Question 1

The Sarbanes-Oxley Act was passed to:
A)prevent fraud at public companies.
B)replace all of the old accounting procedures with new ones.
C)improve the accuracy of the company's financial reporting.
D)Both A and C are correct.

Accepted Answer

The Sarbanes-Oxley Act was primarily passed to prevent fraud at public companies and improve the accuracy of the company's financial reporting. The act implemented stricter regulations and increased accountability measures for publicly traded companies, ultimately aiming to improve investor confidence in the accuracy and transparency of financial reporting.

Question 2

Accounting provides information to:
A)managers.
B)government.
C)investors.
D)All of these answers are correct.

Accepted Answer

Accounting provides information to all of these groups. Managers use accounting information to make decisions about operations and finances, governments use it to regulate and collect taxes, and investors use it to make decisions about buying or selling investments.

Question 3

A partnership is a business which is:
A)easy to form.
B)ends with the death of a partner.
C)owned by more than one person.
D)All of these answers are correct.

Accepted Answer

A partnership is a business structure that is owned by more than one person and can be formed relatively easily. Additionally, partnerships are often structured to end upon the death of a partner, as outlined in the partnership agreement. Therefore, all of the answer choices are correct.

Question 4

What is the difference between Bookkeeping and Accounting?

Accepted Answer

The answer of What is the difference between Bookkeeping and...

Question 5

A sole proprietorship ends with the death of the owner.

Accepted Answer

A sole proprietorship is a business that is owned and operated by one individual. Since there is no legal separation between the business and the owner, the business ceases to exist upon the death of the owner.

Question 6

A legal firm would be considered a:
A)merchandise company.
B)manufacturer.
C)service company.
D)None of the above are correct.

Accepted Answer

A legal firm provides services to clients in the form of legal advice, representation, and documentation. They do not produce physical products or sell merchandise, nor do they manufacture any goods. Therefore, a legal firm is classified as a service company.

Question 7

The type of business organization that can continue indefinitely is known as a:
A)sole proprietorship.
B)partnership.
C)corporation.
D)None of the above

Accepted Answer

A corporation is a type of business organization that can continue indefinitely because it has a separate legal existence from its owners (shareholders). It can own property, enter into contracts, and take legal action on its own behalf. This therefore means that as long as the corporation is properly managed, it can last indefinitely. Sole proprietorship and partnership are not perpetual because the business is tied to the life of the owner(s) or partners.

Question 8

The purpose of the accounting process is to provide financial information about:
A)sole proprietorships.
B)small businesses.
C)large corporations.
D)All of these answers are correct.

Accepted Answer

The accounting process provides financial information about all types of businesses, including sole proprietorships, small businesses, and large corporations.

Question 9

A corporation:
A)can continue indefinitely.
B)is owned by stockholders.
C)has limited risk to stockholders.
D)all of the above.

Accepted Answer

A corporation can continue indefinitely as it is a separate legal entity from its owners. It is owned by stockholders who invest in the company and hold shares of stock. The risk to stockholders is limited to the amount of their investment as they are not personally liable for the corporation's debts or liabilities.

Question 10

Which of the following is a characteristic of a sole proprietorship?
A)Business owned by more than one person
B)Easy to form
C)Each stockholder acts as an owner of the company
D)Can continue indefinitely

Accepted Answer

A sole proprietorship is a business owned by a single person, so option A is incorrect. Option C describes a corporation, not a sole proprietorship. Option D is true for both sole proprietorships and corporations, so it is not a distinguishing characteristic. However, option B is correct because sole proprietorships are easy to form and require minimal legal filings and fees compared to other business structures.

Question 11

Which of the following is not an asset?
A)Cash
B)Accounts Receivable
C)Accounts Payable
D)Buildings

Accepted Answer

Accounts Payable is a liability, not an asset.

Question 12

Which of the following will be recorded in the owner's equity column as an increase?
A)An exchange of assets
B)The purchase of an asset on credit
C)An investment by the owner
D)A withdrawal by the owner

Accepted Answer

An investment by the owner will increase the owner's equity, as it represents an increase in the owner's stake in the business.

Question 13

Which of the following is not a type of business organization?
A)Corporation
B)Partnership
C)Sole proprietorship
D)Operation

Accepted Answer

Operation is not a type of business organization. It refers to the process of carrying out a specific activity, such as production or service delivery, within a business organization.

Question 14

Discuss the advantages and disadvantages of sole proprietorships, partnerships and corporations.

Accepted Answer

The answer of Discuss the advantages and disadvantages of sole...

Question 15

The purchase of supplies for cash would affect which account category?
A)Assets
B)Liabilities
C)Capital
D)Expense

Accepted Answer

The purchase of supplies for cash would increase the assets of the business, as supplies are considered an asset.

Question 16

The function of accounting includes analyzing, recording, classifying, summarizing, reporting, and interpreting financial information.

Accepted Answer

This is a correct statement as the main functions of accounting are analyzing, recording, classifying, summarizing, reporting, and interpreting financial information.

Question 17

Items owned by the business such as land, supplies and equipment are:
A)assets.
B)liabilities.
C)owner's equity.
D)revenue.

Accepted Answer

Items like land, supplies and equipment are resources owned by the business and can be used to create revenue. These are categorized as assets on the balance sheet.

Question 18

Generally Accepted Accounting Principles are the procedures and guidelines that must be followed during the accounting process.

Accepted Answer

Generally Accepted Accounting Principles (GAAP) are a set of standards, principles, and procedures that companies must follow when preparing their financial statements. These principles ensure consistency and comparability in financial reporting and help to provide accurate and reliable information to stakeholders.

Question 19

Which is an advantage of a sole proprietorship form of business?
A)There is limited personal risk.
B)The business can continue indefinitely.
C)The owner makes all the decisions.
D)All of these answers are correct.

Accepted Answer

The owner of a sole proprietorship retains full control over the business and makes all the decisions, which is a distinct advantage of this form of business organization. Unlike corporations, sole proprietorships do not offer limited personal risk, nor do they inherently have the ability to continue indefinitely, as the business is closely tied to the life and decisions of the owner.

Question 20

Put the 7 main steps of the accounting process in order (from 1 -7)below:

Accepted Answer

The answer of Put the 7 main steps of the...

Quiz 1: Accounting Concepts and Procedures

The Sarbanes-Oxley Act was passed to:

Accounting provides information to:

A partnership is a business which is:

What is the difference between Bookkeeping and Accounting?

A sole proprietorship ends with the death of the owner.

A legal firm would be considered a:

The type of business organization that can continue indefinitely is known as a:

The purpose of the accounting process is to provide financial information about:

A corporation:

Which of the following is a characteristic of a sole proprietorship?

Which of the following is not an asset?

Which of the following will be recorded in the owner's equity column as an increase?

Which of the following is not a type of business organization?

Discuss the advantages and disadvantages of sole proprietorships, partnerships and corporations.

The purchase of supplies for cash would affect which account category?

The function of accounting includes analyzing, recording, classifying, summarizing, reporting, and interpreting financial information.

Items owned by the business such as land, supplies and equipment are:

Generally Accepted Accounting Principles are the procedures and guidelines that must be followed during the accounting process.

Which is an advantage of a sole proprietorship form of business?

Put the 7 main steps of the accounting process in order (from 1 -7)below: