proprietorship form of business

    Question. 1. The proprietorship form of business organization

    combines the records of the business with the personal records of the owner

    generally receives favorable tax treatment relative to a corporation

    is classified as a separate legal entity

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    must have at least two owners in most states

    Question 2. Most business enterprises in the United States are

    government units

    proprietorships and partnerships

    partnerships

    corporations

    Question 3. A business organized as a separate legal entity is a

    corporation.

    proprietor.

    partnership.

    government unit.

    Question 4. Which of the following is the best definition of an internal user of accounting information?

    Creditors like banks that use accounting information to evaluate the risk of lending money

    Investors who use accounting information to decide whether to buy or sell stock

    Labor unions who use accounting information to examine the ability of the company to pay increased wages and benefits.

    Managers who use accounting information to plan, organize, and run a business.

    Question 5. Which of the following groups uses accounting information primarily to insure the entity is operating within prescribed rules?

    Taxing authorities

    Regulatory agencies

    Labor Unions

    Management

    Question 6. Which of the following groups uses accounting information to determine whether the company can pay its obligations?

    Chief Financial Officer

    Investors in common stock

    Creditors

    Marketing managers

    Question 7. Which of the following financial statements is divided into major categories of operating, investing, and financing activities?

    The balance sheet.

    The income statement.

    The retained earnings statement.

    The statement of cash flows.

    Question 8. Ending retained earnings for a period is equal to:

    Beginning retained earnings + Net income – Dividends

    Beginning retained earnings – Net income – Dividends

    Beginning retained earnings – Net income + Dividends

    Beginning retained earnings + Net income + Dividends

    Question 9. The financial statement that summarizes the changes in retained earnings for a specific period of time is the

    income statement.

    balance sheet.

    statement of cash flows.

    retained earnings statement.

    Question 10. To show how successfully your business performed during a period of time, you would report its revenues and expense in the

    balance sheet.

    retained earnings statement.

    income statement.

    retained earnings statement.

    statement of cash flows.

    Question 11. Which financial statement is prepared first?

    Balance sheet

    statement of cash flows.

    income statement.

    Question 12. An income statement shows

    assets, liabilities, and stockholders’ equity.

    revenues, liabilities, and stockholders’ equity.

    expenses, dividends, and stockholders’ equity.

    revenues, expenses, and net income.

    Question 13. Dawson Corporation has the following information available for 2011:

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    (in millions)
    Issued common stock $45
    Retired common stock $65
    Paid dividends $75
    Net income $130
    Beginning common stock balance $575
    Beginning retained earnings balance $425

    Based in this information, what is Dawson’s Common Stock balance at the end of the year?

    $555

    $630

    $685

    $195

    Question 14. Declaring a cash dividend will

    increase retained earnings.

    decrease retained earnings.

    increase common stock.

    decrease common stock.

    Question 15. At December 31, 2012 Lowery Company had retained earnings of $2,184,000. During 2012 they issued stock for $98,000, and paid dividends of $34,000. Net income for 2012 was $402,000. The retained earnings balance at the beginning of 2012 was:

    $2,454,000

    $1,914,000

    $2,552,000

    $1,816,000

    Question 16. Which of the following organizations issues accounting standards for countries outside the United States?

    IASB

    GAAP

    FASB

    SEC

    Question 17. Generally accepted accounting principles

    are accounting rules that are recognized as a general guide for financial reporting.

    have eliminated all errors in accounting..

    are sound in theory but rarely used in real life.

    are accounting rules formulated by the Internal Revenue Service.

    Question 18. The agency of the United States Government that oversees the U.S. financial markets is the

    Security Exchange Commission

    Internal Revenue Service

    Financial Accounting Standards Board.

    International Auditing Standards Committee.

    Question 19. What organization issues U.S. accounting standards?

    International Auditing Standards Committee.

    Financial Accounting Standards Board.

    Security Exchange Commission.

    International Accounting Standards Committee.

    Question 20. Two of the major characteristics that make accounting information useful are

    Comparability and flexibility.

    Relevance and Faithful representation.

    Understandability and consistency.

    Verifiability and timeliness.

    Question 21. If accounting information has relevance, it is useful in making predictions about

    the future events of a company.

    new accounting principles.

    future IRS audits.

    foreign currency exchange rates.

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