True/False
Indicate whether the sentence or statement is true
or false.
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1.
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When
expenses total more than revenues it is a net loss.
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2.
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A
liability account has the word "Payable" in its account title.
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3.
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The
basic accounting equation is: A = L - C
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4.
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The
owners of a partnership business are referred to as stockholders.
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5.
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The
Balance Sheet is the first of the three statements to be prepared.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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6.
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An
example of an economic entity is a. | a town. | b. | a
business. | c. | a nonprofit hospital. | d. | a
church. | | |
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7.
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The
form of a business organization that is not affected by the withdrawal or death of an owner and can
continue forever is a. | the sole proprietorship. | b. | the
partnership. | c. | the corporation. | d. | the nonprofit
organization. | | |
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8.
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The
financial affairs of a business and the financial affairs of the owners should be a. | combined in the
firm's accounting records. | b. | reported in different parts of the firm's accounting
records. | c. | combined only if the owner wants them to
be. | d. | kept totally
separate. | | |
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9.
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The
owners are not held responsible for the debts of the form of business organization referred to
as a. | the sole
proprietorship. | b. | the partnership. | c. | the
corporation. | d. | the nonprofit organization. | | |
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10.
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Anything the business owns that has value is a. | a
liability | d. | a
revenue | b. | an asset | e. | owner's equity | c. | an
expense | | | | |
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11.
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Costs
of doing business are known as a. | an asset | d. | a revenue | b. | a
liability | e. | owner's
equity | c. | an expense | | | | |
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12.
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Anything the business owes is a. | an expense | d. | a liability | b. | an
asset | e. | owner's
equity | c. | a revenue | | | | |
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13.
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When
the business performs services it is a. | a revenue | d. | a liability | b. | an
expense | e. | owner's
equity | c. | an asset | | | | |
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14.
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What
is left when the business pays what is owed from what it owns is known as a. | an
asset | d. | an
expense | b. | a liability | e. | owner's equity | c. | a
revenue | | | | |
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15.
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If
assets are $5,000 and liabilities are $2,000 what is owner's equity? a. | $7,000 | c. | $10,000 | b. | $3,000 | d. | None of these | | | | |
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16.
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If
liabilities total $15,000 and owner's equity totals $25,000 then assets are a. | $40,000 | c. | $5,000 | b. | $10,000 | d. | None of these | | | | |
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17.
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If
assets total $24,000 and liabilities total $8,000 then owner's equity totals a. | $32,000 | c. | $6,000 | b. | $3,000 | d. | None of these | | | | |
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18.
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The
owner's equity can be increased by which of the following? a. | investments | c. | withdrawals | b. | expenses | d. | None of these | | | | |
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19.
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The
owner's equity can be decreased by which of the following? a. | investments | c. | withdrawals | b. | revenue | d. | None of these | | | | |
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20.
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The
owner's equity can be decreased by which of the following? a. | investments | c. | revenue | b. | expenses | d. | None of these | | | | |
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