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Question 1

· A corporation:  

·	·	· Is a business legally separate from its owners.
·	·	· Is controlled by the FASB.
·	·	· Has shareholders who have unlimited liability for the acts of the corporation.
·	·	· Is the same as a limited liability partnership.
·	·	· Is not subject to double taxation.

5 points

Question 2

· Risk is:  

·	·	· Net income divided by average total assets.
·	·	· The reward for investment.
·	·	· The uncertainty about the expected return to be earned.
·	·	· Unrelated to expected return.
·	·	· Derived from the idea of getting something back from an investment.

5 points

Question 3

· Owners of a corporation are called shareholders or stockholders.   True  False     

5 points

Question 4

· Of the following accounts, the one that normally has a credit balance is:  

·	·	· Cash.
·	·	· Office Equipment.
·	·	· Wages Payable.
·	·	· Owner, Withdrawals.
·	·	· Sales Salaries Expense.

5 points

Question 5

· A financial statement providing information that helps users understand a company's financial status, and which lists the types and amounts of assets, liabilities, and equity as of a specific date, is called a(n):  

·	·	· Balance sheet.
·	·	· Income statement.
·	·	· Statement of cash flows.
·	·	· Statement of owner's equity.
·	·	· Financial Status Statement.

5 points

Question 6

· Creditors' claims on the assets of a company are called:  

·	·	· Net losses.
·	·	· Expenses.
·	·	· Revenues.
·	·	· Equity.
·	·	· Liabilities.

5 points

Question 7

· A customer's promise to pay is called an account payable to the seller.   True  False     

5 points

Question 8

· The account used to record the transfers of assets from a business to its owner is:  

·	·	· A revenue account.
·	·	· The owner's withdrawals account.
·	·	· The owner's capital account.
·	·	· An expense account.
·	·	· A liability account.

5 points

Question 9

· An income statement reports on investing and financing activities.   True  False     

5 points

Question 10

· External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.   True  False     

5 points

Question 11

· If equity is $300,000 and liabilities are $192,000, then assets equal:  

·	·	· $108,000.
·	·	· $192,000.
·	·	· $300,000.
·	·	· $492,000.
·	·	· $792,000.

5 points

Question 12

· Operating activities:  

·	·	· Are the means organizations use to pay for resources like land, buildings and equipment.
·	·	· Involve using resources to research, develop, purchase, produce, distribute and market products and services.
·	·	· Involve acquiring and disposing of resources that a business uses to acquire and sell its products or services.
·	·	· Are also called asset management.
·	·	· Are also called strategic management.

5 points

Question 13

· If the liabilities of a business increased $75,000 during a period of time and the owner's equity in the business decreased $30,000 during the same period, the assets of the business must have:  

·	·	· Decreased $105,000.
·	·	· Decreased $45,000.
·	·	· Increased $30,000.
·	·	· Increased $45,000.
·	·	· Increased $105,000.

5 points

Question 14

Generally accepted accounting principles are the basic assumptions, concepts, and guidelines for preparing financial statements.   True  False