Test Bank for Fundamental Financial Accounting Concepts
n n n n n n
11th Edition
n
by Thomas Edmonds, Philip Olds, Christopher Edmonds
n n n n n n
,Student name:
n
1) nIndicatenwhetherneachnofnthenfollowingnstatementsnaboutn marketsnisntruenornfalse.
a)nFinancialnresourcesncannbenprovidedntonanbusinessnbyninvestors.
b)nResourcenownersnarenthenbusinessesnthatntransformnresourcesnintonproductsnthatns
atisfynconsumerndesires.
c)nLabornresourcesnincludenbothnthenphysicalnandnintellectualnlabornofnanbusiness'sne
mployees.
d)nBusinessesnpurchasentheirnresourcesnfromnresourcenowners.
e)nConsumersnarenthenmainnprovidersnofnresourcesninnanynmarket.
2) Indicatenwhetherneachnofnthenfollowingnstatementsnaboutnaccountingninformationnisntruenornf
alse.
a)nFinancialnaccountingnisnprimarilynintendedntonsatisfyntheninformationnneedsnofni
nternalnstakeholders.
b)nManagerialnaccountingninformationnincludesnfinancialnandnnonfinancialn
information.
c)nThenaccountingninformationnintendedntonsatisfynthenneedsnofnancompany'sne
mployeesnisnmanagerialnaccountingninformation.
d)nGAAPnrequiresnthatncompaniesnadherentonfinancialnaccountingnstandards.
e)nManagerialnaccountingninformationnisnusuallynlessndetailednthannfinancialn
accountingninformation.
3) Indicatenwhetherneachnofnthenfollowingnstatementsnaboutn liabilitiesnisntruenornfalse.
a)nAnnetnlossnonnthenincomenstatementndecreasesnliabilities.
b)nThenacquisitionnofnanbanknloannincreasesnbothnassetsnandnliabilities.
c)nThenaccountingnequationnrequiresnthatnliabilitiesnbenequalntonstockholders’nequity.
d)nThenamountnofnancompany'snliabilitiesnisnequalntonthendifferencenbetweennitsnassetsna
ndnitsnstockholders’nequity.
e)nLiabilitiesnarenreportednonnthenstatementn ofncashnflowsnofnanbusiness.
,4) Indicatenwhetherneachnofnthenfollowingnstatementsnaboutnretainednearningsnisntruenornfalse.
a)nAndividendnpaidntonstockholdersndecreasesnretainednearnings.
b)nIssuingncommonnstocknforncashnincreasesnretainednearnings.
c)nThenamountnofnnetn incomenfornanperiodnmustnequalnretainednearnings.
d)nThenpurchasenofnantruckndecreasesnretainednearnings.
e)nNetnincomenincreasesnretainednearnings.
5) Indicatenwhetherneachnofnthenfollowingnstatementsnaboutnthentypesnofntransactionsnisntrueno
rnfalse.
a)nAnnassetnsourcentransactionnincreasesntotalnassetsnandnincreasesnclaimsntonassets.
b)nThenissuancenofnstockntonownersnforncashnwouldnbenannexamplenofnannassetne
xchangentransaction.
c)nPurchasingnequipmentnforncashnisnannexamplenofnannassetnusentransaction.
d)nPayingnandividendntonstockholdersnisnannexamplenofnannassetnusentransaction.
e)nMakingnanpaymentnonnanbanknloannisnannexamplenofnannassetnexchangentransaction.
6) Indicatenwhetherneachnofnthenfollowingnstatementsnaboutnfinancialnstatementsnisntruenornf
alse.
a)nAncashndividendnpaidntonstockholdersnisnreportedninntheninvestingnactivitiesnsectionno
fnthenstatementnofncashnflows.
b)nAncashndividendnpaidntonstockholdersnisnreportednonnthenstatementnofnchangesninns
tockholders'nequity.
c)nAncashndividendnpaidntonstockholdersnisnreportednonnthenincomenstatement.
d)nThenbalancensheetnreportsnthenendingnbalancesnofnpermanentnaccountsnasnofnthenlastnd
aynofnthenaccountingnperiod.
e)nChangesninnretainednearningsnduringnthenaccountingnperiodnarenreportednonntheni
ncomenstatement.
