Test Bank for Fundamental Financial Accounting Concepts
11th Edition
by Thomas Edmonds, Philip Olds, Christopher Edmonds
,Student nzname:
1) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzmarkets nzis nztrue nzor nzfalse.
a) nzFinancial nzresources nzcan nzbe nzprovided nzto nza nzbusiness nzby nzinvestors.
b) nzResource nzowners nzare nzthe nzbusinesses nzthat nztransform nzresources nzinto
nzproducts nzthat nzsatisfy nzconsumer nzdesires.
c) nzLabor nzresources nzinclude nzboth nzthe nzphysical nzand nzintellectual nzlabor nzof nza
nzbusiness's nzemployees.
d) nzBusinesses nzpurchase nztheir nzresources nzfrom nzresource nzowners.
e) nzConsumers nzare nzthe nzmain nzproviders nzof nzresources nzin nzany nzmarket.
2) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzaccounting nzinformation
nzis nztrue nzor nzfalse.
a) nzFinancial nzaccounting nzis nzprimarily nzintended nzto nzsatisfy nzthe nzinformation
nzneeds nzof nzinternal nzstakeholders.
b) nzManagerial nzaccounting nzinformation nzincludes nzfinancial nzand
nznonfinancial nzinformation.
c) nzThe nzaccounting nzinformation nzintended nzto nzsatisfy nzthe nzneeds nzof nza
nzcompany's nzemployees nzis nzmanagerial nzaccounting nzinformation.
d) nzGAAP nzrequires nzthat nzcompanies nzadhere nzto nzfinancial nzaccounting nzstandards.
e) nzManagerial nzaccounting nzinformation nzis nzusually nzless nzdetailed nzthan
nzfinancial nzaccounting nzinformation.
3) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzliabilities nzis nztrue nzor nzfalse.
a) nzA nznet nzloss nzon nzthe nzincome nzstatement nzdecreases nzliabilities.
b) nzThe nzacquisition nzof nza nzbank nzloan nzincreases nzboth nzassets nzand nzliabilities.
c) nzThe nzaccounting nzequation nzrequires nzthat nzliabilities nzbe nzequal nzto nzstockholders’
nz equity.
d) nzThe nzamount nzof nza nzcompany's nzliabilities nzis nzequal nzto nzthe nzdifference nzbetween
nzits nzassets nzand nzits nzstockholders’ nzequity.
e) nzLiabilities nzare nzreported nzon nzthe nzstatement nzof nzcash nzflows nzof nza nzbusiness.
,4) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzretained nzearnings nzis nztrue nzor
nzfalse.
a) nzA nzdividend nzpaid nzto nzstockholders nzdecreases nzretained nzearnings.
b) nzIssuing nzcommon nzstock nzfor nzcash nzincreases nzretained nzearnings.
c) nzThe nzamount nzof nznet nz income nzfor nza nzperiod nzmust nzequal nzretained nzearnings.
d) nzThe nzpurchase nzof nza nztruck nzdecreases nzretained nzearnings.
e) nzNet nzincome nzincreases nzretained nzearnings.
5) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzthe nztypes nzof
nztransactions nzis nztrue nzor nzfalse.
a) nzAn nzasset nzsource nztransaction nzincreases nztotal nzassets nzand nzincreases nzclaims nzto
nz assets.
b) nzThe nzissuance nzof nzstock nzto nzowners nzfor nzcash nzwould nzbe nzan nzexample
nzof nzan nzasset nzexchange nztransaction.
c) nzPurchasing nzequipment nzfor nzcash nzis nzan nzexample nzof nzan nzasset nzuse nztransaction.
d) nzPaying nza nzdividend nzto nzstockholders nzis nzan nzexample nzof nzan nzasset nzuse nztransaction.
e) nzMaking nza nzpayment nzon nza nzbank nzloan nzis nzan nzexample nzof nzan nzasset nzexchange
nztransaction.
6) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzfinancial nzstatements
nzis nztrue nzor nzfalse.
a) nzA nzcash nzdividend nzpaid nzto nzstockholders nzis nzreported nzin nzthe nzinvesting
nzactivities nzsection nzof nzthe nzstatement nzof nzcash nzflows.
b) nzA nzcash nzdividend nzpaid nzto nzstockholders nzis nzreported nzon nzthe nzstatement nzof
nzchanges nzin nzstockholders' nzequity.
c) nzA nzcash nzdividend nzpaid nzto nzstockholders nzis nzreported nzon nzthe nzincome nzstatement.
d) nzThe nzbalance nzsheet nzreports nzthe nzending nzbalances nzof nzpermanent nzaccounts nzas
nzof nzthe nzlast nzday nzof nzthe nzaccounting nzperiod.
e) nzChanges nzin nzretained nzearnings nzduring nzthe nzaccounting nzperiod nzare
nzreported nzon nzthe nzincome nzstatement.
, 7) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzstockholders’ nzequity
nzis nztrue nzor nzfalse.
a) nzExpenses nzdecrease nzretained nzearnings.
b) nzStockholders' nzequity nzand nzliabilities nzcan nzbe nzviewed nzeither nzas nzsources nzof
nzassets nzor nzclaims nzto nzassets nzof nzthe nzbusiness.
c) nzRetained nzearnings nzis nzincreased nzby nzloans nzreceived nzfrom nza nzbank.
d) nzDividends nzpaid nzto nzstockholders nzdecrease nzcommon nzstock.
e) nzGenerally, nzassets nzare nzreported nzat nzthe nzactual nzprice nzpaid nzfor nzthem nzwhen
nzpurchased nzregardless nzof nzsubsequent nzchanges nzin nzmarket nzvalue.
8) Jessup nzCompany nzwas nzfounded nzin nzYear nz1. nzIt nzacquired nz$45,000 nzcash nzby nzissuing
nzstock nzto nzinvestors nzand nzan nzadditional nz$15,000 nzcash nzby nzborrowing nzfrom nzcreditors. nzDuring
nzYear nz1 nzit nzreceived
$25,000 nzcash nzrevenues nzand nzpaid nz$32,000 nzin nzcash nzexpenses. nzThe nzcompany nzthen nzwent
nzout nzof nzbusiness.
Required:
a) Explain nzthe nzterm, nz"business nzliquidation."
b) What nzamount nzof nzcash nzshould nzJessup nzCompany nzhave nzhad nzon nzhand nzimmediately
nzbefore nzgoing nzout nzof nzbusiness?
c) What nzamount nzof nzcash nzwill nzJessup's nzcreditors nzreceive?
d) What nzamount nzof nzcash nzwill nzJessup's nzstockholders nzreceive?
9) Bates nzCompany nzentered nzinto nzthe nzfollowing nztransactions nzduring nzits nzfirst nzyear nzin
nzbusiness. nzAssume nzthat nzall nztransactions nzinvolve nzthe nzreceipt nzor nzpayment nzof nzcash.
1) Issued nzcommon nzstock nzto nzinvestors nzfor nz$25,000 nzcash.
2) Borrowed nz$18,000 nzfrom nzthe nzlocal nzbank.
3) Provided nzservices nzto nzcustomers nzfor nz$28,000.
4) Paid nzexpenses nzamounting nzto nz$21,400.
5) Purchased nza nzplot nzof nzland nzcosting nz$22,000.
6) Paid nza nzdividend nzof nz$15,000 nzto nzits nzstockholders.
7) Repaid nz$12,000 nzof nzthe nzloan nzlisted nzin nzitem nz2.
Required:
(a) Fill nzin nzthe nzthree nzcolumn nzheadings nzof nzthe nzaccounting nzequation nzin nzthe nzfirst nzrow
nzof nzthe nztable nzshown nzbelow.
(b) Show nzthe nzeffects nzof nzthe nzabove nztransactions nzon nzthe nzaccounting nzequation.
