Test Bank – Fundamentals of Financial Accounting 8th Edition (Latest) | Fred Phillips Exam Questions & Solutions

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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
Aici găsești materiale de studiu create cu atenție pentru a face procesul de învățare mai clar și mai

eficient. Fiecare document este organizat logic pentru a te ajuta să înțelegi rapid conceptele
4) Cash paid for wages is an example of an operating activity on the statement of cash flows.
⊚ true
importante. Materialele sunt ideale pentru pregătirea examenelor, recapitulare și consolidarea
⊚ false
cunoștințelor. Accentul este pus pe calitate și acuratețe, astfel încât să poți studia cu încredere.

Studenții apreciază
5) Borrowing moneyexplicațiile
from a bank concise și rezumatele
is a financing practice
activity on care economisesc
the statement of cash flows.timp și reduc
⊚ true
stresul. ⊚
Scopul
false meu este să îți ofer resurse utile care să îți crească încrederea și performanța
academică. Descarcă materiale bine structurate și transformă studiul într-o experiență mai
6) The daily
organizată și business activities involved in running a business, such as buying supplies and
productivă.
paying salaries and wages, are classified as operating activities on the statement of cash
flows.
⊚ true
Malay (±130 words)
⊚ false



7) Stockholders' equity is the difference between a company's assets and its liabilities.
Selamat⊚datang
true ke kedai Stuvia saya! Di sini anda akan menemui bahan pembelajaran yang
⊚ false
disusun dengan teliti untuk membantu anda belajar dengan lebih mudah dan berkesan. Setiap
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dokumen direka secara teratur supaya maklumat penting senang difahami dan diingati. Bahan ini

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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




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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




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22) Public corporations are businesses:
A) owned by two or more people, each of whom is personally liable for the debts of the
business.
B) whose stock is bought and sold on a stock exchange.
C) whose stock is bought and sold privately.
D) where stock is not used as evidence of ownership.



23) The owner(s) of a business are not taxed on the profits of the business if the business is a:
A) sole proprietorship.
B) partnership.
C) corporation.
D) public partnership.



24) Which of the following is typically considered a disadvantage of sole proprietorships?
A) Income taxes are paid by both the business and its owner.
B) The business is considered a separate legal entity from its owner.
C) Establishing the business usually requires legal assistance.
D) Owner is personally liable for all debts of the business.



25) Considering the targeted audience for financial accounting reports, which of the following
parties is not an external user?
A) Directors of the company issuing the reports
B) Creditors of the company issuing the reports
C) Managers of the company issuing the reports
D) Stockholders of the company issuing the reports



26) Accounting systems:
A) are summarized in publicly published reports.
B) analyze, record, and summarize the activities affecting its financial condition and
performance.
C) monitor business activities only in financial terms.
D) capture only the information that is needed by the owners of the company.




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