Chapter 1
1. The objective of most businesses is to maximize profits.
a.
True
b.
False
True
Easy
False
JFND-GO3A-EW4R-RCJZ
2. A limited liability company combines attributes of a partnership and a corporation.
a.
True
b.
False
True
Moderate
False
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3. A partnership is owned by two or more individuals.
a.
True
b.
False
Chapter 1
True
Easy
False
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4. Manufacturing businesses change basic inputs into products that are sold to individual customers.
a.
True
b.
False
True
Easy
False
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4OTI-GO4W-NQNBEE
5. Merchandising businesses produce products rather than provide services to customers.
a.
True
b.
False
False
Easy
Chapter 1
6. A corporation is a business that is legally separate and distinct from its owners.
a.
True
b.
False
True
Easy
False
JFND-GO3A-EW4R-RP1B
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7. The popularity of the sole proprietorship is due to the ease and low cost of organizing.
a.
True
b.
False
True
Easy
False
False
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8. A primary disadvantage of corporations is that the financial resources available to them are limited.
a.
True
b.
False
False
Moderate
False
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9. The ownership of a proprietorship is divided into shares of stock owned by its stockholders.
a.
True
b.
False
False
Moderate
False
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JFNN-4OTI-GO4W-NQNBEE
Chapter 1
10. All merchandising businesses are organized as corporations.
a.
True
b.
False
False
Moderate
False
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11. Stockholders of a corporation are its internal stakeholders.
a.
True
b.
False
False
Moderate
False
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Chapter 1
12. John Deere is a leading manufacturer of agricultural machinery in the world producing products that serve unique
market needs. Therefore, John Deere is an example of a company that uses a premium-price emphasis to attract
customers.
a.
True
b.
False
True
Moderate
False
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4OTI-GO4W-NQNBEE
13. A business stakeholder has an interest in the economic performance of a business.
a.
True
b.
False
True
Easy
False
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JFND-GO3A-EW4R-RP1R
Chapter 1
14. Companies using a low-cost emphasis provide products and services that compete on features other than price.
a.
True
b.
False
False
Moderate
False
JFND-GO3A-EW4R-RPT1
15. The basic type of stock issued to owners is called common stock.
a.
True
b.
False
True
Easy
False
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4OTI-GO4W-NQNBEE
Chapter 1
16. Assets are acquired through investing activities when resources are purchased.
a.
True
b.
False
True
Easy
False
JFND-GO3A-EW4R-RPTO
17. Creditors have preference to assets behind stockholders if a business fails.
a.
True
b.
False
False
Easy
False
JFND-GO3A-EW4R-RPTZ
18. A liability is a legal obligation to repay the amount borrowed according to the terms of the borrowing agreement.
a.
True
Chapter 1
b.
False
True
Easy
False
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4OTI-GO4W-NQNBEE
19. Accounting is thought to be the “language of business” because business information is communicated to stakeholders.
a.
True
b.
False
True
Easy
False
JFND-GO3A-EW4R-RPTI
4OTI-GO4W-NQNBEE
20. The branch of accounting related to the management‘s financial decisions is known as financial accounting.
a.
True
b.
False
False
Chapter 1
21. The stockholders’ equity of a company should equal the sum of its total assets and total liabilities.
a.
True
b.
False
False
Easy
False
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22. The balance sheet represents the accounting equation.
a.
True
b.
False
True
Easy
False
Easy
False
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Chapter 1
SACC.WARR.18.1-4 – LO: 01.04
United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
7/19/2016 9:44 AM
23. What is the primary objective of most businesses?
a.
To maximize profits
b.
To pay dividends to stockholders
c.
To provide a benefit to society
d.
To manufacture a quality product
Multiple Choice
SACC.WARR.18.1-1 – LO: 01.01
United States – BUSPROG: Analytic
United States – AK – DISC: AICPA: FN-Measurement
Bloom’s: Remembering
7/19/2016 9:44 AM
7/19/2016 9:44 AM
24. Which of the following businesses buys products from other businesses to sell them to customers?
a.
A merchandising business
b.
A manufacturing business
c.
A service business
d.
An investment business
Multiple Choice
Chapter 1
25. Which of the items below is not a business organization form?
a.
Venture entrepreneurship
b.
Proprietorship
c.
Partnership
d.
Corporation
a
Moderate
Multiple Choice
False
SACC.WARR.18.1-1 – LO: 01.01
United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
10/28/2016 9:44 AM
JFND-GO3A-EW4R-RP4G
26. Which of the following types of business is popular for its ease and low cost of organizing?
a.
Not-for-profit
b.
Corporation
c.
Partnership
d.
Proprietorship
Moderate
False
SACC.WARR.18.1-1 – LO: 01.01
United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
10/5/2016 9:59 AM
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Chapter 1
27. Which of the following statements is true about a limited liability company?
a.
It is organized under state or federal statutes as a separate legal entity.
b.
Many professional practices such as lawyers, doctors, and accountants are organized as limited liability
companies.
c.
Its financial resources are limited to the individual owner’s resources.
d.
The frequency of this form is due to the ease and low cost of organizing.
