Chapter 1 self-test

1.

In which forms of business organization are the owners personally liable for all the debts of the business? A.
Sole proprietorships and corporations B.
Sole proprietorships and partnerships C.
Partnership and corporation D.
All of them

2. The 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.

3. Which forms of business organization are considered to be separate accounting entities? A.
Sole proprietorships and partnerships B.
Partnerships and corporations C.
Only corporations D.
Sole proprietorships, corporations, and partnerships

4. Internal users of accounting information include a company's stockholders. A.
True
B.
False

5. To which of the following questions will internal users want answers? A.
What selling price for our product will maximize the company's net income? B.
Which product line is most profitable? C.
Is cash sufficient to pay dividends to stockholders? D.
All of these

6. Which of the following is not an external user of accounting data? A.
Labor unions B.
Customers
C.
Economic planners D.
Chief Financial Officer

7. Which statement about users of accounting information is incorrect? A.
Management is considered an internal user. B.
Taxing authorities are considered external users. C.
Present creditors are considered external users. D.
Regulatory authorities are considered internal users.

8. Which of the following is not one of the three primary business activities? A.
Financing
B.
Operating
C.
Advertising
D.
Investing

9. Which of the following is an