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Fundamentals of Accountancy, Business and
The value is tied to objective and verifiable past

Management 1 MAIN
transactions
Question 1
Question 5
Multiple choice (one answer)
The accounting profession can be divided into three
Retained earnings will change over time because of
major categories; specifically, the practice of public
several factors. Which of the following factors would
accounting, private accounting, and governmental
explain an increase in retained earnings?
accounting. A somewhat unique and important
service of public accountants is: Dividends
Managerial Accounting Net Loss
Cost Accounting Investments by stockholders
Auditing Net Income
Financial Accounting
Question 6
Question 2
Which of these items would be accounted for as an
expense?
The primary private sector agency that oversees
external financial reporting standards is the: Repayment of a bank loan
Financial Accounting Standards Board Payment of the current period’s rent
Internal Revenue Service Dividends to stockholders
General Accounting Office The purchase of Land
Financial Accounting Standard Board
Question 7
Question 3
Which of the following transactions would have no
impact on stockholders’ equity?
3. Which of the following equations properly
represents a derivation of the fundamental accounting Dividends to stockholders
equation?
Net Loss
Assets+Liabilities=Owner’s Equity
Purchase of land from the proceeds of a bank
Cash=Assets loan
Assets-liabilities=owner’s equity Investments of cash by stockholders
Assets =Owner’s Equity
Question 8
Question 4
The study of the history and development of
accounting is to an understanding and appreciation of
Wilson Company owns land that cost $100,000. If a
prevent fraud as well as of the institutional structure
“quick sale” of the land was necessary to generate
of the discipline.
cash, the company feels it would receive only
$80,000. The company continues to report the asset False
on the balance sheet at $100,000. Which of the
following concepts justifies this? True
Both a and b Question 9

The historical-cost principle Multiple choice (one answer)
Early history of accounting A.C Littleton has already
Neither of the above lists seven preconditions for the emergence of the
systematic bookkeeping. Choose the correct
preconditions for the emergence of the systematic
bookkeeping.
Types of Financial Transactions
I. Commerce
II. Private property Types of Financial Reports used in Businesses
III. Equities
IV. Capital Generally Accepted Accounting Practices
All the above None of the above
I, II and IV All of the above
I and II Question 14
II and III Multiple choice (one answer)
Accounting shows:
Question 10 How much others owe to the business
Development of double-entry bookkeeping. State the How much the business owes others
existence of the following depreciation methods that None of the above
provided by Saliero in 1915.
I. Straight line and reducing method All of the above
II. Straight line and sinking fund How much money the business has
III. Annuity method and unit cost method
IV. Reducing and sinking fund Question 15
All the above Multiple choice (one answer)
Create Budgets and make business decisions,
II and IV Measure performance, and Make investment
I, II and III decisions are examples of:
I and III Generally Accepted Accounting Principles

Who uses the information
Question 11
Multiple choice (one answer) Types of Financial Reports
Historical research in accounting history will include Types of Financial Transactions
all, except…
Uses of Accounting
Critical history
Medical history Question 16
General history Business Owners, Managers of various operations,
Institutional history Stakeholders are examples of:
Generally Accepted Accounting Principles
Question 12
Multiple choice (one answer) Types of Financial Reports
Accounting is the process of keeping track of a Uses of Accounting
business’ finances.
Types of Financial Transactions
True
Who uses the information for accounting
False purposes
Question 13 Question 17
Multiple choice (one answer) Multiple choice (one answer)
Selling of merchandise, Purchasing of equipment, Generally Accepted Accounting Principles (GAAP)
Collection of money, and Paying bills are examples guides a business as to what should be included when
of creating and sharing a business’ financial
information. This is to ensure consistency in the
business community as well as to protect those who Multiple choice (one answer)
use this information to make economic decisions Which branch of accounting embraces the
preparation of various tax returns and tax planning
False
necessary to minimize the impact of taxes on the
True firm?
Management accounting
Question 18
Multiple choice (one answer) Auditing
Accounting does not impact a business’s taxes. financial accounting
False cost accounting
True Tax accounting
Types of businesses include (select all that apply): Which branch of accounting is primarily concerned
Limited Liability Company (LLC) with the preparation of specific purpose financial
statements for the management to base financial
Sole Proprietorship decisions on?
Corporation Auditing
all of the above Cost accounting
Partnership Financial Accounting
Question 20 Management Accounting

