econ final

Customers

External user

Did the company earn a satisfactory income?

External user

Internal Revenue Service

External user

Roger Holloway, owner of Roger's Photography, records his personal living costs as expenses of the business.

Incorrect; Economic entity assumption

Tisinai Company owns buildings that are worth substantially more than they originally cost. In an effort to provide more relevant information, Tisinai reports the buildings at fair value in its accounting reports.

Incorrect; Historical cost principle

Suppliers

External user

Which product should we emphasize?

Internal user

Kingston Company includes in its accounting records only transaction data that can be expressed in terms of money.

Correct; Monetary unit assumption

The three steps in the accounting process are identification, recording, and examination.

false

A market structure with many producers selling differentiated products is

monopolistic competition

Which of the following individuals would most likely be considered unemployed?

A 35 year old auto worker who was laid off and is looking for another job

Securities and Exchange Commission

External user

Will the company be able to pay its short-term debts?

External user

What does it cost us to manufacture each unit produced?

Internal user

Keeping a systematic chronological diary of events.

Records

Computer repair business

Service

Interior design firm

Service

The primary accounting standard-setting body in the United States is the Securities and Exchange Commission (SEC).

false

When an economy is expanding rapidly (booming), you would expect to see the price level _____ and the unemployment rate ______.

increasing; decreasing

If the price of an important drug rises significantly and the number of people taking the drug barely decreases at all , the demand for the drug is probably

inelastic

To maximize profits, a firm should produce the quantity (output) where its

marginal revenue = marginal cost

When the total spending and economic activity in an economy decreases, it is expected for the economy to experience

a recession (contraction).

The opportunity cost of an activity is

the value of the best alternative not chosen

A business owned by one person is generally a proprietorship.

true

A landscaping company is an example of a service company.

true

Reporting information in a standard format.

Communication

How does the company's profitability compare to other companies?

External user

Classifying economic events.

Records

Measuring events in dollars and cents.

Records

Internal users include human resources managers.

true

The accounting process includes the bookkeeping function.

true

The historical cost principle dictates that companies record assets at their cost and continue to report them at their cost over the time the assets are held.

true

The monetary unit assumption requires that companies record only transactions that can be measured in monetary units.

true

The two most common types of external users are investors and creditors.

true

Store manager

Internal user

Chemical plant

Manufactoring

Furniture factory

Manufacturing

Economics is the study of how people

make choices using limited resources

Explaining uses, meaning, and limitations of data.

Communication

Summarizing economic events.

Records

The standards of conduct by which actions are judged as loyal or disloyal are ethics.

false

Do we need to borrow in the near future?

Internal user

Marketing manager

Internal user

Production supervisor

Internal user

Vice president of finance

Internal user

Pharmacy

Merchandising

Sporting goods store

Merchandising

Selecting economic activities relevant to the company.

Identifies

Can we afford to give our employees a pay raise?

Internal user

If the government wants to increase economic growth through expansionary fiscal policy, it can __________ taxes and/or ___________ government spending.

decrease; increase

At equilibrium price, the quantity demanded is _____ the quantity supplied.

equal to

A business owned by two or more persons associated as partners is a corporation.

false

A department store is an example of a manufacturing company.

false

A merchandising company converts raw materials into finished goods to sell to customers.

false

Congress passed the Sarbanes-Oxley Act to ensure that investors invest only in companies that will be profitable.

false

Managerial accounting provides reports to help investors and creditors evaluate a company.

false

Preparing accounting reports.

Communication

Analyzing and interpreting information.

Communication

Labor unions

External user