Multiple choice select the best answer.

1.A business is

a.An easy way to get rich

b.An organization that has the purpose of accumulating wealth

c.An organization that always adds value

d.An activity that provides little or no benefit to society.

2.If a company had $1,000 of revenue, this means

a.Cash in the amount of $1,000

b.An increase in business wealth in the amount of $1,000, caused by making a sale

c.A profit of $1,000

d.All of the above.

3.To add value, a business always has to

a.Make a profit

b.Consume resources

c.Make a sale

d.Both (b) and (c).

4.Expenses

a.Will always add significant value

b.May add little or no value

c.Require a nonvalue-added activity

d.None of the above.

5.A business knows that is has net income when

a.Revenues are greater than expenses

b.Expenses are greater than revenues

c.It is still able to repay its loans

d.It is certain that it is adding value.

6.Business resources except:

a.Property

b.Services

c.Accounts receivable

d.Credit.

7.Business asset must have specific qualities to be qualified:

a.future economic benefits

b.owned by a business as a result of a past event

c.service potential

d.all of the above.

8.All possible claims on business assets except:

a.Creditors claim

b.Owners claim

c.Accounts payable

d.All of the above.

9.Economic entity assumption means

a.Separate recording keeping is important

b.It must be possible to correctly identify a particular financial activity

c.If an entity cannot be identified, accounting cannot be done

d.All of the above.

10.A proprietorship

a.Is not a separate economic entity

b.Is difficult and time-consuming to start

c.Cannot be easily managed by the owner

d.Is the most common form of business entity type in the US.

11.The owners of a corporation are usually called

a.Partners

b.Investors

c.Shareholders

d.Members

12.The owners of a LLC are usually called

a.Partners

b.Investors

c.Shareholders

d.Members

13.For which of the following would A = L + OE not apply?

a.Proprietorship

b.Partnership

c.Corporation

d.None of the above

14.Which of the following is a combined economic entity and a legal entity?

a.The Da Anza Partnership Company

b.The West Valley Corporation

c.The Mission Proprietorship

d.None of the above

15. Which of the following is perpetual in life of business operation?

a.Proprietorship

b.Partnership

c.Corporation

d.None of the above