Multiple choice (one answer) Tax Accounting
Accounting affects the different business types
because: Question 24
Affects the business’ ability to gain money or Multiple choice (one answer)
capital Which branch of accounting is concerned with
analyzing costs of products or services rendered in a
Taxes are handled differently based on the type business?
of business
Management Accounting
All of the above
Tax Accounting
Can affect the initial and recurring costs of the
business Cost accounting
Auditing
Question 21
Multiple choice (one answer) Financial Accounting
What is primarily centered on the critical
examination of financial statements by an Question 25
independent CPA to express an opinion regarding the Multiple choice (one answer)
fairness of the contents of the financial Statements? Which branch of accounting deals with the calculate
the profit or loss of a business during a period and to
management accounting provide an accurate picture of the financial position
tax accounting of the business as on a particular date to investors or
banks?
auditing
Cost accounting
financial accounting
Tax Accounting
cost accounting
Financial Accounting
Question 22
Auditing Internal users
Management Accounting External users
Rob is a CPA who inspects the accuracy and Investors are
consistency of financial statements and certifies the
Owners
accounts done by the accountants of his clients.
Which branch of accounting is Rob doing? Banks
Financial accounting Suppliers
Management Accounting Customers
Tax accounting
Question 31
Auditing Multiple choice (one answer)
Cost Accounting Which of below users considered as Internal user ?
Bank
Question 27
Employees
Krystel is an accountant who assisting clients and Owner
companies with their financial and income tax
statements. She studied tax laws and is up-to-date Middle management c. Bank
with tax issues. Which branch of accounting does she
fall under? Question 32
Financial Accounting Who utilize accounting information to make lending
tax accounting decisions :
Auditing Investors
Cost accounting Customers
Management accounting Employees

