Question

PROY B MARTIN ACC 114 CHAPTER 1 AND 2 Din chen 1. Generally accepted accounting principles are a.standards that indicate how to report economie events. b. prineiples that have been proven correct by academie researchers e. theories that are based on physical laws of the universe. d. income tax regulations of the Internal Revenue Service. 2. The SEC and PAD Are two organizations that are primarily responsible for establishing generally accepted accounting principles. It is true that a. the EC often mandates guidelines when no accounting principles b. the SEC is a private organization of accountants. c. they are both governmental agencies. d. the SIC and PASB rarely cooperate in developing accounting standards, 3. GAAP stands for a. Generally Accepted Accounting principles. b. Generally Accepted Accounting Procedures. c. Generally Accepted Auditing Principles. d. Generally Accepted Auditing Procedures. 4. Which of the following is not a characteristic of the cost principle? a. Subjectivity b. Verifiability c. Objectivity d. Reliability 5. The economic entity assumption requires that the activities a. must be reported to the Securities and Exchange Commission b. of an entity be kept separate from the activities of its owner c. of a sole proprietorship cannot be distinguished from the personal economic events of its owners. d. of different entities can be combined if all the entities are corporations. 6. A business organized as a corporation a. is owned by its stockholders. b. requires that stockholders be personally liable for the debt the business. c. is not a separate legal entity in most states. d. terminates when one of its original stockholders dies. 7. Owner's equity is best depicted by the following: a. Liabilities + Assets. b. Assets - Liabilities. c. Residual equity + Assets. d. Assets = Liabilities.

Answer 1

1) a

2) a

3) a [Generally accepted accounting principles]

4) d

5) b

6) a [ Corporation is owned by shareholders i.e stockholders]

7) b [ Assets = Owner's Capital + Liability, Thus Owner's capital is Assets - Liabilities