Chapter 1 Business: What's It All About?
Learning Objective 1-1
1.1-1) The ownership structure of a business includes the following forms ________.
A) individual, group, and corporate
B) sole proprietorship, partnership, and corporation
C) service, manufacturing, and financial
D) debtors, cre...
test bank for financial accounting a business process approach 3rd edition by reimers
chapter 1 business whats it all about learning objective 1 1 11 1 the ownership structure of a business in
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3RD EDITION BY REIMERS
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Financial Accounting: A Business Process Approach, 3e (Reimers)
Chapter 1 Business: What's It All About?
Learning Objective 1-1
1.1-1) The ownership structure of a business includes the following forms ________.
A) individual, group, and corporate
B) sole proprietorship, partnership, and corporation
C) service, manufacturing, and financial
D) debtors, creditors, and owners
Answer: B
Diff: 1
Objective: LO 1-1
1.1-2) Which of the following is true about a sole proprietorship?
A) A sole proprietorship is a company owned by two or more individuals.
B) The owner's liability is limited to the amounts invested in the business.
C) Income from a sole proprietorship is distributed to the owner in the form of a dividend.
D) The income from a sole proprietorship is taxed on the owner's personal income tax return.
Answer: D
Diff: 2
Objective: LO 1-1
1.1-3) A partnership agreement ________.
A) exempts partners from unlimited liability
B) establishes the partnership as a separate legal entity
C) details how much work partners will do and how they will split up the profits
D) defines how many shares of stock the partnership may sell to investors
Answer: C
Diff: 3
Objective: LO 1-1
1.1-4) The two types of merchandising businesses include ________.
A) wholesale and retail
B) service and financial
C) manufacturing and retail
D) service and wholesale
Answer: A
Diff: 2
Objective: LO 1-1
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1.1-5) The inputs of a firm include ________.
A) revenues
B) liabilities
C) inventory and supplies
D) All of these are correct.
Answer: C
Diff: 1
Objective: LO 1-1
1.1-6) A corporation ________.
A) is a legal entity separate from the owners
B) is a manufacturer and not a service organization
C) may cause unlimited liability for its shareholders
D) provides goods or services for the sole purpose of helping people
Answer: A
Diff: 1
Objective: LO 1-1
1.1-7) Corporations are ________.
A) for-profit businesses only
B) manufacturers and not service organizations
C) owned by shareholders
D) exempt from legal liability
Answer: C
Diff: 1
Objective: LO 1-1
1.1-8) Advantages of the corporate form of business organization include ________.
A) double taxation
B) limited liability for shareholders
C) separation of ownership and management
D) Two or more of these are correct.
Answer: B
Diff: 3
Objective: LO 1-1
1.1-9) Disadvantages of the corporate form of business organization include ________.
A) double taxation
B) limited liability for shareholders
C) separation of ownership and management
D) two or more of these
Answer: D
Diff: 3
Objective: LO 1-1
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Business-Process-Approach-3rd-Edition-by-Reimers
1.1-10) Which of the following is legally a separate entity from its owner(s)?
A) sole proprietorship
B) partnership
C) corporation
D) Two of these are correct.
Answer: C
Diff: 1
Objective: LO 1-1
1.1-11) The outputs of a firm are its ________.
A) capital contributions
B) services provided to customers
C) delivery of products to customers
D) Two or more of these are correct.
Answer: D
Diff: 1
Objective: LO 1-1
1.1-12) A service company ________.
A) is a wholesale business
B) manufactures goods
C) is a retail business
D) None of these are correct.
Answer: D
Diff: 1
Objective: LO 1-1
1.1-13) The four types of business are ________.
A) service, wholesale, retail, and financial
B) for profit, nonprofit, wholesale, and retail
C) service, merchandising, manufacturing, and financial services
D) financial, manufacturing, service, and wholesale
Answer: C
Diff: 3
Objective: LO 1-1
1.1-14) A manufacturing business ________.
A) will lend money to customers
B) buys goods for resale
C) provides services to its customers
D) makes the products it sells
Answer: D
Diff: 1
Objective: LO 1-1
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Business-Process-Approach-3rd-Edition-by-Reimers
1.1-15) Financial services companies ________.
A) deal in services related to money
B) sell insurance to their customers
C) lend money to consumers to pay for cars and houses
D) All of these are correct.
Answer: D
Diff: 1
Objective: LO 1-1
1.1-16) A business in the form of a sole proprietorship ________.
A) is separate and distinct from its owner
B) is a separate legal entity
C) files its own tax return
D) is a company with a single owner
Answer: D
Diff: 1
Objective: LO 1-1
1.1-17) A partnership ________.
A) is a business owned by two or more individuals
B) has owners who are legally liable for everything the company does
C) may be organized under a partnership agreement
D) is all of these
Answer: D
Diff: 2
Objective: LO 1-1
1.1-18) The owners of a corporation are called ________.
A) shareholders
B) partners
C) stockholders
D) two or more of these
Answer: D
Diff: 1
Objective: LO 1-1
1.1-19) Which of the following is true about a corporation?
A) Corporations must have a minimum of two or more shareholders.
B) Each individual shareholder has individual legal responsibility for the corporation's actions.
C) Corporations are exempt from taxes; however, the shareholders are required to pay taxes on
dividends received.
D) Managers of corporations can be held responsible for the actions of the corporation.
Answer: D
Diff: 3
Objective: LO 1-1
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