Test Bank for Fundamental Financial Accounting Concepts
11th Edition
by Thomas Edmonds, Philip Olds, Christopher Edmonds
,Studentqname:
1) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqmarketsqisqtrueqorqfalse.
a)qFinancialqresourcesqcanqbeqprovidedqtoqaqbusinessqbyqinvestors.
b)qResourceqownersqareqtheqbusinessesqthatqtransformqresourcesqintoqproductsqthat
qsatisfyqconsumerqdesires.
c)qLaborqresourcesqincludeqbothqtheqphysicalqandqintellectualqlaborqofqaqbusiness's
qemployees.
d)qBusinessesqpurchaseqtheirqresourcesqfromqresourceqowners.
e)qConsumersqareqtheqmainqprovidersqofqresourcesqinqanyqmarket.
2) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqaccountingqinformationqisqtrueqor
qfalse.
a)qFinancialqaccountingqisqprimarilyqintendedqtoqsatisfyqtheqinformationqneedsqof
qinternalqstakeholders.
b)qManagerialqaccountingqinformationqincludesqfinancialqandqnonfinancial
qinformation.
c)qTheqaccountingqinformationqintendedqtoqsatisfyqtheqneedsqofqaqcompany's
qemployeesqisqmanagerialqaccountingqinformation.
d)qGAAPqrequiresqthatqcompaniesqadhereqtoqfinancialqaccountingqstandards.
e)qManagerialqaccountingqinformationqisqusuallyqlessqdetailedqthanqfinancial
qaccountingqinformation.
3) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqliabilitiesqisqtrueqorqfalse.
a)qAqnetqlossqonqtheqincomeqstatementqdecreasesqliabilities.
b)qTheqacquisitionqofqaqbankqloanqincreasesqbothqassetsqandqliabilities.
c)qTheqaccountingqequationqrequiresqthatqliabilitiesqbeqequalqtoqstockholders’qequity.
d)qTheqamountqofqaqcompany'sqliabilitiesqisqequalqtoqtheqdifferenceqbetweenqitsqassets
qandqitsqstockholders’qequity.
e)qLiabilitiesqareqreportedqonqtheqstatementqofqcashqflowsqofqaqbusiness.
,4) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqretainedqearningsqisqtrueqorqfalse.
a)qAqdividendqpaidqtoqstockholdersqdecreasesqretainedqearnings.
b)qIssuingqcommonqstockqforqcashqincreasesqretainedqearnings.
c)qTheqamountqofqnetqincomeqforqaqperiodqmustqequalqretainedqearnings.
d)qTheqpurchaseqofqaqtruckqdecreasesqretainedqearnings.
e)qNetqincomeqincreasesqretainedqearnings.
5) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqtheqtypesqofqtransactionsqisqtrue
qorqfalse.
a)qAnqassetqsourceqtransactionqincreasesqtotalqassetsqandqincreasesqclaimsqtoqassets.
b)qTheqissuanceqofqstockqtoqownersqforqcashqwouldqbeqanqexampleqofqanqasset
qexchangeqtransaction.
c)qPurchasingqequipmentqforqcashqisqanqexampleqofqanqassetquseqtransaction.
d)qPayingqaqdividendqtoqstockholdersqisqanqexampleqofqanqassetquseqtransaction.
e)qMakingqaqpaymentqonqaqbankqloanqisqanqexampleqofqanqassetqexchangeqtransaction.
6) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqfinancialqstatementsqisqtrueqor
qfalse.
a)qAqcashqdividendqpaidqtoqstockholdersqisqreportedqinqtheqinvestingqactivitiesqsection
qofqtheqstatementqofqcashqflows.
b)qAqcashqdividendqpaidqtoqstockholdersqisqreportedqonqtheqstatementqofqchangesqin
qstockholders'qequity.
c)qAqcashqdividendqpaidqtoqstockholdersqisqreportedqonqtheqincomeqstatement.
d)qTheqbalanceqsheetqreportsqtheqendingqbalancesqofqpermanentqaccountsqasqofqtheqlast
qdayqofqtheqaccountingqperiod.
e)qChangesqinqretainedqearningsqduringqtheqaccountingqperiodqareqreportedqonqthe
qincomeqstatement.
