Chapter 1 - Introduction to Accounting and Business

What type of business provides intangible products or services?

• Manufacturing

• Service

• Merchandising

• Retail

Which business type transforms raw materials into finished goods?

• Service

• Retail

• Manufacturing

• Wholesale

Selling goods purchased for resale best describes a:

• Service business

• Manufacturing business

• Merchandising business

• Retail business

Financial accounting primarily serves which type of user?

• Marketing managers

• Internal auditors

• External users

• Supervisors

Who would use managerial accounting?

• Investors

• Creditors

• Government agencies

• Department managers

Which characteristic applies to a proprietorship?

• Separate legal taxable entity

• Unlimited liability for the owner

• Ownership by shareholders

• Limited liability for all members

A business taxed like a partnership but with limited liability is a:

• Corporation

• Partnership

• Limited liability company

• Proprietorship

What does the accounting equation state?

• Assets = Liabilities + Owner's Equity

• Assets = Owner's Equity - Liabilities

• Liabilities = Assets + Owner's Equity

• Owner's Equity = Assets + Liabilities

What is the formula for net income?

• Assets – Liabilities

• Revenues – Expenses

• Owner’s equity – Withdrawals

• Contributions – Revenues

Which concept records items at their original cost?

• Matching principle

• Objectivity concept

• Cost concept

• Monetary unit assumption