Creditors
Question 28
Multiple choice (one answer) Question 33
Adrian works at a large bank as an a type of Multiple choice (one answer)
accountant. His duties are to prepare profit and loss Who may need accounting information to decide
statements to show clients and potential investors the which products to buy from which companies:
general financial health of the bank that he works at.
Which branch of accounting are Adrian's duties Company's owner
under? Creditors
Financial accounting Customers
Management accounting Investors
Tax accounting
Question 34
Auditing Multiple choice (one answer)
Cost accounting A company's senior and middle management use
accounting information to:
Question 29 run the business
Parties outside the reporting entity or company make buy, sell or keep decisions related to
shares.
determine a company's profitability and profit maintain accurate reports
sharing
keep track of sales.
utilize accounting information to make lending
control the finances of the business
decisions
compile the business’s expenses.
Question 35
Data are checked by Multiple choice (one answer)
Why are accurate accounting records important to a
External users + Internal users
business?
External users
They increase the return on investments
Internal users
They give the business an image of success
None of the answers
they show how the business is doing.
Question 36 keep track of sales.
Users of accounting information are Question 41
External users
Which of the following groups makes regular use of a
Internal users business’s managerial accounting information:
Subsidiary users Managers
External users and Internal users Creditors
Customers
Question 37
Multiple choice (one answer) Investors
Employees use accounting information to
Question 42
decide which products to buy from which
companies
A creditor is most likely to examine a business’s
determine a company's profitability and profit financial accounting records if the business is
sharing
complying with regulations.
run the business
using cash accounting.
make lending decisions
applying for a bank loan
Question 38 selecting a new market.
The process of keeping the financial records of a Question 43
business is known as Multiple choice (one answer)
Riley is an employee of the federal government who
bookkeeping
studies the financial reports of major businesses in a
accounting specific industry. The government’s purpose in
assigning this task to Riley is to
controlling
decide if funds are available for pay raises
financing
determine creditworthiness
Question 39 identify trends in the industry.
The overall purpose of accounting is to search for profitable investments.
Question 44
For an accounting system to be useful to the business, Multiple choice (one answer)
the accounting information it contains must be Which of the following presents the first three steps
in the accounting cycle in the correct order:
approved by the chief executive officer.
Bookkeeping is the same as accounting
accurate and up to date
Analyze, journalize, and post
recorded using the accrual method
Bookkeeping is limited to information on sales
posted by an accountant.
Bookkeeping does not use computers.
Question 45
Which of the following is a requirement for a good Multiple choice (one answer)
accounting system: Businesses would not be able to determine if they are
meeting their financial goals without accurate:
It should be updated annually
marketing plans
It should be replaced every two or three years
accounting systems
It should provide needed information quickly
distribution systems
It should eliminate the need for an accountant.
production plans
Question 46
Checks, receipts, invoices, and purchase orders are Multiple choice (one answer)
examples of What is one of the main reasons why businesses need
to keep accurate accounting records?
department ledgers
to eliminate risks
source documents
to regulate taxes
accounting standards
to follow procedures
financial statements
to control expenses
Question 47
What type of accounting method would most likely Multiple choice (one answer)
be used by a small business owner who does not offer A person who takes a risk to produce goods and
credit? services in search of profit -
COD method magistrate
Cash method manager
Check method entrepreneur
Accrual method profiteer
Which of the following is a true statement: What kind of business is BEST described by these
statements?
Bookkeeping does not use computers
I am the only owner of my business.
Bookkeeping is the same as accounting I take all the risks of doing business.
I keep all the profits.
Bookkeeping records business transactions
cooperative
Bookkeeping is limited to information on sales.
corporation
partnership limited liability
proprietorship minimal government regulation
An entrepreneur The Dow Jones industrial average swept past 12,000
for the first time. Investors are increasingly optimistic
enforces government regulations
about corporate earnings and the economy.
sets the interest rates at banks This achievement MOST likely involved which type
of business organization?
takes the risk to earn profit
conglomerate
manages financial investments
proprietorship
Question 55 partnership
In a corporation, owners share profit, but liability is corporation
limited to -
Question 60
distribution
investment In which type of organization does one person take
all the risks?
theft
monopoly
production
corporation
A form of business organization that is authorized to proprietorship
act as a legal entity regardless of the number of
owners. Question 61
proprietorship
Floral Shops, Bookstores, Farms are examples of
partnership what type business
distributor Franchise
corporation Multinational Corporation
Sole Proprietorship
Question 57
Multiple choice (one answer) Corporation
What is a disadvantage of partnerships?
Question 62
possibility of personality conflict
owners share responsibilities Easy to start, Owner is his/her own boss, Owner
keeps all the profits - These are advantages of what
ease of formation type of business
limited liability Partnership
Question 58 Franchise
Multiple choice (one answer) Sole Proprietorship
What is the advantage of corporations?
Corporation
has one owner
short life span Question 63
Which ownership type has unlimited liability (owner Corporations do NOT continue when stockholders
has full responsibility for company's debt and can sell stock.
lose entire investment as well as personal assets).
False
Cooperative
True
Corporation
Sole Proprietorship Question 69
Partnership Nike, IBM, and Google are examples of
partnership
Question 64
Multiple choice (one answer) partnership
What type of business consists of two or more
corporation
people?
franchise
Partnership
Corporation Question 70
Sole Proprietorship Multiple choice (one answer)
Which is NOT a basic type of business ownership?
Cooperative
proprietorship
Question 65 corporation
partnership
Which are the disadvantages of a partnership?
retail
Partners may not get along
Partners share unlimited liability Question 71
all of these are correct Multiple choice (one answer)
Who plays an important role in all three business
Partnership must be reorganized if one partner organizations?
quits
Entrepreneurs
Question 66 Magistrates
Presidents
Law firms, medical practices, and auto body repair
shops are examples of what type of ownership Governors
partnership
Question 72
franchise Multiple choice (one answer)
sole proprietorship Owned by many people - stockholders, but treated by
the law as one person
corporation
Sole Proprietorship
Question 67 Corporation
Partnership
What type of business structure is owned by many
people? Franchise
partnership
Question 73
corporation Multiple choice (one answer)
sole proprietorship How is a corporation different from a sole
proprietorship or partnership?
Question 68
Corporations requires a legal charter to start Sole proprietorships have limited liability for
the owners
The owners of the corporation control the
business.
Question 78
Corporation has only one or two owners Multiple choice (one answer)
The form of business organization that has the largest
Corporation has only one or two owners
sales volume is the:
Question 74 Partnership
corporation
How are sole proprietorships and partnerships alike?
cooperative
The businesses are owned by one person
multinational
Owners have complete control of the business.
Owners have limited legal liability Question 79
Contracts are needed to start the businesses
The simplest form of business ownership is a
Question 75 corporation
cooperative
When comparing the four main types of business
organization, which type protects owners the MOST partnership
from personal financial liability due to being sued by
Proprietorship
a customer?
Franchise Question 80
Corporation Multiple choice (one answer)
Which of the following is an advantage of a sole
Partnership proprietorship?
Sole proprietorship ease of starting a business
pride of ownership
Question 76
Multiple choice (one answer) all of the above
Steven and his brothers want to start a plumbing
being your own boss
business together. What is an advantage of
organizing the business as a partnership rather than a
corporation? Question 81
Partnerships need a legal charter to begin. The main disadvantage of a general partnership is:
Partnerships can be started up quickly difficulty of termination
Partnerships can issue stock to raise money. disagreement amongst partners
Partnerships have limited legal liability the unlimited liability of the partners
the unlimited liability of the partners
Question 77
How is a corporation different from a sole Question 82
proprietorship? Multiple choice (one answer)
A ___________ is a business with two or more
Corporations can sell stock to raise money for owners:
the business.
conglomerate
Sole proprietorships require a legal charter to
start the business. public corporation
Corporations are owned by only one person

