Acct 504 Study Questions Essay

12052 Words Mar 22nd, 2014 49 Pages
8/4/13

Chapter 1 Results

36% (9 out of 25 correct)

Responses to questions are indicated by the

symbol.

1. Corporations generally receive more favorable tax treatment than sole proprietorships and corporations. A. True B. False

Correct! Sole proprietorships and partnerships generally receive more favorable tax treatment than corporations.

2. Which is not one of the three forms of business organization? A. Sole proprietorship B. Creditorship C. Partnership D. Corporation

This is one of three forms of business organization discussed in the chapter.

3. Which is an advantage of corporations relative to partnerships and sole proprietorships? A. Increased difficulty of raising funds B. Harder to transfer ownership C.
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D. is classified as a separate legal entity.

Correct! Because sole proprietorships have the ability to report business entity gains on their personal income tax returns, both sole proprietorships and partnerships have a tax advantage over the corporation.

7. Which forms of business organization are considered to be separate accounting entities? A. Sole proprietorships and partnerships only B. Partnerships and corporations only C. Only corporations D. Sole proprietorships, corporations, and partnerships

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2/8

8/4/13

Chapter 1 Results

These are both separate accounting entities, but there is a better answer.

8. Internal users of accounting information include a company's stockholders. A. True B. False

Correct! Since stockholders are not normally officers, directors, or managers of the company, they are considered external users of accounting information.

9. To which of the following questions will internal users want answers? A. What selling price for our product will maximize the company's net income? B. Which product line is most profitable? C. Is cash sufficient to pay dividends to stockholders? D. All of the answer choices are correct.

Product price is important as well as profitability and availability of cash.

10. Which of the following is not an external user of accounting data? A. Labor unions B.

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