Test Bank for Fundamental Financial Accounting Concepts
m m m m m m
11th Edition
m
by Thomas Edmonds, Philip Olds, Christopher Edmonds
m m m m m m
,Student name:
m
1) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmmarketsmismtruemormfalse.
a)mFinancialmresourcesmcanmbemprovidedmtomambusinessmbyminvestors.
b)mResourcemownersmaremthembusinessesmthatmtransformmresourcesmintomproductsmth
atmsatisfymconsumermdesires.
c)mLabormresourcesmincludembothmthemphysicalmandmintellectualmlabormofmambusines
s'smemployees.
d)mBusinessesmpurchasemtheirmresourcesmfrommresourcemowners.
e)mConsumersmaremthemmainmprovidersmofmresourcesminmanymmarket.
2) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmaccountingminformationmismtruem
ormfalse.
a)mFinancialmaccountingmismprimarilymintendedmtomsatisfymtheminformationmneedsm
ofminternalmstakeholders.
b)mManagerialmaccountingminformationmincludesmfinancialmandmnonfinanci
alminformation.
c)mThemaccountingminformationmintendedmtomsatisfymthemneedsmofmamcompan
y'smemployeesmismmanagerialmaccountingminformation.
d)mGAAPmrequiresmthatmcompaniesmadheremtomfinancialmaccountingmstandards.
e)mManagerialmaccountingminformationmismusuallymlessmdetailedmthanmfinanci
almaccountingminformation.
3) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmliabilitiesmismtruemormfalse.
a)mAmnetmlossmonmthemincomemstatementmdecreasesmliabilities.
b)mThemacquisitionmofmambankmloanmincreasesmbothmassetsmandmliabilities.
c)mThemaccountingmequationmrequiresmthatmliabilitiesmbemequalmtomstockholders’mequity.
d)mThemamountmofmamcompany'smliabilitiesmismequalmtomthemdifferencembetweenmitsmass
etsmandmitsmstockholders’mequity.
e)mLiabilitiesmaremreportedmonmthemstatementmofmcashmflowsmofmambusiness.
,4) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmretainedmearningsmismtruemormfalse.
a)mAmdividendmpaidmtomstockholdersmdecreasesmretainedmearnings.
b)mIssuingmcommonmstockmformcashmincreasesmretainedmearnings.
c)mThemamountmofmnetm incomemformamperiodmmustmequalmretainedmearnings.
d)mThempurchasemofmamtruckmdecreasesmretainedmearnings.
e)mNetmincomemincreasesmretainedmearnings.
5) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmthemtypesmofmtransactionsmismtr
uemormfalse.
a)mAnmassetmsourcemtransactionmincreasesmtotalmassetsmandmincreasesmclaimsmtomassets.
b)mThemissuancemofmstockmtomownersmformcashmwouldmbemanmexamplemofmanmas
setmexchangemtransaction.
c)mPurchasingmequipmentmformcashmismanmexamplemofmanmassetmusemtransaction.
d)mPayingmamdividendmtomstockholdersmismanmexamplemofmanmassetmusemtransaction.
e)mMakingmampaymentmonmambankmloanmismanmexamplemofmanmassetmexchangemtransaction.
6) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmfinancialmstatementsmismtruem
ormfalse.
a)mAmcashmdividendmpaidmtomstockholdersmismreportedminmtheminvestingmactivitiesmsecti
onmofmthemstatementmofmcashmflows.
b)mAmcashmdividendmpaidmtomstockholdersmismreportedmonmthemstatementmofmchanges
minmstockholders'mequity.
c)mAmcashmdividendmpaidmtomstockholdersmismreportedmonmthemincomemstatement.
d)mThembalancemsheetmreportsmthemendingmbalancesmofmpermanentmaccountsmasmofmtheml
astmdaymofmthemaccountingmperiod.
e)mChangesminmretainedmearningsmduringmthemaccountingmperiodmaremreportedmonmt
hemincomemstatement.
, 7) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmstockholders’mequitymismtruem
ormfalse.
a)mExpensesmdecreasemretainedmearnings.
b)mStockholders'mequitymandmliabilitiesmcanmbemviewedmeithermasmsourcesmofmassetsm
ormclaimsmtomassetsmofmthembusiness.
c)mRetainedmearningsmismincreasedmbymloansmreceivedmfrommambank.
d)mDividendsmpaidmtomstockholdersmdecreasemcommonmstock.
e)mGenerally,massetsmaremreportedmatmthemactualmpricempaidmformthemmwhenmpurchas
edmregardlessmofmsubsequentmchangesminmmarketmvalue.
8) JessupmCompanymwasmfoundedminmYearm1.mItmacquiredm$45,000mcashmbymissuingmstockmtom
investorsmandmanmadditionalm$15,000mcashmbymborrowingmfrommcreditors.mDuringmYearm1mitmreceiv
ed
$25,000mcashmrevenuesmandmpaidm$32,000minmcashmexpenses.mThemcompanymthenmwentmoutmof
mbusiness.
Required:
a) Explainmthemterm,m"businessmliquidation."
b) WhatmamountmofmcashmshouldmJessupmCompanymhavemhadmonmhandmimmediatelymbeforemgoi
ngmoutmofmbusiness?
c) WhatmamountmofmcashmwillmJessup'smcreditorsmreceive?
d) WhatmamountmofmcashmwillmJessup'smstockholdersmreceive?
9) BatesmCompanymenteredmintomthemfollowingmtransactionsmduringmitsmfirstmyearminmbusine
ss.mAssumemthatmallmtransactionsminvolvemthemreceiptmormpaymentmofmcash.
1) Issuedmcommonmstockmtominvestorsmform$25,000mcash.
2) Borrowedm$18,000mfrommthemlocalmbank.
3) Providedmservicesmtomcustomersmform$28,000.
4) Paidmexpensesmamountingmtom$21,400.
5) Purchasedmamplotmofmlandmcostingm$22,000.
6) Paidmamdividendmofm$15,000mtomitsmstockholders.
7) Repaidm$12,000mofmthemloanmlistedminmitemm2.
Required:
(a) Fillminmthemthreemcolumnmheadingsmofmthemaccountingmequationminmthemfirstmrowmofmthemta
blemshownmbelow.
(b) Showmthemeffectsmofmthemabovemtransactionsmonmthemaccountingmequation.
m m m m m m
11th Edition
m
by Thomas Edmonds, Philip Olds, Christopher Edmonds
m m m m m m
,Student name:
m
1) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmmarketsmismtruemormfalse.
a)mFinancialmresourcesmcanmbemprovidedmtomambusinessmbyminvestors.
b)mResourcemownersmaremthembusinessesmthatmtransformmresourcesmintomproductsmth
atmsatisfymconsumermdesires.
c)mLabormresourcesmincludembothmthemphysicalmandmintellectualmlabormofmambusines
s'smemployees.
d)mBusinessesmpurchasemtheirmresourcesmfrommresourcemowners.
e)mConsumersmaremthemmainmprovidersmofmresourcesminmanymmarket.
2) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmaccountingminformationmismtruem
ormfalse.
a)mFinancialmaccountingmismprimarilymintendedmtomsatisfymtheminformationmneedsm
ofminternalmstakeholders.
b)mManagerialmaccountingminformationmincludesmfinancialmandmnonfinanci
alminformation.
c)mThemaccountingminformationmintendedmtomsatisfymthemneedsmofmamcompan
y'smemployeesmismmanagerialmaccountingminformation.
d)mGAAPmrequiresmthatmcompaniesmadheremtomfinancialmaccountingmstandards.
e)mManagerialmaccountingminformationmismusuallymlessmdetailedmthanmfinanci
almaccountingminformation.
3) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmliabilitiesmismtruemormfalse.
a)mAmnetmlossmonmthemincomemstatementmdecreasesmliabilities.
b)mThemacquisitionmofmambankmloanmincreasesmbothmassetsmandmliabilities.
c)mThemaccountingmequationmrequiresmthatmliabilitiesmbemequalmtomstockholders’mequity.
d)mThemamountmofmamcompany'smliabilitiesmismequalmtomthemdifferencembetweenmitsmass
etsmandmitsmstockholders’mequity.
e)mLiabilitiesmaremreportedmonmthemstatementmofmcashmflowsmofmambusiness.