partnership dividends are paid on a per share basis
corporation all of the above
profits are not subject to income tax
Question 83
Multiple choice (one answer) one vote per share
A partner who is not actually involved in the
partnership but lends his name for public relations Question 88
purposes is a: Multiple choice (one answer)
The most effective form of business organization for
silent partner
raising capital is the:
dominant partner
proprietorship
general partner
joint venture
nominal partner
corporation
A_____________partner is an owner who has Question 89
unlimited liability and is active in managing the firm: Multiple choice (one answer)
Cooperatives play an important role in:
limited partner
all of the above
senior partner
manufacturing
general partner
aerospace
silent partner
agriculture
Question 85
Which of the following is probably the most Multiple choice (one answer)
important reason for incorporating? Motor Vehicles
limited liability of shareholders Current asset
shared management Non-current liability
more money for investment. Current liability
increased flexibility Non-current asset
A__________ provides for the greatest degree of Machinery
continuity:
Current liability
personal ownership
Non-current liability
nationally recognized name
Non-current asset
training and management assistance
Current asset
all of the above
Question 92
Question 87 Multiple choice (one answer)
Multiple choice (one answer) Property
Which of the following is a characteristic of a
cooperative? Non-current liability
Non-current asset
Current liability
Question 98
Current asset Multiple choice (one answer)
Commission Income / Received
Question 93
Income
Inventory Equity
Non-current liability Asset
Current asset Liability
Current asset Current liability Expense
Non-current asset
Question 99
Question 94
Petty Cash
Prepaid expenses Equity
Non-current liability Current liability
Current liability Current asset
Non-current asset Expense
Current asset Income

