Test Bank for Fundamental Financial Accounting Concepts
11th Edition
by Thomas Edmonds, Philip Olds, Christopher Edmonds
,Student Fname:
1) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Fmarkets Fis Ftrue For Ffalse.
a) FFinancial Fresources Fcan Fbe Fprovided Fto Fa Fbusiness Fby Finvestors.
b) FResource Fowners Fare Fthe Fbusinesses Fthat Ftransform Fresources Finto Fproducts
Fthat Fsatisfy Fconsumer Fdesires.
c) FLabor Fresources Finclude Fboth Fthe Fphysical Fand Fintellectual Flabor Fof Fa
Fbusiness's Femployees.
d) FBusinesses Fpurchase Ftheir Fresources Ffrom Fresource Fowners.
e) FConsumers Fare Fthe Fmain Fproviders Fof Fresources Fin Fany Fmarket.
2) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Faccounting Finformation Fis
Ftrue For Ffalse.
a) FFinancial Faccounting Fis Fprimarily Fintended Fto Fsatisfy Fthe Finformation
Fneeds Fof Finternal Fstakeholders.
b) FManagerial Faccounting Finformation Fincludes Ffinancial Fand
Fnonfinancial Finformation.
c) FThe Faccounting Finformation Fintended Fto Fsatisfy Fthe Fneeds Fof Fa
Fcompany's Femployees Fis Fmanagerial Faccounting Finformation.
d) FGAAP Frequires Fthat Fcompanies Fadhere Fto Ffinancial Faccounting Fstandards.
e) FManagerial Faccounting Finformation Fis Fusually Fless Fdetailed Fthan
Ffinancial Faccounting Finformation.
3) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Fliabilities Fis Ftrue For Ffalse.
a) FA Fnet Floss Fon Fthe Fincome Fstatement Fdecreases Fliabilities.
b) FThe Facquisition Fof Fa Fbank Floan Fincreases Fboth Fassets Fand Fliabilities.
c) FThe Faccounting Fequation Frequires Fthat Fliabilities Fbe Fequal Fto Fstockholders’ Fequity.
d) FThe Famount Fof Fa Fcompany's Fliabilities Fis Fequal Fto Fthe Fdifference Fbetween Fits
Fassets Fand Fits Fstockholders’ Fequity.
e) FLiabilities Fare Freported Fon Fthe Fstatement Fof Fcash Fflows Fof Fa Fbusiness.
,4) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Fretained Fearnings Fis Ftrue For Ffalse.
a) FA Fdividend Fpaid Fto Fstockholders Fdecreases Fretained Fearnings.
b) FIssuing Fcommon Fstock Ffor Fcash Fincreases Fretained Fearnings.
c) FThe Famount Fof Fnet Fincome Ffor Fa Fperiod Fmust Fequal Fretained Fearnings.
d) FThe Fpurchase Fof Fa Ftruck Fdecreases Fretained Fearnings.
e) FNet Fincome Fincreases Fretained Fearnings.
5) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Fthe Ftypes Fof Ftransactions Fis
Ftrue For Ffalse.
a) FAn Fasset Fsource Ftransaction Fincreases Ftotal Fassets Fand Fincreases Fclaims Fto Fassets.
b) FThe Fissuance Fof Fstock Fto Fowners Ffor Fcash Fwould Fbe Fan Fexample Fof Fan
Fasset Fexchange Ftransaction.
c) FPurchasing Fequipment Ffor Fcash Fis Fan Fexample Fof Fan Fasset Fuse Ftransaction.
d) FPaying Fa Fdividend Fto Fstockholders Fis Fan Fexample Fof Fan Fasset Fuse Ftransaction.
e) FMaking Fa Fpayment Fon Fa Fbank Floan Fis Fan Fexample Fof Fan Fasset Fexchange Ftransaction.
6) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Ffinancial Fstatements Fis
Ftrue For Ffalse.
a) FA Fcash Fdividend Fpaid Fto Fstockholders Fis Freported Fin Fthe Finvesting Factivities
Fsection Fof Fthe Fstatement Fof Fcash Fflows.
b) FA Fcash Fdividend Fpaid Fto Fstockholders Fis Freported Fon Fthe Fstatement Fof
Fchanges Fin Fstockholders' Fequity.
c) FA Fcash Fdividend Fpaid Fto Fstockholders Fis Freported Fon Fthe Fincome Fstatement.
d) FThe Fbalance Fsheet Freports Fthe Fending Fbalances Fof Fpermanent Faccounts Fas Fof Fthe
Flast Fday Fof Fthe Faccounting Fperiod.
e) FChanges Fin Fretained Fearnings Fduring Fthe Faccounting Fperiod Fare Freported Fon
Fthe Fincome Fstatement.