, 7) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqstockholders’qequityqisqtrueqor
qfalse.
a)qExpensesqdecreaseqretainedqearnings.
b)qStockholders'qequityqandqliabilitiesqcanqbeqviewedqeitherqasqsourcesqofqassetsqor
qclaimsqtoqassetsqofqtheqbusiness.
c)qRetainedqearningsqisqincreasedqbyqloansqreceivedqfromqaqbank.
d)qDividendsqpaidqtoqstockholdersqdecreaseqcommonqstock.
e)qGenerally,qassetsqareqreportedqatqtheqactualqpriceqpaidqforqthemqwhenqpurchased
qregardlessqofqsubsequentqchangesqinqmarketqvalue.
8) JessupqCompanyqwasqfoundedqinqYearq1.qItqacquiredq$45,000qcashqbyqissuingqstockqtoqin
vestorsqandqanqadditionalq$15,000qcashqbyqborrowingqfromqcreditors.qDuringqYearq1qitqreceived
$25,000qcashqrevenuesqandqpaidq$32,000qinqcashqexpenses.qTheqcompanyqthenqwentqoutqofqbu
siness.
Required:
a) Explainqtheqterm,q"businessqliquidation."
b) WhatqamountqofqcashqshouldqJessupqCompanyqhaveqhadqonqhandqimmediatelyqbeforeqgoing
qoutqofqbusiness?
c) WhatqamountqofqcashqwillqJessup'sqcreditorsqreceive?
d) WhatqamountqofqcashqwillqJessup'sqstockholdersqreceive?
9) BatesqCompanyqenteredqintoqtheqfollowingqtransactionsqduringqitsqfirstqyearqinqbusiness.
qAssumeqthatqallqtransactionsqinvolveqtheqreceiptqorqpaymentqofqcash.
1) Issuedqcommonqstockqtoqinvestorsqforq$25,000qcash.
2) Borrowedq$18,000qfromqtheqlocalqbank.
3) Providedqservicesqtoqcustomersqforq$28,000.
4) Paidqexpensesqamountingqtoq$21,400.
5) Purchasedqaqplotqofqlandqcostingq$22,000.
6) Paidqaqdividendqofq$15,000qtoqitsqstockholders.
7) Repaidq$12,000qofqtheqloanqlistedqinqitemq2.
Required:
(a) Fillqinqtheqthreeqcolumnqheadingsqofqtheqaccountingqequationqinqtheqfirstqrowqofqtheqtable
qshownqbelow.
(b) Showqtheqeffectsqofqtheqaboveqtransactionsqonqtheqaccountingqequation.
11th Edition
by Thomas Edmonds, Philip Olds, Christopher Edmonds
,Studentqname:
1) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqmarketsqisqtrueqorqfalse.
a)qFinancialqresourcesqcanqbeqprovidedqtoqaqbusinessqbyqinvestors.
b)qResourceqownersqareqtheqbusinessesqthatqtransformqresourcesqintoqproductsqthat
qsatisfyqconsumerqdesires.
c)qLaborqresourcesqincludeqbothqtheqphysicalqandqintellectualqlaborqofqaqbusiness's
qemployees.
d)qBusinessesqpurchaseqtheirqresourcesqfromqresourceqowners.
e)qConsumersqareqtheqmainqprovidersqofqresourcesqinqanyqmarket.
2) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqaccountingqinformationqisqtrueqor
qfalse.
a)qFinancialqaccountingqisqprimarilyqintendedqtoqsatisfyqtheqinformationqneedsqof
qinternalqstakeholders.
b)qManagerialqaccountingqinformationqincludesqfinancialqandqnonfinancial
qinformation.
c)qTheqaccountingqinformationqintendedqtoqsatisfyqtheqneedsqofqaqcompany's
qemployeesqisqmanagerialqaccountingqinformation.
d)qGAAPqrequiresqthatqcompaniesqadhereqtoqfinancialqaccountingqstandards.
e)qManagerialqaccountingqinformationqisqusuallyqlessqdetailedqthanqfinancial
qaccountingqinformation.
3) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqliabilitiesqisqtrueqorqfalse.
a)qAqnetqlossqonqtheqincomeqstatementqdecreasesqliabilities.
b)qTheqacquisitionqofqaqbankqloanqincreasesqbothqassetsqandqliabilities.
c)qTheqaccountingqequationqrequiresqthatqliabilitiesqbeqequalqtoqstockholders’qequity.
d)qTheqamountqofqaqcompany'sqliabilitiesqisqequalqtoqtheqdifferenceqbetweenqitsqassets
qandqitsqstockholders’qequity.
e)qLiabilitiesqareqreportedqonqtheqstatementqofqcashqflowsqofqaqbusiness.
