TEST BANK FOR Processing Accounting Information CHAPTER 3
LATEST EXAM 2026/2027 UPDATED GUIDE.
True / False
1. An external event involves interaction between an entity and its environment.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-01 - LO: 03-01
KEYWORDS: Bloom's: Remembering
2. The initial step in the recording process is posting.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
3. The issuance of stock decreases a company's assets and increases its stockholders’ equity.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
4. Payment of a dividend decreases both cash and stockholders’ equity of the distributing business.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
5. Under the cost principle, assets are always carried at their original cost or historical cost.
a. True
b. False
ANSWER: True
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 3: Processing Accounting Information
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 3: Processing Accounting Information
6. Every accounting transaction affects both the balance sheet and the income statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
7. The accounting equation must balance after each transaction.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
8. Dividends are a determinant of net income.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
9. If a company purchases equipment by issuing a note payable, its total assets will not change.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
10. A company's chart of accounts will reflect the nature of its business.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-04 - LO: 03-04
KEYWORDS: Bloom's: Remembering
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 3: Processing Accounting Information
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
LATEST EXAM 2026/2027 UPDATED GUIDE.
True / False
1. An external event involves interaction between an entity and its environment.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-01 - LO: 03-01
KEYWORDS: Bloom's: Remembering
2. The initial step in the recording process is posting.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
3. The issuance of stock decreases a company's assets and increases its stockholders’ equity.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
4. Payment of a dividend decreases both cash and stockholders’ equity of the distributing business.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
5. Under the cost principle, assets are always carried at their original cost or historical cost.
a. True
b. False
ANSWER: True
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 3: Processing Accounting Information
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 3: Processing Accounting Information
6. Every accounting transaction affects both the balance sheet and the income statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
7. The accounting equation must balance after each transaction.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
8. Dividends are a determinant of net income.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
9. If a company purchases equipment by issuing a note payable, its total assets will not change.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
LEARNING OBJECTIVES: FACC.PONO.13.03-03 - LO: 03-03
KEYWORDS: Bloom's: Remembering
10. A company's chart of accounts will reflect the nature of its business.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
LEARNING OBJECTIVES: FACC.PONO.13.03-04 - LO: 03-04
KEYWORDS: Bloom's: Remembering
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 3: Processing Accounting Information
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