, 7) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Fstockholders’ Fequity Fis
Ftrue For Ffalse.
a) FExpenses Fdecrease Fretained Fearnings.
b) FStockholders' Fequity Fand Fliabilities Fcan Fbe Fviewed Feither Fas Fsources Fof
Fassets For Fclaims Fto Fassets Fof Fthe Fbusiness.
c) FRetained Fearnings Fis Fincreased Fby Floans Freceived Ffrom Fa Fbank.
d) FDividends Fpaid Fto Fstockholders Fdecrease Fcommon Fstock.
e) FGenerally, Fassets Fare Freported Fat Fthe Factual Fprice Fpaid Ffor Fthem Fwhen
Fpurchased Fregardless Fof Fsubsequent Fchanges Fin Fmarket Fvalue.
8) Jessup FCompany Fwas Ffounded Fin FYear F1. FIt Facquired F$45,000 Fcash Fby Fissuing Fstock
Fto Finvestors Fand Fan Fadditional F$15,000 Fcash Fby Fborrowing Ffrom Fcreditors. FDuring FYear F1 Fit
Freceived
$25,000 Fcash Frevenues Fand Fpaid F$32,000 Fin Fcash Fexpenses. FThe Fcompany Fthen Fwent Fout
Fof Fbusiness.
Required:
a) Explain Fthe Fterm, F"business Fliquidation."
b) What Famount Fof Fcash Fshould FJessup FCompany Fhave Fhad Fon Fhand Fimmediately Fbefore
Fgoing Fout Fof Fbusiness?
c) What Famount Fof Fcash Fwill FJessup's Fcreditors Freceive?
d) What Famount Fof Fcash Fwill FJessup's Fstockholders Freceive?
9) Bates FCompany Fentered Finto Fthe Ffollowing Ftransactions Fduring Fits Ffirst Fyear Fin
Fbusiness. FAssume Fthat Fall Ftransactions Finvolve Fthe Freceipt For Fpayment Fof Fcash.
1) Issued Fcommon Fstock Fto Finvestors Ffor F$25,000 Fcash.
2) Borrowed F$18,000 Ffrom Fthe Flocal Fbank.
3) Provided Fservices Fto Fcustomers Ffor F$28,000.
4) Paid Fexpenses Famounting Fto F$21,400.
5) Purchased Fa Fplot Fof Fland Fcosting F$22,000.
6) Paid Fa Fdividend Fof F$15,000 Fto Fits Fstockholders.
7) Repaid F$12,000 Fof Fthe Floan Flisted Fin Fitem F2.
Required:
(a) Fill Fin Fthe Fthree Fcolumn Fheadings Fof Fthe Faccounting Fequation Fin Fthe Ffirst Frow Fof Fthe
Ftable Fshown Fbelow.
(b) Show Fthe Feffects Fof Fthe Fabove Ftransactions Fon Fthe Faccounting Fequation.
11th Edition
by Thomas Edmonds, Philip Olds, Christopher Edmonds
,Student Fname:
1) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Fmarkets Fis Ftrue For Ffalse.
a) FFinancial Fresources Fcan Fbe Fprovided Fto Fa Fbusiness Fby Finvestors.
b) FResource Fowners Fare Fthe Fbusinesses Fthat Ftransform Fresources Finto Fproducts
Fthat Fsatisfy Fconsumer Fdesires.
c) FLabor Fresources Finclude Fboth Fthe Fphysical Fand Fintellectual Flabor Fof Fa
Fbusiness's Femployees.
d) FBusinesses Fpurchase Ftheir Fresources Ffrom Fresource Fowners.
e) FConsumers Fare Fthe Fmain Fproviders Fof Fresources Fin Fany Fmarket.
2) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Faccounting Finformation Fis
Ftrue For Ffalse.
a) FFinancial Faccounting Fis Fprimarily Fintended Fto Fsatisfy Fthe Finformation
Fneeds Fof Finternal Fstakeholders.
b) FManagerial Faccounting Finformation Fincludes Ffinancial Fand
Fnonfinancial Finformation.
c) FThe Faccounting Finformation Fintended Fto Fsatisfy Fthe Fneeds Fof Fa
Fcompany's Femployees Fis Fmanagerial Faccounting Finformation.
d) FGAAP Frequires Fthat Fcompanies Fadhere Fto Ffinancial Faccounting Fstandards.
e) FManagerial Faccounting Finformation Fis Fusually Fless Fdetailed Fthan
Ffinancial Faccounting Finformation.
3) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Fliabilities Fis Ftrue For Ffalse.
a) FA Fnet Floss Fon Fthe Fincome Fstatement Fdecreases Fliabilities.
b) FThe Facquisition Fof Fa Fbank Floan Fincreases Fboth Fassets Fand Fliabilities.
c) FThe Faccounting Fequation Frequires Fthat Fliabilities Fbe Fequal Fto Fstockholders’ Fequity.
d) FThe Famount Fof Fa Fcompany's Fliabilities Fis Fequal Fto Fthe Fdifference Fbetween Fits
Fassets Fand Fits Fstockholders’ Fequity.
e) FLiabilities Fare Freported Fon Fthe Fstatement Fof Fcash Fflows Fof Fa Fbusiness.
