TEST BANK FOR
Fundamentals of Financial Accounting
by Patricia Libby
8th Edition
1
,Test Bank 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
2
,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
⊚ False
3
, 15) Common Stock Is Reported As An Asset On The Balance Sheet.
⊚ True
⊚ False
16) Investors Are Mainly Interested In The Profitability Of A Company.
⊚ True
⊚ False
17) A Stock That Does Not Pay A Dividend Is An Undesirable Investment.
⊚ True
⊚ False
18) To Ensure That Companies Produce Useful Information, It Must Have Two
Fundamental Characteristics: Reliability And Understandability.
⊚ True
⊚ False
19) The Securities And Exchange Commission (SEC) Is The Government Agency That
Has Primary Responsibility For Setting Accounting Standards In The U.S.
⊚ True
⊚ False
20) The Sarbanes-Oxley Act (SOX) Requires Top Management Of Companies To
Sign A Report Certifying That The Financial Statements Are Free Of Error.
⊚ True
⊚ False
21) Companies Must Use A December 31st Year-End For All Financial Statements.
⊚ True
⊚ False
4
Fundamentals of Financial Accounting
by Patricia Libby
8th Edition
1
,Test Bank 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
2
,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
⊚ False
3
, 15) Common Stock Is Reported As An Asset On The Balance Sheet.
⊚ True
⊚ False
16) Investors Are Mainly Interested In The Profitability Of A Company.
⊚ True
⊚ False
17) A Stock That Does Not Pay A Dividend Is An Undesirable Investment.
⊚ True
⊚ False
18) To Ensure That Companies Produce Useful Information, It Must Have Two
Fundamental Characteristics: Reliability And Understandability.
⊚ True
⊚ False
19) The Securities And Exchange Commission (SEC) Is The Government Agency That
Has Primary Responsibility For Setting Accounting Standards In The U.S.
⊚ True
⊚ False
20) The Sarbanes-Oxley Act (SOX) Requires Top Management Of Companies To
Sign A Report Certifying That The Financial Statements Are Free Of Error.
⊚ True
⊚ False
21) Companies Must Use A December 31st Year-End For All Financial Statements.
⊚ True
⊚ False
4