Bank loan (Long Term Borrowings) Discount allowed (Cash discount allowed to Trade
Receivables to encourage early / prompt payment)
Non-current asset
Asset
Current asset
Equity
Liability
Current liability
Expense
Question 96 Income
Mortgage
Question 101
Current liability Multiple choice (one answer)
Discount received (cash discount received from trade
Non-current asset
payables for prompt / early payment)
Asset
Current asset
Equity
Question 97 Liability
Multiple choice (one answer) Income
Repairs and maintenance
Expense
Equity
Income Question 102
Expense
Carriage on sales / Freight charges / delivery
Asset charges / transportation charges
Liability
. Liability
Question 107
Equity Multiple choice (one answer)
The chart of accounts is a listing of the accounts
Income
presently having balances in the general ledger
Expense
False
Asset
True
Question 103
Question 108
Sales revenue
Some accounting software classify some accounts as
Asset "income" accounts, while accountants might refer to
these accounts as "revenue" accounts.
Expense
False
Equity
True
Income
Liability Question 109
Question 104 The digits of the account numbers assigned to general
Multiple choice (one answer) ledger accounts often have significance. For example,
Cost of sales an account number beginning with a "1" might
signify that the account is an asset account, a "6"
Liability
might signify an operating expense, etc.
Equity
True
Asset
False
Expense
Question 110
Income
Every transaction will affect how many accounts?
Question 105
Multiple choice (one answer) two or more
Bank charges
only two
Income
only one
Asset
Question 111
Liability
Equity In addition to the standard chart of accounts for a
specific industry, you will likely want to expand
Expense
and/or modify the chart of accounts to fit your
business. One tool that would be helpful in
Question 106 determining the accounts for your company would be
Multiple choice (one answer) your company's _______________ chart.
Depreciation of non-current assets
Business
Asset
Entrepreneurship
Equity
Organization
Expense
Management
Income
Liability Question 112
What type of account is the rental income account? What type of account is the utilities cost account?
equity equity
Liability Expense
revenue Liability

What type of account is the cash account? What type of account is the depreciation account?
expenses Liability
liabilities Expense
Asset contra assets

What type of account is the accounts receivable What type of account is the unearned revenue
account? account?
revenue Revenue
equity Expense
Asset Liability

What type of account is the income tax payable What type of account is the accumulated depreciation
account? account?
Equity Expense
Expense Contra asset
liabilities Liability

What type of account is the common stock account? A business pays a supplier 100 in cash, which
account does it credit?
Expense
cash
Asset
Accounts payable
Equity
Question 123
Question 117
A business buys new plant and machinery from a
What type of account is the retained earnings
supplier who gives 30 days credit. Which account
account?
should the business debit?
Asset
fixed assets
Equity
cash
liabilities
Question 124
Question 118 Multiple choice (one answer)
Goods are bought on credit for 300, is the entry to the
purchases account a debit or a credit?
Debit
Credit
Question 125
Cash is introduced to a business by the owner as
equity. Which account does the credit entry go to?
loan account
capital account
Question 126
A friend of the owner lends the business 1,000.
Which account is credit entry made to?
cash
loan
Question 127
A customer pays a sales invoice for 500 in cash, what
entry is made to the sales ledger (accounts
receivable) control?
debit
credit
Question 128
A supplier returns goods to the business and a credit
note is issued, what entry is made on the creditor
(accounts payable) control.
debit
credit
Question 129
Are fixtures and fittings assets or liabilities?
Asset
Liability
Question 130
The business has a loan of 10,000 from a bank. Is the
loan an asset or a liability?
Asset
Liability

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Fundamentals of Accountancy, Business and

The value is tied to objective and verifiable past

Both a and b Question 9

All the above None of the above

I, II and IV All of the above

I and III Generally Accepted Accounting Principles

Question 20 Management Accounting

Cost accounting Customers

Management accounting Employees

Corporations are owned by only one person

Question 95 Question 100

Question 113 Question 119

Question 114 Question 120

Question 115 Question 121

Question 116 Question 122

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