FAR Reviewer 1

The concept assumes that the business has an indefinite economic life.

• accounting entity
• accounting period
• going concern
• objectivity

Which form of business organization is characterized by limited liability?

• Sole Proprietorship
• Partnership
• Corporation
• Both sole proprietorship and partnership

Which of the following processes best defines accounting?

• Measuring economic activities
• Communicating results to interested parties
• Preventing fraud
• Both a and b.

To which area of accounting are generally accepted accounting principles primarily relevant? a. Managerial Accounting

• Managerial Accounting
• Financial Accounting
• Tax Accounting
• Financial Reporting To all Regulatory Agencies

Which of the following is not one of the three types of business activities?

• Investing
• Financing
• Marketing
• Operating

Which of the following processes is considered bookkeeping?

• Analyzing
• Reporting
• Recording
• Summarizing

Krishna started a speech therapy center. He also sells professional books on speech development. What is the nature of his business? Support your answer with a reason

• manufacturing
• service
• trading
• service and trading

Which of the following is a trading business?

• a clinic
• a law firm
• a pharmacy
• a telecommunications company

Which of the following statements is false?

• A sole proprietor has limited risk with respect to the amount of resources he invests in his business.
• A sole proprietorship has only one owner.
• A sole proprietorship is easy to set up.
• A sole proprietorship may not be able to obtain loans easily.

A business which prepares financial statements every year is following the concept.

• accounting entity
• periodicity
• going concern
• objectivity