, 7) Indicatenwhetherneachnofnthenfollowingnstatementsnaboutnstockholders’nequitynisntruenornf
alse.
a)nExpensesndecreasenretainednearnings.
b)nStockholders'nequitynandnliabilitiesncannbenviewedneithernasnsourcesnofnassetsnornc
laimsntonassetsnofnthenbusiness.
c)nRetainednearningsnisnincreasednbynloansnreceivednfromnanbank.
d)nDividendsnpaidntonstockholdersndecreasencommonnstock.
e)nGenerally,nassetsnarenreportednatnthenactualnpricenpaidnfornthemnwhennpurchasednr
egardlessnofnsubsequentnchangesninnmarketnvalue.
8) JessupnCompanynwasnfoundedninnYearn1.nItnacquiredn$45,000ncashnbynissuingnstockntoninve
storsnandnannadditionaln$15,000ncashnbynborrowingnfromncreditors.nDuringnYearn1nitnreceived
$25,000ncashnrevenuesnandnpaidn$32,000ninncashnexpenses.nThencompanynthennwentnoutnofnbusi
ness.
Required:
a) Explainnthenterm,n"businessnliquidation."
b) WhatnamountnofncashnshouldnJessupnCompanynhavenhadnonnhandnimmediatelynbeforengoingno
utnofnbusiness?
c) WhatnamountnofncashnwillnJessup'sncreditorsnreceive?
d) WhatnamountnofncashnwillnJessup'snstockholdersnreceive?
9) BatesnCompanynenterednintonthenfollowingntransactionsnduringnitsnfirstnyearninnbusiness.n
Assumenthatnallntransactionsninvolventhenreceiptnornpaymentnofncash.
1) Issuedncommonnstocknton investorsnforn$25,000ncash.
2) Borrowedn$18,000nfromnthenlocalnbank.
3) Providednservicesntoncustomersnforn$28,000.
4) Paidnexpensesnamountingnton$21,400.
5) Purchasednanplotnofnlandncostingn$22,000.
6) Paidnandividendnofn$15,000ntonitsnstockholders.
7) Repaidn$12,000nofnthenloannlistedninnitemn2.
Required:
(a) Fillninnthenthreencolumnnheadingsnofnthenaccountingnequationninnthenfirstnrownofnthentablens
hownnbelow.
(b) Showntheneffectsnofnthenaboventransactionsnonnthenaccountingnequation.
n n n n n n
11th Edition
n
by Thomas Edmonds, Philip Olds, Christopher Edmonds
n n n n n n
,Student name:
n
1) nIndicatenwhetherneachnofnthenfollowingnstatementsnaboutn marketsnisntruenornfalse.
a)nFinancialnresourcesncannbenprovidedntonanbusinessnbyninvestors.
b)nResourcenownersnarenthenbusinessesnthatntransformnresourcesnintonproductsnthatns
atisfynconsumerndesires.
c)nLabornresourcesnincludenbothnthenphysicalnandnintellectualnlabornofnanbusiness'sne
mployees.
d)nBusinessesnpurchasentheirnresourcesnfromnresourcenowners.
e)nConsumersnarenthenmainnprovidersnofnresourcesninnanynmarket.
2) Indicatenwhetherneachnofnthenfollowingnstatementsnaboutnaccountingninformationnisntruenornf
alse.
a)nFinancialnaccountingnisnprimarilynintendedntonsatisfyntheninformationnneedsnofni
nternalnstakeholders.
b)nManagerialnaccountingninformationnincludesnfinancialnandnnonfinancialn
information.
c)nThenaccountingninformationnintendedntonsatisfynthenneedsnofnancompany'sne
mployeesnisnmanagerialnaccountingninformation.
d)nGAAPnrequiresnthatncompaniesnadherentonfinancialnaccountingnstandards.
e)nManagerialnaccountingninformationnisnusuallynlessndetailednthannfinancialn
accountingninformation.
3) Indicatenwhetherneachnofnthenfollowingnstatementsnaboutn liabilitiesnisntruenornfalse.
a)nAnnetnlossnonnthenincomenstatementndecreasesnliabilities.
b)nThenacquisitionnofnanbanknloannincreasesnbothnassetsnandnliabilities.
c)nThenaccountingnequationnrequiresnthatnliabilitiesnbenequalntonstockholders’nequity.
d)nThenamountnofnancompany'snliabilitiesnisnequalntonthendifferencenbetweennitsnassetsna
ndnitsnstockholders’nequity.
e)nLiabilitiesnarenreportednonnthenstatementn ofncashnflowsnofnanbusiness.
