Understanding Financial Accounting 3rd Canadian Edition by Christopher D. Burnley test bank
CPA: Financial Reporting
AACSB: Analytic
44. Businesses can be operated in a number of different forms, such as a
a) corporation.
b) partnership.
c) proprietorship.
d) All of the choices are correct.
Answer: d
Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Describe the major forms of business organization and explain the key distinctions between each form.
CPA: Financial Reporting
AACSB: Analytic
45. Which statement is INCORRECT with regard to the characteristics of a corporation?
a) It is a separate legal entity.
b) It can be sued.
c) Shareholders liability is limited to their investment.
d) It cannot be publicly accountable.
Answer: d
Bloomcode: Knowledge
Difficulty: Medium
Learning Objective: Describe the major forms of business organization and explain the key distinctions between each form.
CPA: Financial Reporting
AACSB: Analytic
46. Which of the following statements best describes a proprietorship?
a) A proprietorship can be comprised of single or multiple owners.
b) The owners are taxed separately from the business.
c) It is the most expensive business structure to establish.
d) The owner is responsible for the debt of the company.
Answer: d
Bloomcode: Knowledge
Difficulty: Medium
Learning Objective: Describe the major forms of business organization and explain the key distinctions between each form.
CPA: Financial Reporting
AACSB: Analytic
47. Which of the following statements best describes a partnership?
a) A partnership is a separate legal entity from its owners.
b) There is only a single owner.
c) It is the most expensive business structure to establish.
d) The owners are responsible for the debt of the company.
Answer: d
Bloomcode: Knowledge
Difficulty: Medium
Learning Objective: Describe the major forms of business organization and explain the key distinctions between each form.
CPA: Financial Reporting
AACSB: Analytic
48. Which of the following statements best describes a corporation?
a) The business can be comprised of single or multiple owners.
b) The owners are taxed separately from the business.
c) It is the most expensive structure to establish.
d) All of the choices are correct.
Answer: d
Bloomcode: Knowledge
Difficulty: Medium
Learning Objective: Describe the major forms of business organization and explain the key distinctions between each form.
CPA: Financial Reporting
AACSB: Analytic
49. What is the initial investment by the shareholders in a company called?
a) owners’ capital
b) shareholders’ capital
c) retained earnings
d) shareholders’ equity
Answer: d
Bloomcode: Knowledge
Difficulty: Medium
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic
50. The fundamental types of business activities that a firm typically engages in include all of the following EXCEPT for
a) operating activities.
b) borrowing activities.
c) investing activities.
d) financing activities.
Answer: b
Bloomcode: Knowledge
Difficulty: Medium
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic
51. Which of the following is an example of an operating activity?
a) paying dividends
b) sale of investment in other companies' shares
c) purchase of property, plant, and equipment
d) payment of interest expense
Answer: d
Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic
52. Which of the following is a typical financing activity?
a) purchasing property, plant or equipment
b) purchasing another company’s shares
c) paying interest expense
d) paying dividends
Answer: d
Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting