100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Previously searched by you
Previously searched by you
logo
Test Bank for Financial Accounting Tools For Business Decision Making 10th Edition Paul D. Kimmel, Jerr||Latest 2024 Verified by expert||ANSWERSHEETPublisher ‎Wiley; 10th edition (December 2, 2021) Loose Leaf ‎896 pages ISBN-10 ‎1119791081 ISBN-13 ‎978-11 $13.29
Add to cart
Quickly navigate to
Preview
  2.  
  3. Financial Accounting Tools For Business
  4.  
  5. Financial Accounting Tools For Business

Exam (elaborations)

Test Bank for Financial Accounting Tools For Business Decision Making 10th Edition Paul D. Kimmel, Jerr||Latest 2024 Verified by expert||ANSWERSHEETPublisher ‎Wiley; 10th edition (December 2, 2021) Loose Leaf ‎896 pages ISBN-10 ‎1119791081 ISBN-13 ‎978-11
 0 purchase
  • Course
  • Financial Accounting Tools For Business
  • Institution
  • Financial Accounting Tools For Business

Test Bank for Financial Accounting Tools For Business Decision Making 10th Edition Paul D. Kimmel, Jerr||Latest 2024 Verified by expert||ANSWERSHEET Publisher ‎Wiley; 10th edition (December 2, 2021) Loose Leaf ‎896 pages ISBN-10 ‎1119791081 ISBN-13 ‎978-1119791089 Item Weight ‎3.44 p...

[Show more]

Preview 10 out of 2283  pages

Document information

  • May 5, 2024
  • 2283
  • 2023/2024
  • Exam (elaborations)
  • Questions & answers

Subjects

Written for

  • Financial Accounting Tools For Business
  • Financial Accounting Tools For Business

Seller

avatar-seller
ANSWERSHEET

Reviews received

Content preview

2024 ANSWERSHEET


CHAPTER 1
INTRODUCTION TO FINANCIAL STATEMENTS
CHAPTER LEARNING OBJECTIVES
1. Identify the forms of business organization and the uses of accounting information. A
sole proprietorship is a business owned by one person. A partnership is a business owned
by two or more people associated as partners. A corporation is a separate legal entity for
which evidence of ownership is provided by shares of stock. Internal users are managers
who need accounting information to plan, organize, and run business operations. The
primary external users are investors and creditors. Investors (stockholders) use accounting
information to decide whether to buy, hold, or sell shares of a company‘s stock. Creditors
(suppliers and bankers) use accounting information to assess the risk of granting credit or
loaning money to a business. Other groups who have an indirect interest in a business are
taxing authorities, customers, labor unions, and regulatory agencies.

2. Explain the three principal types of business activity. Financing activities involve
collecting the necessary funds to support the business. Investing activities involve acquiring
the resources necessary to run the business. Operating activities involve putting the
resources of the business into action to generate a profit.
3. Describe the four financial statements and how they are prepared. An income statement
presents the revenues and expenses of a company for a specific period of time. A retained
earnings statement summarizes the changes in retained earnings that have occurred for a
specific period of time. A balance sheet reports the assets, liabilities, and stockholders‘
equity of a business at a specific date. A statement of cash flows summarizes information
concerning the cash inflows (receipts) and outflows (payments) for a specific period of time.
Assets are resources owned by a business. Liabilities are the debts and obligations of the
business. Liabilities represent claims of creditors on the assets of the business.
Stockholders‘ equity represents the claims of owners on the assets of the business.
Stockholders‘ equity is subdivided into two parts: common stock and retained earnings. The
basic accounting equation is Assets = Liabilities + Stockholders‘ Equity. Within the annual
report, the management discussion and analysis provides management‘s interpretation of
the company‘s results and financial position as well as a discussion of plans for the future.
Notes to the financial statements provide additional explanation or detail to make the
financial statements more informative. The auditor‘s report expresses an opinion as to
whether the financial statements present fairly the company‘s results of operations and
financial position.
*4. Explain the career opportunities in accounting. Accounting offers many different jobs in
fields such as public and private accounting, governmental, and forensic accounting.
Accounting is a popular major because there are many different types of jobs, with unlimited
potential for career advancement




Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)

,2-2 Test Bank for Kimmel, Financial Accounting: Tools for Business Decision Making, 10e

Difficulties:
Easy: 143
Medium: 101
Hard: 12

Question List by Section
Business Organization and Accounting Information Uses:
Forms of Business Organization; 47, 48, 202, 246
Sole Proprietorship: 5, 44, 49, 58, 59
Partnership: 1, 4, 46, 56
Corporation: 2, 3, 45, 50, 51, 52, 53, 55, 57, 233, 245
Hybrid Forms of Organization: 60, 61
Users and Uses of Financial Information: 6, 7, 11, 74, 87
Internal Users: 62, 63, 64, 75, 77, 82, 234
External Users: 8, 9, 10, 12, 65, 76, 78, 79, 80, 81, 83, 84, 85, 86, 88, 89
Data Analytics: 66, 67, 68, 69, 70, 235, 236
Ethics in Financial Reporting: 71, 72, 73, 237, 255
The Three Types of Business Activity: 97
Financing Activities: 13, 15, 18, 90, 91, 93, 94, 95, 96, 97, 102, 109, 117, 118, 119, 238
Investing Activities: 14, 16, 98, 99, 115, 116
Operating Activities: 17, 19, 20, 100, 101, 103, 104, 105, 106, 107, 108, 110, 111, 112, 113,
114
The Four Financial Statements:
Income Statement: 21, 22, 23, 24,127, 128, 132, 133, 134, 138, 142, 143
Retained Earnings Statement: 120, 122, 123, 124, 125, 126, 129, 130, 131, 135, 137, 139,
140, 141, 144, 145, 146, 147, 148, 149, 150, 154, 164, 169, 178, 181, 252
Balance Sheet: 25, 27, 28, 29, 30, 31, 32, 33, 34, 35, 136, 151, 152, 153, 163, 165, 166, 168,
170, 173, 177, 179, 180, 182, 185, 186, 187, 188, 199, 200, 201, 207, 208, 213, 214, 215, 216,
217, 218, 219, 220, 221, 222, 225, 229, 239, 240, 241, 253
Statement of Cash Flows: 26, 121, 171, 174, 183, 242, 249
Interrelationships of Statements: 155, 156, 157, 158, 159, 160, 161, 162, 167, 175, 176, 184,
250, 251, 256
Elements of an Annual Report: 36, 41, 192, 196, 197
Management Discussion and Analysis: 40, 191
Notes to the Financial Statements: 37, 42, 190, 193, 194, 198, 254
Auditor‘s Report: 38, 39, 195




Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)

, A Further Look at Financial Statements 2-3

TRUE-FALSE STATEMENTS
1. A business organized as a separate legal entity and owned by stockholders is a
partnership.
Ans: F, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Partnership, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

2. Corporate stockholders have no personal liability for the debts of the corporation.
Ans: T, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Corporation, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

3. The liability of corporate stockholders is limited to the amount of their investment.

Ans: T, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Corporation, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

4. The majority of U.S. business is transacted by partnerships.
Ans: F, LO: 1, Bloom: K, Section: Business Organization and Accounting Information Uses, Subsection: Partnerships, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

5. Sole proprietorships in the United States generate more revenue than the other two
forms of business enterprise.
Ans: F, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Sole Proprietorship, Bloom: K, Difficulty: Easy, Min: 1,
AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

6. Owners of business firms are the only people who need accounting information.
Ans: F, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Users and Uses of Financial Information, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None,
IMA: Reporting

7. Some users of accounting information are internal to the company while others are
external.
Ans: T, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Users and Uses of Financial Information, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None,
IMA: Reporting

8. Management of a business enterprise is the major external user of accounting
information.
Ans: F, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: External Users, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

