TEST BANK for Fundamentals of Financial Accounting 8th Edition By Phillips, Clor-Proell,
Robert Libby and Patricia Libby LATEST UPDATE||2024/2025.
,Chapter 01 8e Phillips
1) Creditors are owners of a corporation.
⊚ true
⊚ false
2) All corporations acquire financing by issuing stock on public stock exchanges.
⊚ true
⊚ false
3) You paid $10,000 to buy 1% of the stock in a corporation that is now bankrupt. The companyowes
$10 million dollars to its creditors. As a result of the bankruptcy, you are responsible for paying
$100,000 (or $10 million × 1%) of the amount owed to the creditors.
⊚ true
⊚ false
4) Cash paid for wages is an example of an operating activity on the statement of cash flows.
⊚ true
⊚ false
5) Borrowing money from a bank is a financing activity on the statement of cash flows.
⊚ true
⊚ false
6) The daily business activities involved in running a business, such as buying supplies andpaying
salaries and wages, are classified as operating activities on the statement of cash flows.
⊚ true
⊚ false
7) Stockholders' equity is the difference between a company's assets and its liabilities.
2
, ⊚ true
⊚ false
8) A company owes $200,000 on a bank loan. It will be reported by the company as Accounts
Payable.
⊚ true
⊚ false
9) The amounts reported on financial statements are sometimes rounded to the nearest thousandor
million.
⊚ true
⊚ false
10) Accounts Payable, Notes Payable, and Salaries and Wages Payable are examples of
liabilities.
⊚ true
⊚ false
11) Dividends are subtracted from revenues on the income statement.
⊚ true
⊚ false
12) If a company reports net income on the income statement, then the statement of cash flowswill
report the same amount as cash flows from operating activities for the period.
⊚ true
⊚ false
13) Revenue is reported on the income statement only if cash was received at the point of sale.
⊚ true
⊚ false
3
, 14) Generally Accepted Accounting Principles (GAAP) require profitable companies to
distribute some of their earnings to their stockholders.
⊚ true
⊚ false
4
Robert Libby and Patricia Libby LATEST UPDATE||2024/2025.
,Chapter 01 8e Phillips
1) Creditors are owners of a corporation.
⊚ true
⊚ false
2) All corporations acquire financing by issuing stock on public stock exchanges.
⊚ true
⊚ false
3) You paid $10,000 to buy 1% of the stock in a corporation that is now bankrupt. The companyowes
$10 million dollars to its creditors. As a result of the bankruptcy, you are responsible for paying
$100,000 (or $10 million × 1%) of the amount owed to the creditors.
⊚ true
⊚ false
4) Cash paid for wages is an example of an operating activity on the statement of cash flows.
⊚ true
⊚ false
5) Borrowing money from a bank is a financing activity on the statement of cash flows.
⊚ true
⊚ false
6) The daily business activities involved in running a business, such as buying supplies andpaying
salaries and wages, are classified as operating activities on the statement of cash flows.
⊚ true
⊚ false
7) Stockholders' equity is the difference between a company's assets and its liabilities.
2
, ⊚ true
⊚ false
8) A company owes $200,000 on a bank loan. It will be reported by the company as Accounts
Payable.
⊚ true
⊚ false
9) The amounts reported on financial statements are sometimes rounded to the nearest thousandor
million.
⊚ true
⊚ false
10) Accounts Payable, Notes Payable, and Salaries and Wages Payable are examples of
liabilities.
⊚ true
⊚ false
11) Dividends are subtracted from revenues on the income statement.
⊚ true
⊚ false
12) If a company reports net income on the income statement, then the statement of cash flowswill
report the same amount as cash flows from operating activities for the period.
⊚ true
⊚ false
13) Revenue is reported on the income statement only if cash was received at the point of sale.
⊚ true
⊚ false
3
, 14) Generally Accepted Accounting Principles (GAAP) require profitable companies to
distribute some of their earnings to their stockholders.
⊚ true
⊚ false
4