Multiple Choice
SACC.WARR.18.1-1 – LO: 01.01
United States – BUSPROG: Analytic
United States – DISC: – ACBSP: APC–03 – Business Forms
Bloom’s: Understanding
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11/2/2016 4:03 AM
28. Under a _____, a business designs products that possess unique attributes or characteristics for which customers are
willing to pay more.
a.
premium-price emphasis
b.
outreach emphasis
c.
low-cost emphasis
d.
customer emphasis
Multiple Choice
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United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
7/19/2016 9:44 AM
Chapter 1
Multiple Choice
SACC.WARR.18.1-1 – LO: 01.01
United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
7/19/2016 9:44 AM
29. Which of the following is not a characteristic of a corporation?
a.
Corporations are organized as a separate legal taxable entity.
b.
Ownership is divided into shares of stock.
c.
Corporations experience an ease in obtaining large amounts of resources by issuing stock.
d.
A corporation can elect to be taxed as a partnership.
Multiple Choice
SACC.WARR.18.1-1 – LO: 01.01
United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
7/19/2016 9:44 AM
30. A corporation is an entity _____.
a.
that is organized according to state or federal statutes and in which ownership is divided into shares of stock
b.
that is known for its ease of formation
c.
that terminates its existence with the death of the owner
Chapter 1
d.
that pays tax on the owner’s tax returns
Multiple Choice
SACC.WARR.18.1-1 – LO: 01.01
United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
11/2/2016 4:03 AM
31. A low-cost emphasis strives to provide:
a.
no-frills, standardized products and services.
b.
products and services that provide unique market needs.
c.
products and services that provide prestige and image for customers.
d.
products and services that compete on features other than price.
Multiple Choice
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United States – BUSPROG: Analytic
United States – AK – DISC: AICPA: BB-Industry
Bloom’s: Understanding
7/19/2016 9:44 AM
7/19/2016 9:44 AM
32. Which of the following businesses use a premium-price emphasis?
a.
Value City Furniture selling furniture at affordable prices
b.
Tommy Hilfiger selling products that have a unique image
Chapter 1
c.
Wal-Mart reselling standardized products
d.
Southwest Airlines providing standardized services
Multiple Choice
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Bloom’s: Applying
7/19/2016 9:44 AM
7/19/2016 9:44 AM
33. Motel 6, a company that helps customers find budget motels across the nation, is an example of a business using
which of the following?
a.
Low-cost emphasis
b.
Outreach emphasis
c.
Customer emphasis
d.
Premium-price emphasis
Multiple Choice
SACC.WARR.18.1-1 – LO: 01.01
United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
7/19/2016 9:44 AM
34. Which of the following is a business stakeholder?
Chapter 1
a.
A bank
b.
An employee
c.
A federal government
d.
All of these
Moderate
Multiple Choice
False
SACC.WARR.18.1-1 – LO: 01.01
United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
10/5/2016 10:08 AM
JFND-GO3A-EW4R-RP3S
35. _____ is an example of internal stakeholders.
a.
Managers
b.
Creditors
c.
Stockholders
d.
Suppliers
a
Moderate
Multiple Choice
False
SACC.WARR.18.1-1 – LO: 01.01
United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
7/19/2016 9:44 AM
JFND-GO3A-EW4R-RP3I
Chapter 1
36. Which of the following is not an example of a capital market stakeholder?
a.
Banks
b.
Owners
c.
Suppliers
d.
Stockholders
c
Moderate
Multiple Choice
False
SACC.WARR.18.1-1 – LO: 01.01
United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
7/19/2016 9:44 AM
JFND-GO3A-EW4R-RP3W
4OTI-GO4W-NQNBEE
37. Capital market stakeholders have an interest in a company because:
a.
they collect taxes from the company.
b.
they depend upon the continued success of the company for keeping their jobs.
c.
they purchase the company’s products or services or sell their products or services to the company.
d.
they provide major financing for the business.
Moderate
Multiple Choice
False
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United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
10/5/2016 10:13 AM
JFND-GO3A-EW4R-RPNN
Chapter 1
38. In the case of a failing company, the first claim to the company’s assets lies with:
a.
the state governments.
b.
the creditors of the company.
c.
the owners of the company.
d.
the managers of the company.
Multiple Choice
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United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
10/6/2016 1:58 AM
39. The economic performance of a business is of importance to the government because:
a.
of tax collections.
b.
they sell their products to the business.
c.
of the amount owed by them to the business.
d.
all of these.
Multiple Choice
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United States – BUSPROG: Analytic
United States – AK – DISC: AICPA: FN-Measurement
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7/19/2016 9:44 AM
10/6/2016 2:00 AM
Chapter 1
40. The performance evaluation of the managers of a company is dependent on the company’s:
a.
common stock.
b.
volatility.
c.
economic performance.
d.
nonrecurring activities.
c
Moderate
Multiple Choice
False
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United States – BUSPROG: Analytic
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Bloom’s: Understanding
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10/6/2016 2:10 AM
JFND-GO3A-EW4R-RPBA
41. Which of the following is incurred by a business when it borrows money?
a.
An accumulated depletion
b.
A liability
c.
A loss
d.
An accrued expenditure
Moderate
Multiple Choice
False
SACC.WARR.18.1-2 – LO: 01.02
United States – BUSPROG: Analytic
Bloom’s: Understanding
7/19/2016 9:44 AM
10/6/2016 2:13 AM
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