Test Bank for Financial Accounting, 6th Edition by Jay S. Rich.pdf

Test Bank for Financial Accounting, 6th Edition 6e by Jay S. Rich, Jeff Jones
m m m m m m m m m m m m m




Chapm 01 m 6em Rich
Answers Included
m

Indicate m whetherm them statementm ism truem orm fals
e.
m 1.mAmcompany mwith mhealthy mcash mflowsmfrommoperatingmactivitiesmismin mamgood mposition mto mrepay mitsmdebts.
a. True
b. False

ANSWER:m True

m 2.mDividend mpaymentsmappearmon mthemretained mearningsmstatement.
a. True
b. False

ANSWER:m True
m 3.mContributed mcapitalmismthemresidualminterestmthatmremainsmaftermdeductingmliabilitiesmfrommstockholders' mequity.
a. True
b. False

ANSWER:m False
m 4.mCreditorsmusemaccountingminformation mto mevaluate mwhethermto mloan mmoney mto mamcompany.
a. True
b. False

ANSWER:m True
m 5.mThemthreemmain mbusinessmactivitiesmaremfinancing,moperating,mand minvesting.
a. True
b. False

ANSWER:m True
m 6.mInternalmusersmof maccountingminformation mincludempresentmcreditorsmand mmanagement.
a. True
b. False

ANSWER:m False
m 7.mCurrentmassetsmincludemcash,minventory,mequipment, msupplies,mand maccountsmreceivable.
a. True
b. False

ANSWER:m False




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,Name: Class: Date:

Chapm 01 m 6em Ric
h
m 8.mThemincome mstatementmprovidesminformationmatmonemspecificmpointmin mtime,mwhilemthemothermbasicmfina
ncialmstatementsmprovide minformation mon mactivitiesmthatmoccurmovermamperiod mof mtime.
a. True
b. False

ANSWER:m False
m 9.mThemclassificationsmin mthembalance msheetmaremto mhelp musersmdetermine mhowmamcompany mobtained mitsmresources.
a. True
b. False

ANSWER:m True
m 10.mOnemprimarympurposemofmthemclassified mbalancemsheetmismtomhelpmusersmevaluatemthemworkingmcapitalmofmamcompany.
a. True
b. False

ANSWER:m True
m 11.mWhenmanmentity'smstockmissuancesmexceed mitsmexpensesmformamperiod mof mtime,mthementity mwillmreportmnetmincome.
a. True
b. False

ANSWER:m False
m 12.mStockholders' mequity mismcomposed mof mcontributed mcapitalmand mretained mearnings.
a. True
b. False

ANSWER:m True
m 13.mThemamountmof mearningsmdistributed mto mstockholdersmcan mbemfound mon mthemincome mstatementmasman mexpense.
a. True
b. False

ANSWER:m False
m 14.mThemownersmof mamsolemproprietorship, mampartnership, mand mcorporationsmhavemlimited mliability.
a. True
b. False

ANSWER:m False
m 15.mThempurposemofmfinancialmreportingmismto mprovidemeconomicminformationmto minvestors,mcreditors,mand mothermfina
ncialmstatementmusers.
a. True
b. False

ANSWER:m True
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,Name: Class: Date:

Chapm 01 m 6em Ric
h
m 16.mIncome mfrommoperationsmismcomputedmaftermtakingminto maccountminterestmrevenuemandminterestmexpensembec
ausemthese mitemsmaremconsidered mto mbemoperatingmin mnature.
a. True
b. False

ANSWER:m False
m 17.mInvestingmismthembusinessmactivitymthatmmeasuresmamcompany'smability mtomgeneratemcashmfrommitsmrevenue
mand mexpense mactivities.

a. True
b. False

ANSWER:m False
m 18.mIn mthemstockholders'mequity msectionmofmamclassifiedmbalancemsheet,mamdistinctionmismmadembetween mthemam
ountsminvested mby mownersmand mthemamountsmfinanced mby mcreditors.
a. True
b. False

ANSWER:m False
m 19.mThemfourmstepsminmpreparingmthemincomemstatementmare:m(1)mpreparemamheading,m(2)mlistmthemrevenuesmo
f mthemcompany,m(3)mlistmthemexpensesmof mthemcompany,mand m(4)mlistmthemdividendsmof mthemcompany.
a. True
b. False

ANSWER:m False
m 20.mThemincome mstatementmsummarizesmthemassets,mliabilities,mand mstockholders' mequity mformamperiod mof mtime.
a. True
b. False

ANSWER:m False
m 21.mThemstatementmof mcash mflows,mlikemthemincome mstatement,mreportsmonly mthemoperatingmactivitiesmof mamcompany.
a. True
b. False

ANSWER:m False
m 22.mNetmlossmreducesmamcompany'smretained mearningsmbalance.
a. True
b. False

ANSWER:m True




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, Name: Class: Date:

Chapm 01 m 6em Ric
h
m 23.mThemcurrentmratio mismusefulmin mdeterminingmamcompany'smability mto mpay mobligationsmwhen mthey mbecome mdue.
a. True
b. False

ANSWER:m True
m 24.mThemonlymfinancialmstatementmthatmreportsmthemretained mearningsmbalancematmthemendmofmthemperiod mismthemret
ained mearningsmstatement.
a. True
b. False

ANSWER:m False
m 25.mThemendingmcash mbalance mismshown mon mthembalance msheetmand mthemretained mearningsmstatement.
a. True
b. False

ANSWER:m False
m 26.mBecausemthemfourmfinancialmstatementsmareminterrelatedm(i.e.,mtheremismamnaturalmprogression mfrommonemfina
ncialmstatementmto manother),mthembalancemsheetmshould mbemprepared mfirst.
a. True
b. False

ANSWER:m False
m 27.mThemstatementmof mcash mflowsmshowsmcash minflowsmand mcash moutflowsmformamperiod mof mtime.
a. True
b. False

ANSWER:m True
m 28.mCurrentmliabilitiesmaremtypically mlisted min mthemordermin mwhich mthey mwillmbempaid.
a. True
b. False

ANSWER:m True
m 29.mThemfourmbasicmfinancialmstatementsmaremthemincomemstatement,mretainedmearningsmstatement,mbalancemsheet,
mand mstatementmof mcash mflows.

a. True
b. False

ANSWER:m True




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