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Chapter 1 1. Which of the following will be recorded in the owners equity column as an increase? a) An exchange of assets b) The purchase of an asset on credit c) An investment by the owner d) A withdrawal by the owner 2. Payment of wages is recorded as: a) an expense. b) an increase to capital. c) an increase to assets. d) all of these. 3. The net income or net loss is developed on the: a) balance sheet. b) statement of owner’s equity. c) income statement. d) none of these 4. Anytime an owner removes any asset for personal use it is recorded as: a) an investment. b) an expense. c) a withdrawal. d) payment of a liability. 5. The increase or decrease in the owner’s equity is reported on the: a) income statement. b) statement of owner’s equity. c) balance sheet. d) all of these 6. The purpose of the accounting process is to provide financial information on: a) individuals. b) small businesses. c) large corporations. d) All of these answers are correct. 7. Accounting provides information to: a) managers. b) government. c) investors. d) All of these answers are correct. 8. Which of the following is a characteristic of a sole proprietorship? a) Business owned by more than one person b) Easy to form c) Each stockholder acts as an owner of the company d) Can continue indefinitely 9. A corporation is a business which is: a) easy to form. b) ends with the death of a stockholder. c) owned by stockholders. d) None of these answers are correct. 10. Which is an advantage of a sole proprietorship form of business? a) There is limited personal risk. b) The business an continue indefinitely. c) The owner makes all the decisions. d) All of thes