Fundamentals of Financial Accounting 5Th Canadian Edition By Fred Phillips -Test Bank

,Chapter 01 - Business Decisions and Financial Accounting


Chapter 01
Business Decisions and Financial Accounting




True / False Questions


1. Building a new warehouse is an operating activity.
TRUE



Blooms: Understand
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements.
Topic: 01-15 The Statement of Cash Flows



2. The payment of dividends is a financing activity.
TRUE



Blooms: Understand
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements.
Topic: 01-15 The Statement of Cash Flows



3. Daily activities involved in running a business such as buying supplies and paying wages
are operating activities.
TRUE



Blooms: Understand
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements.
Topic: 01-15 The Statement of Cash Flows




1-1

,Chapter 01 - Business Decisions and Financial Accounting



4. Financing activities include borrowing and obtaining money by issuing shares of ownership
(called stock certificates).
TRUE



Blooms: Understand
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements.
Topic: 01-15 The Statement of Cash Flows



5. Shareholders are creditors of a company.
FALSE



Blooms: Understand
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 01-01 Describe various organizational forms and business decision makers.
Topic: 01-10 Shareholders' Equity



6. All corporations acquire financing by issuing shares of ownership (called stock certificates)
for sale on public stock exchanges.
FALSE



Blooms: Understand
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 01-01 Describe various organizational forms and business decision makers.
Topic: 01-04 Corporation



7. You paid $10,000 to buy 1% of the stock in a corporation that has now gone bankrupt. The
company owes $10 million dollars to creditors. As a result of the bankruptcy, you will lose
$100,000.
FALSE



Blooms: Understand
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 01-01 Describe various organizational forms and business decision makers.
Topic: 01-04 Corporation




1-2

, Chapter 01 - Business Decisions and Financial Accounting




1-3