Chapter 1 Quiz

Accounting is an information and measurement system that identifies, records, and communicates an organization's business activities.

• True

• False

Accounting includes the analysis and interpretation of information.

• True

• False

The fraud triangle shows that three factors that push a person to commit fraud are opportunity, pressure, and rationalization.

• True

• False

A partnership is a business owned by two or more people.

• True

• False

The balance sheet shows a company's net income or loss over a period of time.

• True

• False

The business entity assumption means that accounting information presumes that the business will continue operating instead of being closed or sold.

• True

• False

Revenues should not be recognized in the accounting records when earned, but rather when cash is received.

• True

• False

The going-concern assumption presumes that a business will continue operating instead of being closed or sold.

• True

• False

The measurement principle prescribes that accounting information is based on subjective opinion rather than cost.

• True

• False

The monetary unit assumption means that companies should express transactions and events in terms such as “a lot” or “very little”.

• True

• False