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1 Copyright © 2019 Pearson Education, Inc.College Accounting, 14e (Slater) Chapter 1 Accounting Concepts and Procedures 1.1 Learning Objective 1-1 1) The type of business organization that can continue indefinitely is known as a:

• corporation.
• partnership.
• sole proprietorship.
• All of the above

Answer: C

Diff: 2

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

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

• sole proprietorships.
• small businesses.
• large corporations.
• All of these answers are correct.

Answer: D

Diff: 1

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

3) Accounting provides information to:

• investors.
• government.
• managers.
• All of these answers are correct.

Answer: D

Diff: 2

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

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

• Business owned by more than one person
• Easy to form
• Each stockholder acts as an owner of the company
• Can continue indefinitely

Answer: B

Diff: 1

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

College Accounting (Chapters 1-12) 14th Edition Jeffrey Slater (Test Bank, All Chapters 100% Original Verified, A+ Grade) 1 / 4

2 Copyright © 2019 Pearson Education, Inc.

5) A partnership is a business which:

• is easy to form.
• ends with the death of a partner.
• is owned by more than one person.
• All of these answers are correct.

Answer: D

Diff: 1

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

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

• There is limited personal risk.
• The business can continue indefinitely.
• The owner makes all the decisions.
• The business is legally separate from the owner.

Answer: C

Diff: 1

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

7) Which of the following is NOT a type of business organization?

• Corporation
• Partnership
• Sole proprietorship
• An Accounting organization

Answer: D

Diff: 1

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

8) A corporation:

• is legally separate from its owners.
• is owned by stockholders.
• has limited risk to stockholders.
• All of the above

Answer: D

Diff: 2

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

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9) The Sarbanes-Oxley Act was passed to:

• prevent financial statement fraud at public companies.
• replace inventory accounting procedures.
• improve the accuracy of the company's financial reporting.
• Both A and C are correct.

Answer: D

Diff: 2

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

10) A law firm would be considered a:

• merchandise company.
• manufacturer.
• service company.
• retailer.

Answer: C

Diff: 1

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

11) Generally Accepted Accounting Principles are the procedures and guidelines that must be followed every other year.

Answer: FALSE

Diff: 1

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

12) The function of accounting includes analyzing, recording, classifying, summarizing, reporting, strategic management and environmental assessment.

Answer: FALSE

Diff: 1

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

13) A sole proprietorship ends with the death of the owner.

Answer: TRUE

Diff: 1

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

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

________ Interpreting ________ Analyzing ________ Recording ________ Classifying ________ Reporting ________ Communication ________ Summarizing

Answer:

• Interpreting
• Analyzing
• Recording
• Classifying
• Reporting
• Communication
• Summarizing

Diff: 3

LO: 1-1

AACSB: Reflective Thinking

Learning Outcome: Define accounting terms, accounting concepts and principles

15) Discuss the advantages and disadvantages of sole proprietorships, partnerships and corporations.Answer: A sole proprietorship is a business that has one owner. The advantage of a sole proprietorship is that the owner makes all of the decisions for the business. Another advantage is ease of formation. A disadvantage is that if the business cannot pay its obligations, the business owner must pay them from personal Assets. The business ends with the death of the owner or the closing of the business.

A partnership is a business owned by more than one person. Its advantage is ease of formation. The disadvantages are that partners could lose personal Assets to meet obligations of the partnership and a partnership ends with death of a partner from the partnership.

A corporation is a business owned by stockholders. The advantages are that stockholders have limited personal risk which is limited to their investment in the company. The corporation has unlimited life and the disadvantage is that a corporation is more difficult to form.

Diff: 2

LO: 1-1

AACSB: Written and Oral Communication

Learning Outcome: Define accounting terms, accounting concepts and principles

16) What is the difference between Bookkeeping and Accounting?Answer: Bookkeeping is the recording function within the accounting process. A bookkeeper records the transactions into the company's books (more transactional), while an accountant reviews and analyzes the information including the transactions which are recorded. The accountant then takes the information and prepares the financial statements.

Diff: 2

LO: 1-1

AACSB: Written and Oral Communication

Learning Outcome: Define accounting terms, accounting concepts and principles

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