Final Review Part 2 Question Preview (ID: 18910)


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All types of businesses sell a product.
a) True
b) False
c)
d)

In a free enterprise system, businesses compete for customers.
a) True
b) False
c)
d)

One advantage of owning your own business is that any financial gain from operating the business is yours.
a) True
b) False
c)
d)

For accounting purposes, a business is an entity separate from its owners.
a) True
b) False
c)
d)

The most common form of business organization is the ____.
a) sole proprietorship
b) partnership
c) corporation
d) not for profit organization

Accounting is often call the language of business because ____.
a) it is easy to understand
b) it is fundamental to the communication of financial information
c) all business owners have a good understanding of accounting principles
d) accountants in many companies share financial information

The most common time period covered by an accounting report is one ____.
a) quarter
b) year
c) month
d) week

An example of an internal user of accounting information is ____.
a) the Internal Revenue Service
b) a large stockholder
c) the president of a bank that has loaned money to the business
d) the manager in charge of a specific product line

The assumption that requires accounting reports to be prepared for a specific period of time is ____.
a) unit of measure
b) going concern
c) business entity
d) accounting period

If the creditor's financial claim to property totals $1,000 and the owner's financial claim to property totals $11,000, the property value is ____.
a) $10,000
b) $11,000
c) $12,000
d) $1,000

A business is earning a profit if the selling price of its product covers the cost of the raw materials needed to make the product.
a) True
b) False
c)
d)

The life of a business is divided into specific periods for reporting purposes
a) True
b) False
c)
d)

A partnership can be owned by a more than two individuals.
a) True
b) False
c)
d)

GAAP is a way to communicate financial information in a form understood by those interested in the operations and financial condition of the business.
a) True
b) False
c)
d)

The account Accounts Receivable is an example of a(n) ____.
a) asset
b) liability
c) owners equity
d) none of the above

A business owner must always get permission to operate from the state government.
a) True
b) False
c)
d)

Basic accounting rules and procedures differ from business to business.
a) True
b) False
c)
d)

All businesses set up their accounting systems in the same manner.
a) True
b) False
c)
d)

The corporation is the easiest form of business to organize.
a) True
b) False
c)
d)

Corporations often start out as sole proprietorships or partnerships.
a) True
b) False
c)
d)

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