TEST BANK
Financial Accounting Tools For Business Decision
Making, 10th Edition, Paul D. Kimmel,
Chapters 1 – 13, Complete
Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)
,TABLE OF CONTENTS
1 Introduction to Financial Statements
2 A Further Look at Financial Statements
3 The Accounting Information System
4 Accrual Accounting Concepts
5 Merchandising Operations and the Multiple-Step Income Statement
6 Reporting and Analyzing Inventory
7 Fraud, Internal Control, and Cash
8 Reporting and Analyzing Receivables
9 Reporting and Analyzing Long-Lived Assets
10 Reporting and Analyzing Liabilities
11 Reporting and Analyzing Stockholders’ Equity
12 Statement of Cash Flows
13 Financial Analysis: The Big Picture
Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)
,CHAPTER 1
INTRODUCTION TO FINANCIAL STATEMENTS
CHAPTER LEARNING OBJECTIVES
1. Identify the forms of business organization and the uses of accounting information. A sole
proprietorship is a business owned by one person. A partnership is a business owned by two or more
people associated as partners. A corporation is a separate legal entity for which evidence of
ownership is provided by shares of stock. Internal users are managers who need accounting
information to plan, organize, and run business operations. The primary external users are investors
and creditors. Investors (stockholders) use accounting information to decide whether to buy, hold, or
sell shares of a company‘s stock. Creditors (suppliers and bankers) use accounting information to
assess the risk of granting credit or loaning money to a business. Other groups who have an indirect
interest in a business are taxing authorities, customers, labor unions, and regulatory agencies.
2. Explain the three principal types of business activity. Financing activities involve collecting the
necessary funds to support the business. Investing activities involve acquiring the resources necessary
to run the business. Operating activities involve putting the resources of the business into action to
generate a profit.
3. Describe the four financial statements and how they are prepared. An income statement presents
the revenues and expenses of a company for a specific period of time. A retained earnings statement
summarizes the changes in retained earnings that have occurred for a specific period of time. A
balance sheet reports the assets, liabilities, and stockholders‘ equity of a business at a specific date. A
statement of cash flows summarizes information concerning the cash inflows (receipts) and outflows
(payments) for a specific period of time. Assets are resources owned by a business. Liabilities are the
debts and obligations of the business. Liabilities represent claims of creditors on the assets of the
business. Stockholders‘ equity represents the claims of owners on the assets of the business.
Stockholders‘ equity is subdivided into two parts: common stock and retained earnings. The basic
accounting equation is Assets = Liabilities + Stockholders‘ Equity. Within the annual report, the
management discussion and analysis provides management‘s interpretation of the company‘s results
and financial position as well as a discussion of plans for the future. Notes to the financial statements
provide additional explanation or detail to make the financial statements more informative. The
auditor‘s report expresses an opinion as to whether the financial statements present fairly the
company‘s results of operations and financial position.
