1. Which of the following is NOT a form of business organization?

• A) Sole Proprietorship

• B) Partnership

• C) Corporation

• D) Cooperative

Answer: D) Cooperative

2. What is the primary function of accounting?

• A) To predict future market trends

• B) To provide financial information for decision making

• C) To calculate taxes for the business

• D) To create business strategies

Answer: B) To provide financial information for decision making

3. Which of the following is an example of a corporation?

• A) A barber shop

• B) A doctor's private practice

• C) Apple

• D) A local grocery store owned by one person

Answer: C) Apple

4. Internal users of accounting information include which of the following?

• A) Investors

• B) Creditors

• C) Government

• D) Management

Answer: D) Management

5. Which type of data analytics focuses on determining why something happened?

• A) Descriptive analytics

• B) Diagnostic analytics

• C) Predictive analytics

• D) Prescriptive analytics

Answer: B) Diagnostic analytics

6. What are financing activities?

• A) Actions taken to raise money from outside sources

• B) Activities focused on selling goods and services

• C) Activities related to buying long-term assets

• D) Day-to-day business operations

Answer: A) Actions taken to raise money from outside sources

7. What is a liability?

• A) An ownership interest in a company

• B) An amount owed to creditors

• C) A resource owned by a business

• D) A payment made to shareholders

Answer: B) An amount owed to creditors

8. Which financial statement reports the revenues and expenses of a company over a period of time?

• A) Balance Sheet

• B) Income Statement

• C) Retained Earnings Statement

• D) Statement of Cash Flows

Answer: B) Income Statement

9. The basic accounting equation is:

• A) Revenues – Expenses = Net Income

• B) Assets = Liabilities + Stockholders' Equity

• C) Beginning Retained Earnings + Net Income – Dividends = Ending Retained Earnings

• D) Operating Activities + Financing Activities + Investing Activities = Net Cash Flow

Answer: B) Assets = Liabilities + Stockholders' Equity

10. What is the purpose of the Statement of Cash Flows?

• A) To report the financial position of a company

• B) To show the causes of changes in retained earnings

• C) To provide information about a company’s cash inflows and outflows

• D) To measure profitability over a specific period

Answer: C) To provide information about a company’s cash inflows and outflows

11. Which of the following is an example of operating activities?

• A) Borrowing money from the bank

• B) Selling stock to investors

• C) Selling products to customers

• D) Purchasing land for future expansion

Answer: C) Selling products to customers

12. What is the purpose of the Retained Earnings Statement?

• A) To show the success of the business operations

• B) To report the retained earnings for a specific period

• C) To provide details of the company’s liabilities

• D) To track cash receipts and payments

Answer: B) To report the retained earnings for a specific period

13. Which financial statement includes the basic accounting equation: Assets = Liabilities + Stockholders’ Equity?

• A) Income Statement

• B) Retained Earnings Statement

• C) Balance Sheet

• D) Statement of Cash Flows

Answer: C) Balance Sheet

14. What do auditors do?

• A) Conduct an independent examination of financial data

• B) Prepare financial statements

• C) Make financial decisions for a company

• D) Perform management reviews

Answer: A) Conduct an independent examination of financial data

4o

You said:

make it longer

ChatGPT said:

