Homework - Chapter 1
Homework - Chapter 1
Homework - Chapter 1
1. Individuals who manage the business are known as internal users such as owner,
manager, employees and public accountants. F
2. The number of owners in a general partnership can range from 2 to 20. T 3. Unlimited
liability of a business is when its members have a joint obligation to meet any insufficiency in
the assets of the business to enable settlement of any outstanding liability. T
4. The similarities between Klinik F&E and Qisya Bookstore are that both businesses raise
capital by issuing shares.
5. Copyright is classified as a tangible asset.
6. The purpose of accounting is to analyse and interpret the business transactions to help
users in making decision.
7. Among of the characteristics of Kasih Sdn. Bhd., it has limited liability and no legal
obligation to audit the accounts. F
8. Potential investors are considered as internal users of accounting information. F 9. Pre-
adjusted trial balance is prepared at the end of the financial year after adjustments is made
to determine the financial performance of a business. T
10. The steps in the accounting process are classification, identification, interpretation and
communication. F
11. The primary objective of preparing financial statements is to meet the need of managers
who run the business on a day-to-day basis only. F
12. The external users of accounting information include tax authority and potential
investors. T
13. The owner of sole proprietorship is not responsible for the liabilities of the business when
the business goes bankrupt. F
14. Employees of the business is considered to be external users of financial accounting. F
15. In accounting process, it is correct to record the transactions into the ledgers first before
transferring the amount to book of prime entry F
16. For professional partnership, the number of partners allowed is between 2 partners to 20
partners. F
17. Bank overdraft is an example of current liability. T
18. Profits in companies are shared between the owners using pre-agreed profit distribution
ratio. F
19. Bookkeeping possesses a higher scope than accounting. F
20. Creditors are interested to know the business’ financial soundness before granting credit.
T
21. The maximum number of owners in a professional partnership is 50 persons.T
22. Sole proprietorship is the simplest and least costly to establish as compared to a
partnership and company. T
23. Accounting process includes the process of analysing and interpreting the information
recorded in the books of accounts.
24. The accounting process involves recording non-quantifiable economic events.
25. Accounting primarily protects the interest of outsiders dealing with organization in
various capacities.
26. A business organisation as a separate legal entity is a sole proprietorship. 27. There are
two types of limited companies, namely the public limited company and the private limited
company.
28. Internal users are those who work in organisations, such as owners, managers, and
employees.
29. The accounting process starts with the recording of business transactions, the details of
which are taken from source documents.
30. There are two types of current assets, which are non-current assets and investments.
2. The following are the purpose of accounting information EXCEPT for ______. A.
decision making of the users.
B. to evaluate the performance of the business.
C. to avoid misleading financial statement.
D. None of the above.
3. Which of the following is the external user of accounting information for Fashion Star Sdn
Bhd?
A. Clerk of Fashion Star Sdn Bhd
B. Mr. Stanley, one of the potential investors of Fashion Star Sdn. Bhd.
C. Operation Manager of women product line in Fashion Star Sdn Bhd.
D. Puan Mariam, one of Fashion Star Sdn Bhd's shareholders.
4. _______ process explains sorting out the mass of accounting data into orderly and
meaningful categories.
A. Summarizing
B. Interpreting
C. Classifying
D. Recording
5. Which of the following users require financial statement as guideline to evaluate the
organization ability to pay wages and other benefits?
A. Owners
B. Creditors
C. Government
D. Employees
6. Sole proprietorship business owners have ____________.
A. Unlimited liability
B. No liability
C. Limited liability
D. Restricted liability
A. i and ii
B. i and iii
C. iii and iv
D. iv only
A. i and ii
B. i and iii
C. iii and iv
D. iv only
12. Following are the internal users of the accounting information EXCEPT ________.
A. Director
B. Government
C. Employee
D. Manager
13. A term accounting can best be defined as __________.
A. a document that reports on an organization's financial position
B. a system that measures business activities, processes financial information into
reports and communicates the findings
C. a business plans
D. a method of recording business transactions
17. __________ needs the accounting information to evaluate the risks of granting credit or
lending money to businesses.
A. Creditor
B. Employee
C. Government
D. Potential investor
18. All of the following business entities enjoy limited liabilities, except?
A. Private company
B. Public listed company
C. Partnership
D. Limited liability partnership
20. All the followings are characteristics of a sole proprietorship, EXCEPT ______.
A. owner has unlimited legal liability
B. owner has control of the business
C. owner and the business are separate legal entity
D. None of the above
25. Which internal user of financial information is interested in the ability of the business to
progress and expand?
A. Payables
B. Employees
C. Government
D. Consumer
26. Which of the following statements concerning a private limited company is not true?
A. Greater potential for expansion
B. The company’s shares cannot be transacted through the share market
C. Shareholders are legally protected by the law
D. The life span of the business depends on the life span of the members
27. ___ users require financial statement as guideline to evaluate the organization financial
position whether it is a good investment or not.
A. Public
B. Investors
C. Managers
D. Owners