ACC101 Chapter 1

Ethics are the standards of conduct by which one's actions are judged as:

• right or wrong

• honest or dishonest.

• fair or not fair.

The assumption that companies should record assets at their cost called:

• Fair value

• Historical cost

• Relevance

• Monetary unit

"Personal transactions of the proprietor are distinguished from business transactions" refer to the :

• Corporation

• proprietorship

• Company

A business organized as a separate legal entity under state law having ownership divided into shares of stock is a :

• proprietorship.

• partnership

• corporation

• a.sole proprietorship.

Congress passed the Sarbanes-Oxley Act to reduce unethical behavior and decrease the likelihood of future corporate scandals.

• True

• False

The primary accounting standard-setting body in the United States is the Financial Accounting Standards Board (FASB).

• True

• False

The historical cost principle dictates that companies record assets at their cost. In later periods, however, the fair value of the asset must be used if fair value is higher than its cost

• True

• False

Relevance means that financial information matches what really happened; the information is factual

• True

• False

A business owner’s personal expenses must be separated from expenses of the business to comply with accounting’s economic entity assumption

• True

• False

Classify rent expenses and its effect on equity:

• Revenue, Reduce equity

• Expenses, Reduce equity

• Expenses, Increase equity

• Assets, Increase equity