TEST BANK FOR
Fundamentals of Financial Accounting, 8th Edition by Fred Phillips
Chapter 01 8e Phillips Answers Included
1) Creditors are owners of a corporation.
⊚ true
⊚ false
2) All corporations acquire financing by issuing stock on public stock exchanges.
⊚ true
⊚ false
3) You paid $10,000 to buy 1% of the stock in a corporation that is now bankrupt. The company
owes $10 million dollars to its creditors. As a result of the bankruptcy, you are responsible
for paying $100,000 (or $10 million × 1%) of the amount owed to the creditors.
⊚ true
⊚ false
4) Cash paid for wages is an example of an operating activity on the statement of cash flows.
⊚ true
⊚ false
5) Borrowing money from a bank is a financing activity on the statement of cash flows.
⊚ true
⊚ false
6) The daily business activities involved in running a business, such as buying supplies and
paying salaries and wages, are classified as operating activities on the statement of cash
flows.
⊚ true
⊚ false
7) Stockholders' equity is the difference between a company's assets and its liabilities.
⊚ true
⊚ false
,8) A company owes $200,000 on a bank loan. It will be reported by the company as Accounts
Payable.
⊚ true
⊚ false
9) The amounts reported on financial statements are sometimes rounded to the nearest thousand
or million.
⊚ true
⊚ false
10) Accounts Payable, Notes Payable, and Salaries and Wages Payable are examples of
liabilities.
⊚ true
⊚ false
11) Dividends are subtracted from revenues on the income statement.
⊚ true
⊚ false
12) If a company reports net income on the income statement, then the statement of cash flows
will report the same amount as cash flows from operating activities for the period.
⊚ true
⊚ false
13) Revenue is reported on the income statement only if cash was received at the point of sale.
⊚ true
⊚ false
14) Generally Accepted Accounting Principles (GAAP) require profitable companies to
distribute some of their earnings to their stockholders.
⊚ true
⊚
@ W S fal
se
,15) Common @WSStock @WSis @WSreported @WSas @WSan @WSasset @WSon @WSthe @WSbalance @WSsheet.
⊚ @ W S true
⊚ @ W S false
16) Investors @WSare @WSmainly @WSinterested @WSin @WSthe @WSprofitability @WSof @WSa @WScompany.
⊚ @ W S true
⊚ @ W S false
17) A @WSstock @WSthat @WSdoes @WSnot @WSpay @WSa @WSdividend @WSis @WSan @WSundesirable @WSinvestment.
⊚ @ W S true
⊚ @ W S false
18) To @WSensure @WSthat @WScompanies @WSproduce @WSuseful @WSinformation, @WSit @WSmust
@WShave @WStwo @WSfundamental @WScharacteristics: @WSreliability @WSand
@WSunderstandability.
⊚ @ W S true
⊚ @ W S false
19) The @WSSecurities @WSand @WSExchange @WSCommission @WS(SEC) @WSis @WSthe @WSgovernment
@WSagency @WSthat @WShas @WSprimary @WSresponsibility @WSfor @WSsetting @WSaccounting @WSstandards
@WSin @WSthe @WSU.S.
⊚ @ W S true
⊚ @ W S false
20) The @WSSarbanes-Oxley @WSAct @WS(SOX) @WSrequires @WStop @WSmanagement @WSof
@WScompanies @WSto @WSsign @WSa @WSreport @WScertifying @WSthat @WSthe @WSfinancial @WSstatements
@WSare @WSfree @WSof @WSerror.
⊚ @ W S true
⊚ @ W S false
⊚
@ W S fal
se
, 21) Companies @WSmust @WSuse @WSa @WSDecember @WS31st @WSyear-end @WSfor @WSall @WSfinancial @WSstatements.
⊚ @ W S true
⊚
@ W S fal
se
Fundamentals of Financial Accounting, 8th Edition by Fred Phillips
Chapter 01 8e Phillips Answers Included
1) Creditors are owners of a corporation.
⊚ true
⊚ false
2) All corporations acquire financing by issuing stock on public stock exchanges.
⊚ true
⊚ false
3) You paid $10,000 to buy 1% of the stock in a corporation that is now bankrupt. The company
owes $10 million dollars to its creditors. As a result of the bankruptcy, you are responsible
for paying $100,000 (or $10 million × 1%) of the amount owed to the creditors.
⊚ true
⊚ false
4) Cash paid for wages is an example of an operating activity on the statement of cash flows.
⊚ true
⊚ false
5) Borrowing money from a bank is a financing activity on the statement of cash flows.
⊚ true
⊚ false
6) The daily business activities involved in running a business, such as buying supplies and
paying salaries and wages, are classified as operating activities on the statement of cash
flows.
⊚ true
⊚ false
7) Stockholders' equity is the difference between a company's assets and its liabilities.
⊚ true
⊚ false
,8) A company owes $200,000 on a bank loan. It will be reported by the company as Accounts
Payable.
⊚ true
⊚ false
9) The amounts reported on financial statements are sometimes rounded to the nearest thousand
or million.
⊚ true
⊚ false
10) Accounts Payable, Notes Payable, and Salaries and Wages Payable are examples of
liabilities.
⊚ true
⊚ false
11) Dividends are subtracted from revenues on the income statement.
⊚ true
⊚ false
12) If a company reports net income on the income statement, then the statement of cash flows
will report the same amount as cash flows from operating activities for the period.
⊚ true
⊚ false
13) Revenue is reported on the income statement only if cash was received at the point of sale.
⊚ true
⊚ false
14) Generally Accepted Accounting Principles (GAAP) require profitable companies to
distribute some of their earnings to their stockholders.
⊚ true
⊚
@ W S fal
se
,15) Common @WSStock @WSis @WSreported @WSas @WSan @WSasset @WSon @WSthe @WSbalance @WSsheet.
⊚ @ W S true
⊚ @ W S false
16) Investors @WSare @WSmainly @WSinterested @WSin @WSthe @WSprofitability @WSof @WSa @WScompany.
⊚ @ W S true
⊚ @ W S false
17) A @WSstock @WSthat @WSdoes @WSnot @WSpay @WSa @WSdividend @WSis @WSan @WSundesirable @WSinvestment.
⊚ @ W S true
⊚ @ W S false
18) To @WSensure @WSthat @WScompanies @WSproduce @WSuseful @WSinformation, @WSit @WSmust
@WShave @WStwo @WSfundamental @WScharacteristics: @WSreliability @WSand
@WSunderstandability.
⊚ @ W S true
⊚ @ W S false
19) The @WSSecurities @WSand @WSExchange @WSCommission @WS(SEC) @WSis @WSthe @WSgovernment
@WSagency @WSthat @WShas @WSprimary @WSresponsibility @WSfor @WSsetting @WSaccounting @WSstandards
@WSin @WSthe @WSU.S.
⊚ @ W S true
⊚ @ W S false
20) The @WSSarbanes-Oxley @WSAct @WS(SOX) @WSrequires @WStop @WSmanagement @WSof
@WScompanies @WSto @WSsign @WSa @WSreport @WScertifying @WSthat @WSthe @WSfinancial @WSstatements
@WSare @WSfree @WSof @WSerror.
⊚ @ W S true
⊚ @ W S false
⊚
@ W S fal
se
, 21) Companies @WSmust @WSuse @WSa @WSDecember @WS31st @WSyear-end @WSfor @WSall @WSfinancial @WSstatements.
⊚ @ W S true
⊚
@ W S fal
se