Financial Accounting 9th Edition by Miller-Nobles Test bank

True

False

Answer: True
Difficulty: Moderate
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 6 Describe the organisations and principles that govern accounting
A-Head: What are the organisations and principles that govern accounting?

Multiple choice: Choose the alternative(s) that best completes the statement or answers the question.

87. A proprietorship is created by:

1. two or more individuals.
2. electing a board of directors.
3. one individual deciding to start a business.
4. issuing shares of the business.

Answer: C
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 7 Identify the three main types of business organisation
A-Head: What are the main types of business organisation?

88. By definition, which of the following represents the owners of a company?

1. Shareholders
2. Customers
3. Employees
4. Creditors

Answer: A
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 7 Identify the three main types of business organisation
A-Head: What are the main types of business organisation?

89. Regarding accounting information and records, a proprietorship is an entity entirely separate from its:

1. customers.
2. vendors.
3. proprietor.
4. shareholders.

Answer: C
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 7 Identify the three main types of business organisation
A-Head: What are the main types of business organisation?

90. If a proprietorship cannot pay its debts, the creditors may make claims against the:

1. state government.
2. employees of the business.
3. assets of the proprietor.
4. assets of the proprietorship only.

Answer: C
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 7 Identify the three main types of business organisation
A-Head: What are the main types of business organisation?

91. A relatively low amount of government regulation is a key advantage of a:

1. company.
2. not-for-profit.
3. partnership.
4. proprietorship.

Answer: D
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 7 Identify the three main types of business organisation
A-Head: What are the main types of business organisation?

92. Phillip and Reed have developed a new technology for home computer systems. However, they need to raise a large amount of capital to build the production and support facilities to market their product successfully. Which of the following business types would be best suited to help the business raise the necessary capital to begin production?

1. Limited liability partnership
2. Company
3. Partnership
4. Proprietorship

Answer: B
Difficulty: Basic
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 7 Identify the three main types of business organisation
A-Head: What are the main types of business organisation?

93. David has decided to open an auto-detailing business. He will pick up a car from the client, take it to his parents' garage, detail it, and return it to the client. If he does all of the work himself and takes no legal steps to form a special organisation, which type of business organisation, in effect, has he chosen?

1. Proprietorship
2. Partnership
3. Limited liability company
4. Company

Answer: A
Difficulty: Moderate
AACSB: Analytical Thinking
Learning Objective: 7 Identify the three main types of business organisation
A-Head: What are the main types of business organisation?