Accounting True and False Questions

As long as the action is within the scope of the partnership, any partner can bind the partnership.

Question 1 options:

	1) True
	2) False

Each partner is personally liable for all debts of the partnership.

Question 2 options:

	1) True
	2) False

There is no income tax imposed on a partnership.

Question 3 options:

	1) True
	2) False

If a partnership agreement does not specify how income and losses are to be distributed, they should be allocated based on relative Capital account balances.

Question 4 options:

	1) True
	2) False

Partner X purchases Partner Ys $25,000 interest from Partner Y for $30,000. The entry to record the transaction is for $30,000

Question 5 options:

	1) True
	2) False

Liquidation of a partnership is the process of ending the business.

Question 6 options:

	1) True
	2) False

When partner contributes an asset, the partnership should record it at fair market value.

Question 7 options:

	1) True
	2) False

Corporate earnings are subject to a double taxation.

Question 10 options:

	1) True
	2) False

A corporation is a separate entity for legal purposes.

Question 11 options:

	1) True
	2) False

The death of a partner effectively ends the partnership. Similarly, the death of a major stockholder results in the dissolution of the corporation.

Question 12 options:

	1) True
	2) False

For accounting purposes, stated value is treated the same way as par value.

Question 13 options:

	1) True
	2) False

The quality of a companys earnings is affected by the accounting estimates chosen by the companys management.

Question 20 options:

	1) True
	2) False

Extraordinary gains and losses must be shown in the financial statement net of tax.

Question 21 options:

	1) True
	2) False

For an item to be treated as extraordinary, it must be unusual in nature and occur infrequently-AND MATERIAL IN DOLLAR AMOUNT!

Question 22 options:

	1) True
	2) False

A convertible bond is a potentially dilutive security.

Question 23 options:

	1) True
	2) False

A stock dividend does not affect the total amount of stockholders equity.

Question 24 options:

	1) True
	2) False

Par value or stated value is arbitrarily set when stock is authorized.

Question 25 options:

	1) True
	2) False

An $80,000 bond issue priced at 103 is sold for 82,600.

Question 27 options:

	1) True
	2) Fals

The par value of a bond is equal to its face value.

Question 28 options:

	1) True
	2) False

In some cases, the face (par) value of a bond is in even $1,000 increments but usually the issuing company waits until the bond is issued so they can set the face value equal to market.

Question 29 options:

	1) True
	2) False

If a bond has a stated interest rate of 8 percent, a face value of $20,000, and pays interest semiannually, each interest payment will amount to $1,600.

Question 30 options:

	1) True
	2) False

Issuing bonds at a discount has the effect of decreasing interest expense (compared to the actual cash paid for interest).

Question 31 options:

	1) True
	2) False

Total interest cost for a bond issued at a premium equals the total of the periodic interest payments minus the premium.

Question 32 options:

	1) True
	2) False

The test is almost over and I learned a lot in just one semester!

Question 33 options:

	1) True
	2) False

A stock dividend reduces retained earnings.

Question 36 options:

	True
	False