,4) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqretainedqearningsqisqtrueqorqfalse.
a)qAqdividendqpaidqtoqstockholdersqdecreasesqretainedqearnings.
b)qIssuingqcommonqstockqforqcashqincreasesqretainedqearnings.
c)qTheqamountqofqnetqincomeqforqaqperiodqmustqequalqretainedqearnings.
d)qTheqpurchaseqofqaqtruckqdecreasesqretainedqearnings.
e)qNetqincomeqincreasesqretainedqearnings.
5) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqtheqtypesqofqtransactionsqisqtrue
qorqfalse.
a)qAnqassetqsourceqtransactionqincreasesqtotalqassetsqandqincreasesqclaimsqtoqassets.
b)qTheqissuanceqofqstockqtoqownersqforqcashqwouldqbeqanqexampleqofqanqasset
qexchangeqtransaction.
c)qPurchasingqequipmentqforqcashqisqanqexampleqofqanqassetquseqtransaction.
d)qPayingqaqdividendqtoqstockholdersqisqanqexampleqofqanqassetquseqtransaction.
e)qMakingqaqpaymentqonqaqbankqloanqisqanqexampleqofqanqassetqexchangeqtransaction.
6) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqfinancialqstatementsqisqtrueqor
qfalse.
a)qAqcashqdividendqpaidqtoqstockholdersqisqreportedqinqtheqinvestingqactivitiesqsection
qofqtheqstatementqofqcashqflows.
b)qAqcashqdividendqpaidqtoqstockholdersqisqreportedqonqtheqstatementqofqchangesqin
qstockholders'qequity.
c)qAqcashqdividendqpaidqtoqstockholdersqisqreportedqonqtheqincomeqstatement.
d)qTheqbalanceqsheetqreportsqtheqendingqbalancesqofqpermanentqaccountsqasqofqtheqlast
qdayqofqtheqaccountingqperiod.
e)qChangesqinqretainedqearningsqduringqtheqaccountingqperiodqareqreportedqonqthe
qincomeqstatement.
, 7) Indicateqwhetherqeachqofqtheqfollowingqstatementsqaboutqstockholders’qequityqisqtrueqor
qfalse.
a)qExpensesqdecreaseqretainedqearnings.
b)qStockholders'qequityqandqliabilitiesqcanqbeqviewedqeitherqasqsourcesqofqassetsqor
qclaimsqtoqassetsqofqtheqbusiness.
c)qRetainedqearningsqisqincreasedqbyqloansqreceivedqfromqaqbank.
d)qDividendsqpaidqtoqstockholdersqdecreaseqcommonqstock.
e)qGenerally,qassetsqareqreportedqatqtheqactualqpriceqpaidqforqthemqwhenqpurchased
qregardlessqofqsubsequentqchangesqinqmarketqvalue.
8) JessupqCompanyqwasqfoundedqinqYearq1.qItqacquiredq$45,000qcashqbyqissuingqstockqtoqin
vestorsqandqanqadditionalq$15,000qcashqbyqborrowingqfromqcreditors.qDuringqYearq1qitqreceived
$25,000qcashqrevenuesqandqpaidq$32,000qinqcashqexpenses.qTheqcompanyqthenqwentqoutqofqbu
siness.
Required:
a) Explainqtheqterm,q"businessqliquidation."
b) WhatqamountqofqcashqshouldqJessupqCompanyqhaveqhadqonqhandqimmediatelyqbeforeqgoing
qoutqofqbusiness?
c) WhatqamountqofqcashqwillqJessup'sqcreditorsqreceive?
d) WhatqamountqofqcashqwillqJessup'sqstockholdersqreceive?
9) BatesqCompanyqenteredqintoqtheqfollowingqtransactionsqduringqitsqfirstqyearqinqbusiness.
qAssumeqthatqallqtransactionsqinvolveqtheqreceiptqorqpaymentqofqcash.
1) Issuedqcommonqstockqtoqinvestorsqforq$25,000qcash.
2) Borrowedq$18,000qfromqtheqlocalqbank.
3) Providedqservicesqtoqcustomersqforq$28,000.
4) Paidqexpensesqamountingqtoq$21,400.
5) Purchasedqaqplotqofqlandqcostingq$22,000.
6) Paidqaqdividendqofq$15,000qtoqitsqstockholders.
7) Repaidq$12,000qofqtheqloanqlistedqinqitemq2.
Required:
(a) Fillqinqtheqthreeqcolumnqheadingsqofqtheqaccountingqequationqinqtheqfirstqrowqofqtheqtable
qshownqbelow.
(b) Showqtheqeffectsqofqtheqaboveqtransactionsqonqtheqaccountingqequation.