9. External users of accounting information include managers who plan, organize, and run
a business.
Ans: F, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: External Users, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

10. The accounting information needs and questions of external users vary considerably.
Ans: T, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: External Users, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

11. Accounting communicates financial information about a business to both internal and
external users.
Ans: T, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Users and Uses of Financial Information, Bloom: K,
Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None,
IMA: Reporting

12. Two primary external users of accounting information are investors and creditors.
Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)

,2-4 Test Bank for Kimmel, Financial Accounting: Tools for Business Decision Making, 10e


Ans: T, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: External Users, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting
13. Financing activities for corporations include borrowing money and selling shares of their
own stock.
Ans: T, LO: 2, Section: The Three Types of Business Activity, Subsection: Financing Activities, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA
BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

14. Investing activities involve collecting the necessary funds to support the business.
Ans: F, LO: 2, Section: The Three Types of Business Activity, Subsection: Investing Activities, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA
BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting


15. The purchase of equipment is an example of a financing activity.
Ans: F, LO: 2, Section: The Three Types of Business Activity, Subsection: Financing Activities, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA
BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

16. Assets are resources owned by a business that provide future services or benefits to the
business.
Ans: T, LO: 2, Section: The Three Types of Business Activity, Subsection: Investing Activities, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA
BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

17. Payments by the business to its owners are operating activities.
Ans: F, LO: 2, Section: The Three Types of Business Activity, Subsection: Operating Activities, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA
BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

18. The economic resources owned by a business are called stockholders‘ equity.
Ans: F, LO: 2, Section: The Three Types of Business Activity, Subsection: Financing Activities Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA
BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

19. Operating activities involve putting the resources of the business into action to generate
a profit.
Ans: T, LO: 2, Section: The Three Types of Business Activity, Subsection: Operating Activities, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA
BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

20. A business is usually involved in only two types of activities—financing and investing.
Ans: F, LO: 2, Section: The Three Types of Business Activity, Subsection: Operating Activities, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA
BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

21. Net income for the period is determined by subtracting expenses and dividends from
revenues.
Ans: F, LO: 3, Section: The Four Financial Statements, Subsection: Income Statement, Bloom: K, Difficulty: Medium, Min: 1, AACSB: None, AICPA BC:
Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

22. A different set of financial statements is usually prepared for each user.
Ans: F, LO: 3, Section: The Four Financial Statements, Subsection: Income Statement, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC:
Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

23. The heading for an income statement prepared for the year ending December 31, 2025
will include the line ―As of December 31, 2025.‖
Ans: F, LO: 3, Section: The Four Financial Statements, Subsection: Income Statement, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC:
Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

24. Net income is another term for revenue.
Ans: F, LO: 3, Section: The Four Financial Statements, Subsection: Income Statement, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC:
Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

25. Cash is another term for stockholders‘ equity.
Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)

, A Further Look at Financial Statements 2-5

Ans: F, LO: 3, Section: The Four Financial Statements, Subsection: Balance Sheet, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: Process
and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

26. The primary purpose of the statement of cash flows is to provide information about the
cash receipts and cash payments of a company for a specific period of time.
Ans: T, LO: 3, Section: The Four Financial Statements, Subsection: Statement of Cash Flows, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA
BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

27. The balance sheet reports assets and claims to those assets at a specific point in time.
Ans: T, LO: 3, Section: The Four Financial Statements, Subsection: Balance Sheet, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: Process
and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting


28. The basic accounting equation states that Assets = Liabilities.
Ans: F, LO: 3, Section: The Four Financial Statements, Subsection: Balance Sheet, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: Process
and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

29. One way of stating the accounting equation is Assets + Liabilities = Stockholders‘ Equity.
Ans: F, LO: 3, Section: The Four Financial Statements, Subsection: Balance Sheet, Bloom: C, Difficulty: Medium, Min: 1, AACSB: None, AICPA BC:
Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

30. The accounting equation can be expressed as Assets - Stockholders‘ Equity = Liabilities.
Ans: T, LO: 3, Section: The Four Financial Statements, Subsection: Balance Sheet, Bloom: C, Difficulty: Easy, Medium: 1, AACSB: None, AICPA BC:
Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

31. The accounting equation can be expressed as Assets - Liabilities = Stockholders‘ Equity.
Ans: T, LO: 3, Section: The Four Financial Statements, Subsection: Balance Sheet, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: Process
and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

32. If the assets of a business total $150,000 and liabilities total $105,000, then its
stockholders‘ equity totals $45,000.
Ans: T, LO: 3, Section: The Four Financial Statements, Subsection: Balance Sheet, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA BC:
Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

Solution: $150,000 – $105,000 = $45,000
Total assets – Total liabilities

33. If the assets owned by a business total $100,000 and liabilities total $65,000, then
stockholders‘ equity totals $25,000.
Ans: F, LO: 3, Section: The Four Financial Statements, Subsection: Balance Sheet, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA BC:
Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

Solution: $100,000 - $65,000 = $35,000
Total assets – Total liabilities

34. Claims of creditors and owners on the assets of a business are called liabilities.
Ans: F, LO: 3, Section: The Four Financial Statements, Subsection: Balance Sheet, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: Process
and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

35. Creditors‘ rights to assets supersede owners‘ rights to the assets.
Ans: T, LO: 3, Section: The Four Financial Statements, Subsection: Balance Sheet, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: Process
and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

36. All publicly traded U.S. companies must provide their stockholders with an annual report
each year.
Ans: T, LO: 3, Section: The Four Financial Statements, Subsection: Elements of an Annual Report, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None,
AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

37. Information in the notes to the financial statements has to be quantifiable (numeric).
Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)

,2-6 Test Bank for Kimmel, Financial Accounting: Tools for Business Decision Making, 10e


Ans: F, LO: 3, Section: The Four Financial Statements, Subsection: Notes to the Financial Statements, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None,
AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting



38. An auditor is an accounting professional who conducts an independent examination of a
company‘s financial statements.
Ans: T, LO: 3, Section: The Four Financial Statements, Subsection: Auditor‘s Report, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC:
Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: Professional Demeanor, IMA: Reporting

39. The auditor‘s report states the auditor‘s opinion as to the fairness of the presentation of
the financial position and results of operations and their conformance with generally
accepted accounting principles.
Ans: T, LO: 3, Section: The Four Financial Statements, Subsection: Auditor‘s Report, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC:
Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: Professional Demeanor, IMA: Reporting

40. The management discussion and analysis (MD&A) section of an annual report covers
various financial aspects of a company.
Ans: T, LO: 3, Section: The Four Financial Statements, Subsection: Management Discussion and Analysis , Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: Communications, IMA: Reporting

41. Explanatory notes and supporting schedules are an optional part of an annual report.
Ans: F, LO: 3, Section: The Four Financial Statements, Subsection: Elements of an Annual Report, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None,
AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: Communications, IMA: Reporting


42. Examples of notes are descriptions of the significant accounting policies and methods
used in preparing the statements, explanations of contingencies, and various statistics.
Ans: T, LO: 3,Section: The Four Financial Statements, Subsection: Notes to the Financial Statements Bloom: C, Difficulty: Easy, Min: 1, AACSB: None,
AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: Communications, IMA: Reporting

43. The demand for accountants was increased by passage of the Sarbanes-Oxley Act
(SOX) which significantly increased the accounting and internal control requirements for
corporations.
Ans: T, LO: 4, Section: Career Opportunities in Accounting, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: Process and Resource
Management Perspectives, AICPA AC: Reporting, AICPA PC: Communications, IMA: Reporting




MULTIPLE CHOICE QUESTIONS
44. The sole proprietorship form of business organization
a. must have at least two owners in most states.
b. generally receives favorable tax treatment relative to a corporation.
c. combines the records of the business with the personal records of the owner.
d. is classified as a separate legal entity.
Ans: B, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Sole Proprietorship, Bloom: K, Difficulty: Easy, Min: 1,
AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