*4. Explain ithe icareer iopportunities iin iaccounting. iAccounting ioffers imany idifferent ijobs iin ifields
isuch ias ipublic iand iprivate iaccounting, igovernmental, iand iforensic iaccounting. iAccounting iis ia
ipopular imajor ibecause ithere iare imany idifferent itypes iof ijobs, iwith iunlimited ipotential ifor icareer
iadvancement
Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)
, 2-2 Test Bank for Kimmel, Financial Accounting: Tools for Business Decision Making, 10e
Difficulties:
Easy: i143
Medium: i101
Hard: i12
Question iList iby iSection
Business iOrganization iand iAccounting iInformation
iUses:iForms iof iBusiness iOrganization; i47, i48, i202, i246
Sole iProprietorship: i5, i44, i49, i58, i59
Partnership: i1, i4, i46, i56
Corporation: i2, i3, i45, i50, i51, i52, i53, i55, i57, i233, i245
Hybrid iForms iof iOrganization: i60, i61
Users iand iUses iof iFinancial iInformation: i6, i7, i11, i74, i87
Internal iUsers: i62, i63, i64, i75, i77, i82, i234
External iUsers: i8, i9, i10, i12, i65, i76, i78, i79, i80, i81, i83, i84, i85, i86, i88, i89
Data iAnalytics: i66, i67, i68, i69, i70, i235, i236
Ethics iin iFinancial iReporting: i71, i72, i73, i237,
i255iThe iThree iTypes iof iBusiness iActivity: i97
Financing iActivities: i13, i15, i18, i90, i91, i93, i94, i95, i96, i97, i102, i109, i117, i118, i119, i238
Investing iActivities: i14, i16, i98, i99, i115, i116
Operating iActivities: i17, i19, i20, i100, i101, i103, i104, i105, i106, i107, i108, i110, i111, i112, i113,
114
The iFour iFinancial iStatements:
Income iStatement: i21, i22, i23, i24,127, i128, i132, i133, i134, i138, i142, i143
Retained iEarnings iStatement: i120, i122, i123, i 124, i125, i126, i129, i130, i131, i135, i137, i139, i140,
141, i144, i145, i146, i147, i148, i149, i150, i154, i164, i169, i178, i181, i252
Balance iSheet: i25, i27, i28, i29, i30, i31, i32, i33, i34, i35, i136, i151, i152, i153, i163, i165, i166, i168,
170, i173, i177, i179, i180, i182, i185, i186, i187, i188, i199, i200, i201, i207, i208, i213, i214, i215, i216,
217, i218, i219, i220, i221, i222, i225, i229, i239, i240, i241, i253
Statement iof iCash iFlows: i26, i121, i171, i174, i183, i242, i249
Interrelationships iof iStatements: i155, i156, i157, i158, i159, i160, i161, i162, i167, i175, i176, i184,
250, i251, i256
Elements iof ian iAnnual iReport: i36, i41, i192, i196, i197
Management iDiscussion iand iAnalysis: i40, i191
Notes ito ithe iFinancial iStatements: i37, i42, i190, i193, i194, i198, i254
Auditor‘s iReport: i38, i39, i195
Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)
Financial Accounting Tools For Business Decision
Making, 10th Edition, Paul D. Kimmel,
Chapters 1 – 13, Complete
Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)
,TABLE OF CONTENTS
1 Introduction to Financial Statements
2 A Further Look at Financial Statements
3 The Accounting Information System
4 Accrual Accounting Concepts
5 Merchandising Operations and the Multiple-Step Income Statement
6 Reporting and Analyzing Inventory
7 Fraud, Internal Control, and Cash
8 Reporting and Analyzing Receivables
9 Reporting and Analyzing Long-Lived Assets
10 Reporting and Analyzing Liabilities
11 Reporting and Analyzing Stockholders’ Equity
12 Statement of Cash Flows
13 Financial Analysis: The Big Picture
Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)
,CHAPTER 1
INTRODUCTION TO FINANCIAL STATEMENTS
CHAPTER LEARNING OBJECTIVES
1. Identify the forms of business organization and the uses of accounting information. A sole
proprietorship is a business owned by one person. A partnership is a business owned by two or more
people associated as partners. A corporation is a separate legal entity for which evidence of
ownership is provided by shares of stock. Internal users are managers who need accounting
information to plan, organize, and run business operations. The primary external users are investors
and creditors. Investors (stockholders) use accounting information to decide whether to buy, hold, or
sell shares of a company‘s stock. Creditors (suppliers and bankers) use accounting information to
assess the risk of granting credit or loaning money to a business. Other groups who have an indirect
interest in a business are taxing authorities, customers, labor unions, and regulatory agencies.
2. Explain the three principal types of business activity. Financing activities involve collecting the
necessary funds to support the business. Investing activities involve acquiring the resources necessary
to run the business. Operating activities involve putting the resources of the business into action to
generate a profit.
