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Exam 1: Accounting in Business

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Question 51

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The characteristics below apply to at least one of the forms of business organization. a. Is a separate legal entity. b. Is allowed to be owned by one person only. c. Partners or sole proprietors are personally liable for debts of the business. d. Is a separately taxable entity. e. Is a business entity. f. May have a contract specifying the division of profits among the partners. g. Has an unlimited life Use the following format to indicate (with a "yes" or "no") whether or not a characteristic applies to each type of business organization. $\begin{array} { | l | l | l | l | } \hline & \underline{\text { Proprietorthip }} &\underline{ \text { Partnership }} & \underline{\text { Corporation} } \\\hline \text { a. } & & & \\\hline \text { b. } & & & \\\hline \text { c. } & & & \\\hline \text { d } & & & \\\hline \text { e. } & & & \\\hline \text { f. } & & & \\\hline \text { g. } & & & \\\hline\end{array}$

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Question 52

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Charlie's Chocolates Inc.'s stockholders made investments of $50,000 and dividends of $20,000. The company has revenues of $83,000 and expenses of $64,000. Calculate its net income.

A) $30,000.
B) $83,000.
C) $64,000.
D) $19,000.
E) $49,000.

F) B) and C)
G) A) and B)

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Question 53

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Common stock is an increase in equity from a company's earnings activities.

________________________________ explains changes in the stockholders' claim on the business's assets from net income or loss, and dividends over a period of time.

A disadvantage of a sole proprietorship is the fact that the owner has ______________.

Using the accounting equation, equity is equal to ________________________.

Congress passed the ______________________ to help curb financial abuses at companies that issue their stock to the public.

The Securities and Exchange Commission (SEC) is a government agency that has legal authority to establish GAAP.

The primary objective of managerial accounting is to provide general purpose financial statements to help external users analyze and interpret an organization's activities.

The basic financial statements include all of the following except:

An example of an investing activity is:

Revenue is properly recognized:

Increases in equity from a company's sales of products or services are:

Risk is the _________________ about the return an investor expects to earn.

If the liabilities of a company increased $74,000 during a period of time and equity in the company decreased $19,000 during the same period, what was the effect on the assets?

The accounting equation implies that: Assets + Liabilities = Equity.

Creditors' claims on assets that reflect company obligations to provide assets, products, or services to others are called ____________________.

The Sarbanes-Oxley Act (SOX) requires each issuer of securities to disclose whether it has adopted a code of ethics for its senior financial officers and the contents of that code.

Resources such as cash removed from the business by the business owner for personal use are called ____________.

External users include lenders, shareholders, customers, and regulators.