45. A business organized as a corporation
a. is not a separate legal entity in most states.
b. requires that stockholders be personally liable for the debts of the business.
c. is owned by its stockholders.
d. has tax advantages over a proprietorship or partnership.
Ans: C, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Corporation, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting


Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)

, A Further Look at Financial Statements 2-7




46. The partnership form of business organization
a. is a separate legal entity.
b. is a common form of organization for service-type businesses.
c. enjoys an unlimited life.
d. has limited liability.
Ans: B, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Partnership, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

47. Which of the following is not one of the three forms of business organization?
a. Corporations
b. Partnerships
c. Proprietorships
d. Investors
Ans: D, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Forms of Business Organization, Bloom: K, Difficulty: Easy,
Min: 1, AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting


48. The main forms of business organizations include all of the following except
a. Limited Liability Corporations
b. Partnerships
c. Sole Proprietorships
d. Corporations
Ans: A, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Forms of Business Organization, Bloom: K, Difficulty: Easy,
Min: 1, AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting


49. Most business enterprises in the United States are
a. proprietorships and partnerships.
b. partnerships.
c. corporations.
d. government units.
Ans: A, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Sole Proprietorship, Bloom: K, Difficulty: Easy, Min: 1,
AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

50. A business organized as a separate legal entity is a
a. corporation.
b. proprietor.
c. government unit.
d. partnership.
Ans: A, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Corporation, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

51. Which of the following is not an advantage of the corporate form of business
organization?
a. No personal liability
b. Easy to transfer ownership
c. Favorable tax treatment
d. Easy to raise funds
Ans: C, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Corporation, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)

,2-8 Test Bank for Kimmel, Financial Accounting: Tools for Business Decision Making, 10e




52. An advantage of the corporate form of business is that
a. it has limited life.
b. its owner‘s personal resources are at stake.
c. its ownership is easily transferable via the sale of shares of stock.
d. it is simple to establish.
Ans: C, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Corporation, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

53. Which of the following has the advantage of enabling a business to raise funds most
easily?
a. Entity
b. Sole proprietorship
c. Corporation
d. Partnership
Ans: C, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Corporation, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

54. Which of the following is an advantage of corporations relative to partnerships and sole
proprietorships?
a. Reduced legal liability for investors
b. Harder to transfer ownership
c. Lower taxes
d. Most common form of organization
Ans: A, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Forms of Business Organization, Bloom: K, Difficulty:
Medium, Min: 1, AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA:
Reporting

55. Which of the following set of characteristics describes a corporation?
a. Shared control, tax advantages, increased skills and resources
b. Simple to set up and maintains control with founder
c. Easier to transfer ownership and raise funds, no personal liability
d. Harder to raise funds and gives owner control
Ans: C, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Corporation, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting


56. A small neighborhood barber shop that is operated by its two owners would likely be
organized as a
a. joint venture.
b. partnership.
c. corporation.
d. proprietorship.
Ans: B, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Partnership, Bloom: C, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting


57. A local retail shop has been operating as a sole proprietorship. The business is growing
and now the owner wants to incorporate. Which of the following is not a reason for this
Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)

, A Further Look at Financial Statements 2-9

owner to incorporate?
a. Ability to raise capital for expansion
b. Desire to limit the owner‘s personal liability
c. The prestige of operating as a corporation
d. The ease in transferring shares of the corporation‘s stock
Ans: C, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Corporation, Bloom: C, Difficulty: Medium, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

58. All of the following are advantages for organizing a business as a sole proprietorship
except
a. a sole proprietorship is a simple form of business to set up.
b. a sole proprietorship gives the owner control of the business.
c. a sole proprietorship receives more favorable tax treatment.
d. a sole proprietorship allows for an easy transfer of ownership through stock sales.
Ans: D, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Sole Proprietorship, Bloom: K, Difficulty: Easy, Min: 1,
AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