3. Describe the four financial statements and how they are prepared. An income statement presents
the revenues and expenses of a company for a specific period of time. A retained earnings statement
summarizes the changes in retained earnings that have occurred for a specific period of time. A
balance sheet reports the assets, liabilities, and stockholders‘ equity of a business at a specific date. A
statement of cash flows summarizes information concerning the cash inflows (receipts) and outflows
(payments) for a specific period of time. Assets are resources owned by a business. Liabilities are the
debts and obligations of the business. Liabilities represent claims of creditors on the assets of the
business. Stockholders‘ equity represents the claims of owners on the assets of the business.
Stockholders‘ equity is subdivided into two parts: common stock and retained earnings. The basic
accounting equation is Assets = Liabilities + Stockholders‘ Equity. Within the annual report, the
management discussion and analysis provides management‘s interpretation of the company‘s results
and financial position as well as a discussion of plans for the future. Notes to the financial statements
provide additional explanation or detail to make the financial statements more informative. The
auditor‘s report expresses an opinion as to whether the financial statements present fairly the
company‘s results of operations and financial position.
*4. Explain ithe icareer iopportunities iin iaccounting. iAccounting ioffers imany idifferent ijobs iin ifields
isuch ias ipublic iand iprivate iaccounting, igovernmental, iand iforensic iaccounting. iAccounting iis ia
ipopular imajor ibecause ithere iare imany idifferent itypes iof ijobs, iwith iunlimited ipotential ifor icareer
iadvancement
Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)
, 2-2 Test Bank for Kimmel, Financial Accounting: Tools for Business Decision Making, 10e
Difficulties:
Easy: i143
Medium: i101
Hard: i12
Question iList iby iSection
Business iOrganization iand iAccounting iInformation
iUses:iForms iof iBusiness iOrganization; i47, i48, i202, i246
Sole iProprietorship: i5, i44, i49, i58, i59
Partnership: i1, i4, i46, i56
Corporation: i2, i3, i45, i50, i51, i52, i53, i55, i57, i233, i245
Hybrid iForms iof iOrganization: i60, i61
Users iand iUses iof iFinancial iInformation: i6, i7, i11, i74, i87
Internal iUsers: i62, i63, i64, i75, i77, i82, i234
External iUsers: i8, i9, i10, i12, i65, i76, i78, i79, i80, i81, i83, i84, i85, i86, i88, i89
Data iAnalytics: i66, i67, i68, i69, i70, i235, i236
Ethics iin iFinancial iReporting: i71, i72, i73, i237,
i255iThe iThree iTypes iof iBusiness iActivity: i97
Financing iActivities: i13, i15, i18, i90, i91, i93, i94, i95, i96, i97, i102, i109, i117, i118, i119, i238
Investing iActivities: i14, i16, i98, i99, i115, i116
Operating iActivities: i17, i19, i20, i100, i101, i103, i104, i105, i106, i107, i108, i110, i111, i112, i113,
114
The iFour iFinancial iStatements:
Income iStatement: i21, i22, i23, i24,127, i128, i132, i133, i134, i138, i142, i143
Retained iEarnings iStatement: i120, i122, i123, i 124, i125, i126, i129, i130, i131, i135, i137, i139, i140,
141, i144, i145, i146, i147, i148, i149, i150, i154, i164, i169, i178, i181, i252
Balance iSheet: i25, i27, i28, i29, i30, i31, i32, i33, i34, i35, i136, i151, i152, i153, i163, i165, i166, i168,
170, i173, i177, i179, i180, i182, i185, i186, i187, i188, i199, i200, i201, i207, i208, i213, i214, i215, i216,
217, i218, i219, i220, i221, i222, i225, i229, i239, i240, i241, i253
Statement iof iCash iFlows: i26, i121, i171, i174, i183, i242, i249
Interrelationships iof iStatements: i155, i156, i157, i158, i159, i160, i161, i162, i167, i175, i176, i184,
250, i251, i256
Elements iof ian iAnnual iReport: i36, i41, i192, i196, i197
Management iDiscussion iand iAnalysis: i40, i191
Notes ito ithe iFinancial iStatements: i37, i42, i190, i193, i194, i198, i254
Auditor‘s iReport: i38, i39, i195
Copyright © 2022 John Wiley & Sons, Inc. (For Instructor Use Only)