ChatGPT

Chapter 1 Study Guide: Multiple Choice Questions

1. Which of the following is NOT a form of business organization?

• A) Sole Proprietorship

• B) Partnership

• C) Corporation

• D) Cooperative

Answer: D) Cooperative

2. Which of the following is true about a sole proprietorship?

• A) It is owned by two or more people

• B) It is a separate legal entity from its owner

• C) It is owned by one person

• D) It offers limited liability protection

Answer: C) It is owned by one person

3. A partnership is typically associated with which of the following types of businesses?

• A) Publicly traded corporations

• B) Professional practices such as lawyers and doctors

• C) Large multinational companies

• D) Sole proprietorships

Answer: B) Professional practices such as lawyers and doctors

4. Which of the following is an advantage of a corporation?

• A) Shared control

• B) Broader skills and resources

• C) Greater capital-raising potential

• D) Simple to establish

Answer: C) Greater capital-raising potential

5. What is the primary function of accounting?

• A) To predict future market trends

• B) To provide financial information for decision making

• C) To calculate taxes for the business

• D) To create business strategies

Answer: B) To provide financial information for decision making

6. Which of the following groups are considered internal users of accounting information?

• A) Management and employees

• B) Investors and creditors

• C) Government agencies and customers

• D) The general public

Answer: A) Management and employees

7. Which type of data analytics focuses on determining why something happened?

• A) Descriptive analytics

• B) Diagnostic analytics

• C) Predictive analytics

• D) Prescriptive analytics

Answer: B) Diagnostic analytics

8. What type of business activity involves raising funds from outside sources?

• A) Investing activities

• B) Operating activities

• C) Financing activities

• D) Reporting activities

Answer: C) Financing activities

9. Which of the following is an example of a financing activity?

• A) Purchasing new equipment for the company

• B) Selling shares of stock to investors

• C) Paying employees' salaries

• D) Producing inventory for resale

Answer: B) Selling shares of stock to investors

10. A company borrowing money from a bank is an example of:

• A) Operating activities

• B) Investing activities

• C) Financing activities

• D) Dividends

Answer: C) Financing activities

11. What is a liability in accounting?

• A) Resources owned by the company

• B) The total amount of stockholders' equity

• C) Amounts owed to creditors

• D) Cash available for investment

Answer: C) Amounts owed to creditors

12. What is common stock?

• A) Payments made to shareholders

• B) The amount borrowed from the public

• C) The total amount paid by stockholders for shares of ownership

• D) A form of liability

Answer: C) The total amount paid by stockholders for shares of ownership

13. What are assets?

• A) Payments to stockholders

• B) Resources owned by the company

• C) Liabilities owed by the company

• D) Amounts received from investors

Answer: B) Resources owned by the company

14. Which of the following is considered an investing activity?

• A) Purchasing new machinery for the business

• B) Paying off debt to a creditor

• C) Paying employees’ wages

• D) Issuing stock to investors

Answer: A) Purchasing new machinery for the business

15. What is the primary purpose of operating activities?

• A) To finance the business through external sources

• B) To sell products or provide services

• C) To invest in long-term assets

• D) To manage day-to-day cash flow

Answer: B) To sell products or provide services

16. Which of the following is considered an operating activity?

• A) Issuing bonds payable

• B) Purchasing land

• C) Selling goods to customers

• D) Paying dividends to shareholders

Answer: C) Selling goods to customers

17. What is the formula for calculating net income?

• A) Assets = Liabilities + Stockholders' Equity

• B) Revenues – Expenses = Net Income

• C) Beginning Retained Earnings + Net Income – Dividends = Ending Retained Earnings

• D) Operating Activities + Investing Activities + Financing Activities = Cash Flow

Answer: B) Revenues – Expenses = Net Income

18. Which financial statement reports the revenues and expenses of a company over a period of time?

• A) Balance Sheet

• B) Income Statement

• C) Retained Earnings Statement

• D) Statement of Cash Flows

Answer: B) Income Statement

19. What is the basic accounting equation?

• A) Revenues – Expenses = Net Income

• B) Assets = Liabilities + Stockholders’ Equity

• C) Beginning Retained Earnings + Net Income – Dividends = Ending Retained Earnings

• D) Assets = Liabilities – Stockholders’ Equity

Answer: B) Assets = Liabilities + Stockholders’ Equity

20. Which financial statement shows the ending retained earnings?

• A) Balance Sheet

• B) Income Statement

• C) Retained Earnings Statement

• D) Statement of Cash Flows

Answer: C) Retained Earnings Statement

21. What does the Balance Sheet report?

• A) The revenues and expenses over a period of time

• B) The changes in retained earnings over time

• C) The assets, liabilities, and stockholders’ equity at a specific point in time

• D) The cash inflows and outflows for a period

Answer: C) The assets, liabilities, and stockholders’ equity at a specific point in time

22. Which financial statement provides information about cash inflows and outflows?

• A) Balance Sheet

• B) Income Statement

• C) Statement of Retained Earnings

• D) Statement of Cash Flows

Answer: D) Statement of Cash Flows

23. What is included in an annual report of a publicly traded company?

• A) Financial statements, management discussion and analysis, notes to financial statements, and auditor’s report

• B) Marketing strategies and business projections

• C) Information about stock price trends and market competition

• D) Quarterly profit and loss statements

Answer: A) Financial statements, management discussion and analysis, notes to financial statements, and auditor’s report

24. What is the purpose of an auditor’s report?

• A) To provide a company’s financial plan for the future

• B) To verify that financial statements comply with accounting standards

• C) To help management set financial goals

• D) To calculate tax obligations

Answer: B) To verify that financial statements comply with accounting standards

25. What does "unqualified opinion" mean in an auditor’s report?

• A) The auditor has reservations about the accuracy of the financial statements

• B) The auditor believes the financial statements present information fairly

• C) The company failed to comply with accounting standards

• D) The auditor is not qualified to evaluate the financial statements

Answer: B) The auditor believes the financial statements present information fairly

4o