Regarding the separation of corporate ownership and management, which of the following is a true statement? A) The corporate officers elect the board of directors. B) The corporation runs better with day-to-day input from stockholders. C) None of the stockholders have the ability to manage the business of the corporation. D) Stockholders own the business, […]
Ten years ago a corporation purchased a building for $160,000. At that time, the corporation felt that the business was worth $185,000. The current market value of the business is $460,000 The building has been assessed at $435,000 for property tax purposes. At which amount should the corporation record the building in its accounting records? […]
Which of the following statements is true of the corporate form of business? A) The board of directors sets policy for the corporation and appoints the officers. B) Changes in the ownership of stock has a negative effect on the continuity of the corporation. C) Any stockholder may commit the corporation to a contract. D) […]
As per the ________, the entity will remain in operation for the foreseeable future. A) economic entity concept B) monetary unit assumption C) going concern assumption D) cost principle ANSWER C
Corporations pay their own income tax on corporate income. Stockholders pay personal income tax on the dividends received from corporations. This is an example of ________. A) double taxation B) continuous life C) no mutual agency D) a limited liability company ANSWER A
Under the going concern principle, accountants must provide proof that the business will remain in operations long enough to use existing resources for their intended purpose. Indicate whether the statement is true or false ANSWER FALSE .Accountants base going concern on assumptions. Actual proof is not needed to make this determination.
David has decided to open an auto-detailing business. He will pick up an automobile from the client, take it to his parents’ garage, detail it, and return it to the client If he does all of the work himself and takes no legal steps to form a special organization, which type of business organization, in […]
Which of the following is a characteristic of a limited-liability company (LLC)? A) An LLC’s life is terminated at any member’s choice or death. B) Each member of an LLC is liable only for his or her own actions. C) An LLC must have more than five members. D) The income of members from an […]
Caleb Brown has been the sole owner of a bicycle sales and repair shop for several years. Which of the following business types would limit Caleb’s personal liability exposure to the entity’s debts? A) partnership B) limited-liability company C) sole proprietorship D) limited-liability partnership ANSWER B
Which of the following statements is true of a sole proprietorship? A) A sole proprietorship joins two or more individuals as co-owners. B) The sole proprietor is personally liable for the liabilities of the business. C) A sole proprietorship is taxed separately from the owner. D) A sole proprietorship has to pay business income taxes. […]
