Test Bank for Financial Accounting Tools For Business Decision Making 10th Edition Paul D. Kimmel, Jerry J. Weygandt, Jill E. Mitchell

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
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,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




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,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 the career opportunities in accounting. Accounting offers many different jobs in fields such as
public and private accounting, governmental, and forensic accounting. Accounting is a popular major
because there are many different types of jobs, with unlimited potential for career advancement




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, 2-2 Test Bank for Kimmel, Financial Accounting: Tools for Business Decision Making,
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10e
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Difficulties:
Easy: 143 g


Medium: 101 g


Hard: 12 g




Question List by Section g g g




Business Organization and Accounting Information
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Uses:Forms of Business Organization; 47, 48, 202, 246
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Sole Proprietorship: 5, 44, 49, 58, 59
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Partnership: 1, 4, 46, 56 g g g g


Corporation: 2, 3, 45, 50, 51, 52, 53, 55, 57, 233, 245 g g g g g g g g g g g


Hybrid Forms of Organization: 60, 61 g g g g g


Users and Uses of Financial Information: 6, 7, 11, 74, 87
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Internal Users: 62, 63, 64, 75, 77, 82, 234 g g g g g g g g


External Users: 8, 9, 10, 12, 65, 76, 78, 79, 80, 81, 83, 84, 85, 86, 88, 89
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Data Analytics: 66, 67, 68, 69, 70, 235, 236
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Ethics in Financial Reporting: 71, 72, 73, 237, 255The
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Three Types of Business Activity: 97
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Financing Activities: 13, 15, 18, 90, 91, 93, 94, 95, 96, 97, 102, 109, 117, 118, 119, 238
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Investing Activities: 14, 16, 98, 99, 115, 116g g g g g g g


Operating Activities: 17, 19, 20, 100, 101, 103, 104, 105, 106, 107, 108, 110, 111, 112, 113,
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114
The Four Financial Statements:
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Income Statement: 21, 22, 23, 24,127, 128, 132, 133, 134, 138, 142, 143
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Retained Earnings Statement: 120, 122, 123, 124, 125, 126, 129, 130, 131, 135, 137, 139, 140,
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141, 144, 145, 146, 147, 148, 149, 150, 154, 164, 169, 178, 181, 252
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Balance Sheet: 25, 27, 28, 29, 30, 31, 32, 33, 34, 35, 136, 151, 152, 153, 163, 165, 166, 168,
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170, 173, 177, 179, 180, 182, 185, 186, 187, 188, 199, 200, 201, 207, 208, 213, 214, 215, 216,
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217, 218, 219, 220, 221, 222, 225, 229, 239, 240, 241, 253
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Statement of Cash Flows: 26, 121, 171, 174, 183, 242, 249 g g g g g g g g g g


Interrelationships of Statements: 155, 156, 157, 158, 159, 160, 161, 162, 167, 175, 176, 184, g g g g g g g g g g g g g g


250, 251, 256
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Elements of an Annual Report: 36, 41, 192, 196, 197
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Management Discussion and Analysis: 40, 191 g g g g g


Notes to the Financial Statements: 37, 42, 190, 193, 194, 198, 254
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Auditor‘s Report: 38, 39, 195 g g g g




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