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The main objective of a not-for-profit business is not to make a profit.

The role of accounting is to provide many different users with financial information to make economic decisions.

A corporation is a business that is legally separate and distinct from its owners.

Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies where they work.

The primary role of accounting is to determine the amount of taxes a business will be required to pay to taxing entities

Managerial accounting information is used by external and internal users equally.

Financial accounting provides information to all users, while the main focus for managerial accounting is to provide information to the management.

Proper ethical conduct implies that you only consider what's in your best interest

Some of the major fraudulent acts by senior executives started as what they considered to be small ethical lapses which grew out of control.

Two factors that typically lead to ethical violations are relevance and timeliness of accounting information.

Accounting information users need reports about the economic activities and condition of businesses.

An example of an external user of accounting information is the federal government

An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.

A business is an organization in which basic resources or inputs, like materials and labor, are assembled and processed to provide outputs in the form of goods or services to customers.

The basic difference between manufacturing and merchandising companies is the completion level of the products they purchase for resale to customers.

The main objective for all businesses is to maximize unrealized profits.

The Sarbanes-Oxley Act prohibits CPAs from providing nonaudit investment banking services.

About 90% of the businesses in the United States are organized as corporations.

Proprietorships are owned by one owner and provide only services to their customers.

Only large companies such as Wal-Mart, JCP, General Motors, and the Bank of America can be organized as corporations.

The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for developing accounting principles

The unit of measurement concept requires that economic data be recorded in a common unit of measurement.

No significant differences exist between the accounting standards issued by the FASB and the IASB.

The cost concept is the basis for entering the exchange price into the accounting records.

Generally accepted accounting principles regulate how and what financial information is reported by businesses.

The accounting equation can be expressed as Assets - Liabilities = Owners' Equity.

The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of owners.

Owners' rights to assets rank ahead of creditors' rights to assets.

An account receivable is typically classified as a revenue.

An account receivable is a claim against a customer arising from a sale on account.

Paying an account payable increases liabilities and decreases assets.

Receiving payments on an account receivable increases both equity and assets.

Cash dividends paid to stockholders decrease assets and increase equity.

Purchasing supplies on account increases liabilities and decreases equity.

Receiving a bill or otherwise being notified that an amount is owed is not recorded until the amount is paid.

Revenue is earned only when money is received.

Expenses are assets that are used up during the process of earning revenue.

The excess of revenue over the expenses incurred in earning the revenue is called capital stock.

The principal financial statements for a corporation are the income statement, the retained earnings statement, the balance sheet, and the budget.

An income statement is a summary of the revenues and expenses of a business as of a specific date.

A retained earnings statement reports all changes in cash for a period of time.

The statement of cash flows consists of three sections: cash flows from operating activities, cash flows from income activities, and cash flows from equity activities.

All financial statements are identified by the name of the business, the title of the statement, and the date or period of time

The balance sheet represents the accounting equation.

Net income and net profit do not mean the same thing.