11th Edition
by Thomas Edmonds, Philip Olds, Christopher Edmonds
,Student nzname:
1) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzmarkets nzis nztrue nzor nzfalse.
a) nzFinancial nzresources nzcan nzbe nzprovided nzto nza nzbusiness nzby nzinvestors.
b) nzResource nzowners nzare nzthe nzbusinesses nzthat nztransform nzresources nzinto
nzproducts nzthat nzsatisfy nzconsumer nzdesires.
c) nzLabor nzresources nzinclude nzboth nzthe nzphysical nzand nzintellectual nzlabor nzof nza
nzbusiness's nzemployees.
d) nzBusinesses nzpurchase nztheir nzresources nzfrom nzresource nzowners.
e) nzConsumers nzare nzthe nzmain nzproviders nzof nzresources nzin nzany nzmarket.
2) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzaccounting nzinformation
nzis nztrue nzor nzfalse.
a) nzFinancial nzaccounting nzis nzprimarily nzintended nzto nzsatisfy nzthe nzinformation
nzneeds nzof nzinternal nzstakeholders.
b) nzManagerial nzaccounting nzinformation nzincludes nzfinancial nzand
nznonfinancial nzinformation.
c) nzThe nzaccounting nzinformation nzintended nzto nzsatisfy nzthe nzneeds nzof nza
nzcompany's nzemployees nzis nzmanagerial nzaccounting nzinformation.
d) nzGAAP nzrequires nzthat nzcompanies nzadhere nzto nzfinancial nzaccounting nzstandards.
e) nzManagerial nzaccounting nzinformation nzis nzusually nzless nzdetailed nzthan
nzfinancial nzaccounting nzinformation.
3) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzliabilities nzis nztrue nzor nzfalse.
a) nzA nznet nzloss nzon nzthe nzincome nzstatement nzdecreases nzliabilities.
b) nzThe nzacquisition nzof nza nzbank nzloan nzincreases nzboth nzassets nzand nzliabilities.
c) nzThe nzaccounting nzequation nzrequires nzthat nzliabilities nzbe nzequal nzto nzstockholders’
nz equity.
d) nzThe nzamount nzof nza nzcompany's nzliabilities nzis nzequal nzto nzthe nzdifference nzbetween
nzits nzassets nzand nzits nzstockholders’ nzequity.
e) nzLiabilities nzare nzreported nzon nzthe nzstatement nzof nzcash nzflows nzof nza nzbusiness.
,4) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzretained nzearnings nzis nztrue nzor
nzfalse.
a) nzA nzdividend nzpaid nzto nzstockholders nzdecreases nzretained nzearnings.
b) nzIssuing nzcommon nzstock nzfor nzcash nzincreases nzretained nzearnings.
c) nzThe nzamount nzof nznet nz income nzfor nza nzperiod nzmust nzequal nzretained nzearnings.
d) nzThe nzpurchase nzof nza nztruck nzdecreases nzretained nzearnings.
e) nzNet nzincome nzincreases nzretained nzearnings.
5) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzthe nztypes nzof
nztransactions nzis nztrue nzor nzfalse.
a) nzAn nzasset nzsource nztransaction nzincreases nztotal nzassets nzand nzincreases nzclaims nzto
nz assets.
b) nzThe nzissuance nzof nzstock nzto nzowners nzfor nzcash nzwould nzbe nzan nzexample
nzof nzan nzasset nzexchange nztransaction.
c) nzPurchasing nzequipment nzfor nzcash nzis nzan nzexample nzof nzan nzasset nzuse nztransaction.
d) nzPaying nza nzdividend nzto nzstockholders nzis nzan nzexample nzof nzan nzasset nzuse nztransaction.
e) nzMaking nza nzpayment nzon nza nzbank nzloan nzis nzan nzexample nzof nzan nzasset nzexchange
nztransaction.
6) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzfinancial nzstatements
nzis nztrue nzor nzfalse.
a) nzA nzcash nzdividend nzpaid nzto nzstockholders nzis nzreported nzin nzthe nzinvesting
nzactivities nzsection nzof nzthe nzstatement nzof nzcash nzflows.
b) nzA nzcash nzdividend nzpaid nzto nzstockholders nzis nzreported nzon nzthe nzstatement nzof
nzchanges nzin nzstockholders' nzequity.
c) nzA nzcash nzdividend nzpaid nzto nzstockholders nzis nzreported nzon nzthe nzincome nzstatement.
d) nzThe nzbalance nzsheet nzreports nzthe nzending nzbalances nzof nzpermanent nzaccounts nzas
nzof nzthe nzlast nzday nzof nzthe nzaccounting nzperiod.
e) nzChanges nzin nzretained nzearnings nzduring nzthe nzaccounting nzperiod nzare
nzreported nzon nzthe nzincome nzstatement.
, 7) Indicate nzwhether nzeach nzof nzthe nzfollowing nzstatements nzabout nzstockholders’ nzequity
nzis nztrue nzor nzfalse.
a) nzExpenses nzdecrease nzretained nzearnings.
b) nzStockholders' nzequity nzand nzliabilities nzcan nzbe nzviewed nzeither nzas nzsources nzof
nzassets nzor nzclaims nzto nzassets nzof nzthe nzbusiness.
c) nzRetained nzearnings nzis nzincreased nzby nzloans nzreceived nzfrom nza nzbank.
d) nzDividends nzpaid nzto nzstockholders nzdecrease nzcommon nzstock.
e) nzGenerally, nzassets nzare nzreported nzat nzthe nzactual nzprice nzpaid nzfor nzthem nzwhen
nzpurchased nzregardless nzof nzsubsequent nzchanges nzin nzmarket nzvalue.
8) Jessup nzCompany nzwas nzfounded nzin nzYear nz1. nzIt nzacquired nz$45,000 nzcash nzby nzissuing
nzstock nzto nzinvestors nzand nzan nzadditional nz$15,000 nzcash nzby nzborrowing nzfrom nzcreditors. nzDuring
nzYear nz1 nzit nzreceived
$25,000 nzcash nzrevenues nzand nzpaid nz$32,000 nzin nzcash nzexpenses. nzThe nzcompany nzthen nzwent
nzout nzof nzbusiness.
Required:
a) Explain nzthe nzterm, nz"business nzliquidation."
b) What nzamount nzof nzcash nzshould nzJessup nzCompany nzhave nzhad nzon nzhand nzimmediately
nzbefore nzgoing nzout nzof nzbusiness?
c) What nzamount nzof nzcash nzwill nzJessup's nzcreditors nzreceive?
d) What nzamount nzof nzcash nzwill nzJessup's nzstockholders nzreceive?
9) Bates nzCompany nzentered nzinto nzthe nzfollowing nztransactions nzduring nzits nzfirst nzyear nzin
nzbusiness. nzAssume nzthat nzall nztransactions nzinvolve nzthe nzreceipt nzor nzpayment nzof nzcash.
1) Issued nzcommon nzstock nzto nzinvestors nzfor nz$25,000 nzcash.
2) Borrowed nz$18,000 nzfrom nzthe nzlocal nzbank.
3) Provided nzservices nzto nzcustomers nzfor nz$28,000.
4) Paid nzexpenses nzamounting nzto nz$21,400.
5) Purchased nza nzplot nzof nzland nzcosting nz$22,000.
6) Paid nza nzdividend nzof nz$15,000 nzto nzits nzstockholders.
7) Repaid nz$12,000 nzof nzthe nzloan nzlisted nzin nzitem nz2.
Required:
(a) Fill nzin nzthe nzthree nzcolumn nzheadings nzof nzthe nzaccounting nzequation nzin nzthe nzfirst nzrow
nzof nzthe nztable nzshown nzbelow.
(b) Show nzthe nzeffects nzof nzthe nzabove nztransactions nzon nzthe nzaccounting nzequation.