,4) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmretainedmearningsmismtruemormfalse.
a)mAmdividendmpaidmtomstockholdersmdecreasesmretainedmearnings.
b)mIssuingmcommonmstockmformcashmincreasesmretainedmearnings.
c)mThemamountmofmnetm incomemformamperiodmmustmequalmretainedmearnings.
d)mThempurchasemofmamtruckmdecreasesmretainedmearnings.
e)mNetmincomemincreasesmretainedmearnings.
5) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmthemtypesmofmtransactionsmismtr
uemormfalse.
a)mAnmassetmsourcemtransactionmincreasesmtotalmassetsmandmincreasesmclaimsmtomassets.
b)mThemissuancemofmstockmtomownersmformcashmwouldmbemanmexamplemofmanmas
setmexchangemtransaction.
c)mPurchasingmequipmentmformcashmismanmexamplemofmanmassetmusemtransaction.
d)mPayingmamdividendmtomstockholdersmismanmexamplemofmanmassetmusemtransaction.
e)mMakingmampaymentmonmambankmloanmismanmexamplemofmanmassetmexchangemtransaction.
6) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmfinancialmstatementsmismtruem
ormfalse.
a)mAmcashmdividendmpaidmtomstockholdersmismreportedminmtheminvestingmactivitiesmsecti
onmofmthemstatementmofmcashmflows.
b)mAmcashmdividendmpaidmtomstockholdersmismreportedmonmthemstatementmofmchanges
minmstockholders'mequity.
c)mAmcashmdividendmpaidmtomstockholdersmismreportedmonmthemincomemstatement.
d)mThembalancemsheetmreportsmthemendingmbalancesmofmpermanentmaccountsmasmofmtheml
astmdaymofmthemaccountingmperiod.
e)mChangesminmretainedmearningsmduringmthemaccountingmperiodmaremreportedmonmt
hemincomemstatement.
, 7) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmstockholders’mequitymismtruem
ormfalse.
a)mExpensesmdecreasemretainedmearnings.
b)mStockholders'mequitymandmliabilitiesmcanmbemviewedmeithermasmsourcesmofmassetsm
ormclaimsmtomassetsmofmthembusiness.
c)mRetainedmearningsmismincreasedmbymloansmreceivedmfrommambank.
d)mDividendsmpaidmtomstockholdersmdecreasemcommonmstock.
e)mGenerally,massetsmaremreportedmatmthemactualmpricempaidmformthemmwhenmpurchas
edmregardlessmofmsubsequentmchangesminmmarketmvalue.
8) JessupmCompanymwasmfoundedminmYearm1.mItmacquiredm$45,000mcashmbymissuingmstockmtom
investorsmandmanmadditionalm$15,000mcashmbymborrowingmfrommcreditors.mDuringmYearm1mitmreceiv
ed
$25,000mcashmrevenuesmandmpaidm$32,000minmcashmexpenses.mThemcompanymthenmwentmoutmof
mbusiness.
Required:
a) Explainmthemterm,m"businessmliquidation."
b) WhatmamountmofmcashmshouldmJessupmCompanymhavemhadmonmhandmimmediatelymbeforemgoi
ngmoutmofmbusiness?
c) WhatmamountmofmcashmwillmJessup'smcreditorsmreceive?
d) WhatmamountmofmcashmwillmJessup'smstockholdersmreceive?
9) BatesmCompanymenteredmintomthemfollowingmtransactionsmduringmitsmfirstmyearminmbusine
ss.mAssumemthatmallmtransactionsminvolvemthemreceiptmormpaymentmofmcash.
1) Issuedmcommonmstockmtominvestorsmform$25,000mcash.
2) Borrowedm$18,000mfrommthemlocalmbank.
3) Providedmservicesmtomcustomersmform$28,000.
4) Paidmexpensesmamountingmtom$21,400.
5) Purchasedmamplotmofmlandmcostingm$22,000.
6) Paidmamdividendmofm$15,000mtomitsmstockholders.
7) Repaidm$12,000mofmthemloanmlistedminmitemm2.
Required:
(a) Fillminmthemthreemcolumnmheadingsmofmthemaccountingmequationminmthemfirstmrowmofmthemta
blemshownmbelow.
(b) Showmthemeffectsmofmthemabovemtransactionsmonmthemaccountingmequation.