59. Jack and Jill form a partnership. Jack runs the business in New York, while Jill vacations
in Hawaii. During the time Jill is away from the business, Jack increases the debts of the
business by $20,000. Which of the following statements is true regarding this debt?
a. Only Jack is personally liable for the debt, since he has been the managing partner
during that time.
b. Only Jill is personally liable for the debt of the business, since Jack has been working
and she has not.
c. Both Jack and Jill are personally liable for the business debt.
d. Neither Jack nor Jill is personally liable for the business debt, since the partnership is
a separate legal entity.
Ans: C, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Sole Proprietorship, Bloom: K, Difficulty: Medium, Min: 1,
AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

60. Hybrid forms of business organization include
a. limited liability companies.
b. sole proprietorships.
c. partnerships
d. all of these are hybrid forms of business organization.
Ans: A, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Hybrid Forms of Organization, Bloom: K, Difficulty: Medium,
Min: 1, AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

61. Hybrid forms of business organization
a. are not allowed in many states.
b. account for the majority of U.S. business transactions.
c. combine the tax advantages of corporations with the limited liability advantage of
partnerships.
d. combine the tax advantages of partnerships with the limited liability advantage of
corporations.
Ans: D, LO: 1, Section: Business Organization and Accounting Information Uses, Subsection: Hybrid Forms of Organization, Bloom: K, Difficulty: Medium,
Min: 1, AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

62. Which one of the following questions is most likely asked by an internal human
resources director for the company?
a. Which product line is most profitable?
b. What price for our product will maximize the company income?

Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)

, 2-10 Test Bank for Kimmel, Financial Accounting: Tools for Business Decision Making, 10e

c. What average pay raise is affordable for employees this year?
d. Should any product lines be eliminated?
Ans: C, LO: 1, Source: Business Organization and Accounting Information Uses, Subsection: Internal Users, Bloom: C, Difficulty: Medium, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting




63. Which of the following are reports that accounting provides to internal users?
a. Forecasts of cash needs for next year only
b. Financial comparisons of operating activity alternatives only
c. Both forecasts of cash needs and financial comparisons
d. Neither forecasts of cash needs nor financial comparisons
Ans: C, LO: 1, Source: Business Organization and Accounting Information Uses, Subsection: Internal Users, Bloom: K, Difficulty: Medium, Min: 1,
AACSB: None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

64. Which of the following is the best description of an internal user of accounting
information?
a. Investors who use accounting information to decide whether to buy or sell stock
b. Creditors, such as banks, that use accounting information to evaluate the risk of
lending money
c. Labor unions who use accounting information to examine the ability of the company
to pay increased wages and benefits
d. Managers who use accounting information to plan, organize, and run a business
Ans: D, LO: 1, Source: Business Organization and Accounting Information Uses, Subsection: Internal Users, Bloom: K, Difficulty: Medium, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

65. An external user of accounting information like the Internal Revenue Service is most
commonly known as a
a. taxing authority.
b. labor union.
c. customer.
d. regulatory agency.
Ans: A, LO: 1, Source: Business Organization and Accounting Information Uses, Subsection: External Users, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

66. Types of data analytics include all of the following except
a. prescriptive.
b. predictive.
c. authoritative.
d. diagnostic.
Ans: C, LO: 1, Source: Business Organization and Accounting Information Uses, Subsection: Data Analytics, Bloom: K, Difficulty: Easy, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

67. Predictive analytics can be used to answer the question
a. ―What is likely to happen?‖.
b. ―Why did it happen?‖.
c. ―What should we do about it?‖.
d. ―What happened?‖.
Ans: A, LO: 1, Source: Business Organization and Accounting Information Uses, Subsection: Data Analytics, Bloom: K, Difficulty: Medium, Min: 1, AACSB:
None, AICPA BC: Process and Resource Management Perspectives, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting

Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller ANSWERSHEET. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $13.29. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

69411 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 15 years now

Start selling
$13.29
  • (0)
Add to cart
Added