,4) Indicatenwhetherneachnofnthenfollowingnstatementsnaboutnretainednearningsnisntruenornfalse.
a)nAndividendnpaidntonstockholdersndecreasesnretainednearnings.
b)nIssuingncommonnstocknforncashnincreasesnretainednearnings.
c)nThenamountnofnnetn incomenfornanperiodnmustnequalnretainednearnings.
d)nThenpurchasenofnantruckndecreasesnretainednearnings.
e)nNetnincomenincreasesnretainednearnings.
5) Indicatenwhetherneachnofnthenfollowingnstatementsnaboutnthentypesnofntransactionsnisntrueno
rnfalse.
a)nAnnassetnsourcentransactionnincreasesntotalnassetsnandnincreasesnclaimsntonassets.
b)nThenissuancenofnstockntonownersnforncashnwouldnbenannexamplenofnannassetne
xchangentransaction.
c)nPurchasingnequipmentnforncashnisnannexamplenofnannassetnusentransaction.
d)nPayingnandividendntonstockholdersnisnannexamplenofnannassetnusentransaction.
e)nMakingnanpaymentnonnanbanknloannisnannexamplenofnannassetnexchangentransaction.
6) Indicatenwhetherneachnofnthenfollowingnstatementsnaboutnfinancialnstatementsnisntruenornf
alse.
a)nAncashndividendnpaidntonstockholdersnisnreportedninntheninvestingnactivitiesnsectionno
fnthenstatementnofncashnflows.
b)nAncashndividendnpaidntonstockholdersnisnreportednonnthenstatementnofnchangesninns
tockholders'nequity.
c)nAncashndividendnpaidntonstockholdersnisnreportednonnthenincomenstatement.
d)nThenbalancensheetnreportsnthenendingnbalancesnofnpermanentnaccountsnasnofnthenlastnd
aynofnthenaccountingnperiod.
e)nChangesninnretainednearningsnduringnthenaccountingnperiodnarenreportednonntheni
ncomenstatement.
, 7) Indicatenwhetherneachnofnthenfollowingnstatementsnaboutnstockholders’nequitynisntruenornf
alse.
a)nExpensesndecreasenretainednearnings.
b)nStockholders'nequitynandnliabilitiesncannbenviewedneithernasnsourcesnofnassetsnornc
laimsntonassetsnofnthenbusiness.
c)nRetainednearningsnisnincreasednbynloansnreceivednfromnanbank.
d)nDividendsnpaidntonstockholdersndecreasencommonnstock.
e)nGenerally,nassetsnarenreportednatnthenactualnpricenpaidnfornthemnwhennpurchasednr
egardlessnofnsubsequentnchangesninnmarketnvalue.
8) JessupnCompanynwasnfoundedninnYearn1.nItnacquiredn$45,000ncashnbynissuingnstockntoninve
storsnandnannadditionaln$15,000ncashnbynborrowingnfromncreditors.nDuringnYearn1nitnreceived
$25,000ncashnrevenuesnandnpaidn$32,000ninncashnexpenses.nThencompanynthennwentnoutnofnbusi
ness.
Required:
a) Explainnthenterm,n"businessnliquidation."
b) WhatnamountnofncashnshouldnJessupnCompanynhavenhadnonnhandnimmediatelynbeforengoingno
utnofnbusiness?
c) WhatnamountnofncashnwillnJessup'sncreditorsnreceive?
d) WhatnamountnofncashnwillnJessup'snstockholdersnreceive?
9) BatesnCompanynenterednintonthenfollowingntransactionsnduringnitsnfirstnyearninnbusiness.n
Assumenthatnallntransactionsninvolventhenreceiptnornpaymentnofncash.
1) Issuedncommonnstocknton investorsnforn$25,000ncash.
2) Borrowedn$18,000nfromnthenlocalnbank.
3) Providednservicesntoncustomersnforn$28,000.
4) Paidnexpensesnamountingnton$21,400.
5) Purchasednanplotnofnlandncostingn$22,000.
6) Paidnandividendnofn$15,000ntonitsnstockholders.
7) Repaidn$12,000nofnthenloannlistedninnitemn2.
Required:
(a) Fillninnthenthreencolumnnheadingsnofnthenaccountingnequationninnthenfirstnrownofnthentablens
hownnbelow.
(b) Showntheneffectsnofnthenaboventransactionsnonnthenaccountingnequation.