,4) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Fretained Fearnings Fis Ftrue For Ffalse.
a) FA Fdividend Fpaid Fto Fstockholders Fdecreases Fretained Fearnings.
b) FIssuing Fcommon Fstock Ffor Fcash Fincreases Fretained Fearnings.
c) FThe Famount Fof Fnet Fincome Ffor Fa Fperiod Fmust Fequal Fretained Fearnings.
d) FThe Fpurchase Fof Fa Ftruck Fdecreases Fretained Fearnings.
e) FNet Fincome Fincreases Fretained Fearnings.
5) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Fthe Ftypes Fof Ftransactions Fis
Ftrue For Ffalse.
a) FAn Fasset Fsource Ftransaction Fincreases Ftotal Fassets Fand Fincreases Fclaims Fto Fassets.
b) FThe Fissuance Fof Fstock Fto Fowners Ffor Fcash Fwould Fbe Fan Fexample Fof Fan
Fasset Fexchange Ftransaction.
c) FPurchasing Fequipment Ffor Fcash Fis Fan Fexample Fof Fan Fasset Fuse Ftransaction.
d) FPaying Fa Fdividend Fto Fstockholders Fis Fan Fexample Fof Fan Fasset Fuse Ftransaction.
e) FMaking Fa Fpayment Fon Fa Fbank Floan Fis Fan Fexample Fof Fan Fasset Fexchange Ftransaction.
6) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Ffinancial Fstatements Fis
Ftrue For Ffalse.
a) FA Fcash Fdividend Fpaid Fto Fstockholders Fis Freported Fin Fthe Finvesting Factivities
Fsection Fof Fthe Fstatement Fof Fcash Fflows.
b) FA Fcash Fdividend Fpaid Fto Fstockholders Fis Freported Fon Fthe Fstatement Fof
Fchanges Fin Fstockholders' Fequity.
c) FA Fcash Fdividend Fpaid Fto Fstockholders Fis Freported Fon Fthe Fincome Fstatement.
d) FThe Fbalance Fsheet Freports Fthe Fending Fbalances Fof Fpermanent Faccounts Fas Fof Fthe
Flast Fday Fof Fthe Faccounting Fperiod.
e) FChanges Fin Fretained Fearnings Fduring Fthe Faccounting Fperiod Fare Freported Fon
Fthe Fincome Fstatement.
, 7) Indicate Fwhether Feach Fof Fthe Ffollowing Fstatements Fabout Fstockholders’ Fequity Fis
Ftrue For Ffalse.
a) FExpenses Fdecrease Fretained Fearnings.
b) FStockholders' Fequity Fand Fliabilities Fcan Fbe Fviewed Feither Fas Fsources Fof
Fassets For Fclaims Fto Fassets Fof Fthe Fbusiness.
c) FRetained Fearnings Fis Fincreased Fby Floans Freceived Ffrom Fa Fbank.
d) FDividends Fpaid Fto Fstockholders Fdecrease Fcommon Fstock.
e) FGenerally, Fassets Fare Freported Fat Fthe Factual Fprice Fpaid Ffor Fthem Fwhen
Fpurchased Fregardless Fof Fsubsequent Fchanges Fin Fmarket Fvalue.
8) Jessup FCompany Fwas Ffounded Fin FYear F1. FIt Facquired F$45,000 Fcash Fby Fissuing Fstock
Fto Finvestors Fand Fan Fadditional F$15,000 Fcash Fby Fborrowing Ffrom Fcreditors. FDuring FYear F1 Fit
Freceived
$25,000 Fcash Frevenues Fand Fpaid F$32,000 Fin Fcash Fexpenses. FThe Fcompany Fthen Fwent Fout
Fof Fbusiness.
Required:
a) Explain Fthe Fterm, F"business Fliquidation."
b) What Famount Fof Fcash Fshould FJessup FCompany Fhave Fhad Fon Fhand Fimmediately Fbefore
Fgoing Fout Fof Fbusiness?
c) What Famount Fof Fcash Fwill FJessup's Fcreditors Freceive?
d) What Famount Fof Fcash Fwill FJessup's Fstockholders Freceive?
9) Bates FCompany Fentered Finto Fthe Ffollowing Ftransactions Fduring Fits Ffirst Fyear Fin
Fbusiness. FAssume Fthat Fall Ftransactions Finvolve Fthe Freceipt For Fpayment Fof Fcash.
1) Issued Fcommon Fstock Fto Finvestors Ffor F$25,000 Fcash.
2) Borrowed F$18,000 Ffrom Fthe Flocal Fbank.
3) Provided Fservices Fto Fcustomers Ffor F$28,000.
4) Paid Fexpenses Famounting Fto F$21,400.
5) Purchased Fa Fplot Fof Fland Fcosting F$22,000.
6) Paid Fa Fdividend Fof F$15,000 Fto Fits Fstockholders.
7) Repaid F$12,000 Fof Fthe Floan Flisted Fin Fitem F2.
Required:
(a) Fill Fin Fthe Fthree Fcolumn Fheadings Fof Fthe Faccounting Fequation Fin Fthe Ffirst Frow Fof Fthe
Ftable Fshown Fbelow.
(b) Show Fthe Feffects Fof Fthe Fabove Ftransactions Fon Fthe Faccounting Fequation.
