinking about how events affect the business.
b. gathering similar events to provide information that is easy to understand.
c. sorting and grouping similar items together.
d. deciding the meaning and importance of the information in various reports.
ANSWER: c
24. Bringing together various items of information to determine or explain a result is
a. summarizing.
b. interpreting.
c. recording.
d. classifying.
ANSWER: a
25. Examining a transaction or event to determine its fundamental significance to the business so that the relevant
information may be properly processed is called
a. recording.
b. analyzing.
c. classifying.
d. interpreting.
ANSWER: b
26. Which of the following does NOT use nonprofit accounting guidelines and procedures?
a. Proprietorships
b. Hospitals
c. Educational institutions
d. Churches
ANSWER: a
27. Cost accountants provide a wide variety of services, including
a. designing and implementing accounting information systems.
b. auditing reviews.
c. performing general accounting services.
d. analyzing the cost effectiveness of products produced and services provided.
ANSWER: d
28. Public accountants do NOT offer which of the following services?
a. Auditing
b. Tax preparation
c. Management consulting
d. Marketing analysis
ANSWER: d
29. Looking at events that have taken place and thinking about how they affect a business is called
a. analyzing.
Page 4
Chapter 01: Introduction to Accounting
True / False
1. The purpose of accounting is to provide financial information about the current operations and financial conditions of a
business to individuals and organizations.
a. True
b. False
ANSWER: True
2. Because financial information is communicated in accounting terms, accounting is said to be the "language of
business."
a. True
b. False
ANSWER: True
3. Interpreting refers to reviewing events that have taken place and determining how they affect a business.
a. True
b. False
ANSWER: False
4. A partnership is owned by stockholders or shareholders and is managed by them.
a. True
b. False
ANSWER: False
5. A business that makes a product to sell is called a manufacturing business.
a. True
b. False
ANSWER: True
6. A public accountant can achieve professional recognition as a Certified Public Accountant by meeting certain
educational and experience requirements as determined by each state.
a. True
b. False
ANSWER: True
7. The six major steps of the accounting process are analyzing, recording, classifying, summarizing, reporting, and
interpreting.
a. True
b. False
ANSWER: True
8. Generally accepted accounting principles are procedures and guidelines to be followed in the accounting/reporting
process.
a. True
b. False
Page 1
,Name: Class: Date:
Chapter 01: Introduction to Accounting
ANSWER: True
9. Accountants design accounting information systems and analyze and interpret information.
a. True
b. False
ANSWER: True
10. Writing or using one of the latest technological advances to enter a transaction in the accounting records is
called summarizing.
a. True
b. False ANSWER: False
11. The Financial Accounting Standards Board develops generally accepted accounting principles to provide
some assurance that companies are reporting business activities in a similar manner.
a. True
b. False
ANSWER: True
12. Stockholders may have very little influence on business decisions.
a. True
b. False
ANSWER: True
13. Cost accounting is used to develop a financial plan for a company.
a. True
b. False ANSWER: False
14. The principal accounting officer of a company is called a public accountant.
a. True
b. False ANSWER: False
15. A CMA is a Certified Marketing Auditor.
a. True
b. False ANSWER: False
16. Creditors need detailed measures of business performance.
a. True
b. False ANSWER: False
17. Owners are most interested in a company's profitability and current financial performance.
Page 2
,Name: Class: Date:
Chapter 01: Introduction to Accounting
a. True
b. False
ANSWER: True
Multiple Choice
18. Which of the following types of businesses is owned by stockholders?
a. Proprietorship
b. Corporation
c. Partnership with more than ten partners
d. Partnership with only two partners
ANSWER: b
19. A business that purchases a product from another business to sell to customers is called a
a. service business.
b. manufacturing business.
c. merchandising business.
d. nonprofit business.
ANSWER: c
20. A person who reviews the operating and accounting control procedures adopted by management to make sure the
controls are adequate and are being followed may be referred to as a(n)
a. bookkeeper.
b. accountant.
c. information processor.
d. internal auditor.
ANSWER: d
21. A person who records, sorts, and files accounting information in accounting records may be referred to as a(n)
a. budgeter.
b. journalist.
c. accounting clerk.
d. scribe.
ANSWER: c
22. An internal auditor can achieve professional recognition in internal auditing by receiving which of the following
certificates?
a. GAAP
b. CIA
c. CMA
d. CLU
ANSWER: b
23. The accounting function of classifying is
Page 3
, Name: Class: Date:
Chapter 01: Introduction to Accounting
a. thinking about how events affect the business.
b. gathering similar events to provide information that is easy to understand.
c. sorting and grouping similar items together.
d. deciding the meaning and importance of the information in various reports.
ANSWER: c
24. Bringing together various items of information to determine or explain a result is
a. summarizing.
b. interpreting.
c. recording.
d. classifying.
ANSWER: a
25. Examining a transaction or event to determine its fundamental significance to the business so that the relevant
information may be properly processed is called
a. recording.
b. analyzing.
c. classifying.
d. interpreting.
ANSWER: b
26. Which of the following does NOT use nonprofit accounting guidelines and procedures?
a. Proprietorships
b. Hospitals
c. Educational institutions
d. Churches
ANSWER: a
27. Cost accountants provide a wide variety of services, including
a. designing and implementing accounting information systems.
b. auditing reviews.
c. performing general accounting services.
d. analyzing the cost effectiveness of products produced and services provided.
ANSWER: d
28. Public accountants do NOT offer which of the following services?
a. Auditing
b. Tax preparation
c. Management consulting
d. Marketing analysis
ANSWER: d
29. Looking at events that have taken place and thinking about how they affect a business is called
a. analyzing.
Page 4
