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
