ch1bank-st.doc

Chapter 1—Introduction to Accounting and Business I. TRUE/FALSE T1. An example of a business stakeholder is the federal government. F2. Primary users of accounting information are accountants. T3. Accounting is thought to be the language of business because business information is communicated to stakeholders. T4. The role of accounting is to provide many different users with financial information to make economic decisions. F5. Proprietorships are owned by one owner and provide only services to their customers. T6. Large corporations such as Wal-Mart, Coca-Cola, and Nike operate as manufacturing businesses. T7. A business stakeholder is a person or entity that has an economic interest in the company. T8. The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities. F9. Managerial accounting information is used by external and internal users equally. T10. Financial accounting provides information to all of the business stakeholders, while the main focus for managerial accounting is to provide information to the management. F11. Profits are the difference between the amounts received from customers and the amounts paid to provide the goods or services. T12. The main objective for all businesses is to maximize profits. F13. The cost concept is the basis for entering the exchange price into the accounting records. T14. The unit of measurement concept requires that economic data be recorded in a common unit of measurement. F15. If a building is appraised for $90,000, offered for sale at $95,000, and the buyer pays $85,000 cash for it, the buyer would record the building at $90,000. T16. GAAP stands for General Accepted Accounting Protocols. 17. If the liabilities owed by a business total $500,000 and owners equity is equal to $500,000, then the assets also total $500,000. 18. If total assets decreased by $40,000 during a specific period and owners equity decreased by $45,000 during the s