Test Bank for Fundamentals Of Financial Accounting 6th Canadian Edition Fred Phillips, Robert Libby, Patricia Libby

,FundamentalskofkFinancialkAccounting,k6ek(Phillips)k
Chapterk1k BusinesskDecisionskandkFinancialkAccou
nting

1) Stockholderskarekownerskofkakcorporation.

Answer:k TRUE
Explanation:kStockholderskarekthekownerskofkakcorporat
ion.kDifficulty:k1kEasy
Topic:k AccountingkforkBusinesskDecisions
LearningkObjective:k01-
01kDescribekvariouskorganizationalkformskandkbusinesskdecisionkmakers.kBloom's:kUnderstand
AACSB:kAnalyticalkThinkingkAcc
essibility:k KeyboardkNavigation

2) Allkcorporationskacquirekfinancingkbykissuingkstockkforksalekonkpublickstockkexchanges.

Answer:k FALSE
Explanation:kMostkcorporationskstartkoutkaskprivatekcompanieskandkwillkapplyktokbecomek
publickcompaniesk("gokpublic")kifktheykneedkaklotkofkfinancing.kFinancingkcankalsokbekac
quiredkbykborrowingkfromkbanks.
Difficulty:k2kMedium
Topic:k OrganizationalkForms
LearningkObjective:k01-
01kDescribekvariouskorganizationalkformskandkbusinesskdecisionkmakers.kBloom's:kUnderstand
AACSB:kAnalyticalkThinkingkAcc
essibility:k KeyboardkNavigation

3) Youkpaidk$10,000ktokbuyk1%kofkthekstockkinkakcorporationkthatkisknowkbankrupt.kTh
ekcompanykowesk$10kmillionkdollarsktokitskcreditors.kAskakresultkofkthekbankruptcy,kyou
karekresponsiblekforkpayingk$100,000k(ork$10kmillionk×k1%)kofkthekamountkowedktokthe
kcreditors.

Answer:k FALSE
Explanation:kUnlikeksolekproprietorshipskandkpartnerships,kakcorporationkiskakseparatekentit
ykfromkbothklegalkandkaccountingkperspectives.kThiskmeanskthatkakcorporation,knotkitskow
ners,kisklegallykresponsiblekforkitskownktaxeskandkdebts.
Difficulty:k2kMedium
Topic:k OrganizationalkForms
LearningkObjective:k01-
01kDescribekvariouskorganizationalkformskandkbusinesskdecisionkmakers.kBloom's:kApply
AACSB:kAnalyticalkThinkingkAcc
essibility:k KeyboardkNavigation




1
Copyrightk2019k©kMcGraw-
HillkEducation.kAllkrightskreserved.kNokreproductionkorkdistributionkwithoutkthekpriorkwrittenkconsentkofk
McGraw-HillkEducation.

,4) Cashkpaidkforkwageskiskankexamplekofkankoperatingkactivitykonkthekstatementkofkcashkflows
.

Answer:k TRUE
Explanation:k Cashkflowskfromkrunningkthekbusiness,kincludingkcashkpaidkforkwages,karekoperat
ingkactivitieskonkthekstatementkofkcashkflows.
Difficulty:k1kEasy
Topic:k FinancialkStatements
LearningkObjective:k01-
02kDescribekthekpurpose,kstructure,kandkcontentkofkthekfourkbasickfinancialkstatements.
Bloom's:k UnderstandkAACS
B:k AnalyticalkThinking
Accessibility:k KeyboardkNavigation

5) Borrowingkmoneykfromkakbankkiskakfinancingkactivitykonkthekstatementkofkcashkflows.

Answer:k TRUE
Explanation:k Onkthekstatementkofkcashkflows,kborrowingkandkrepayingkbankkloanskarekfinancin
gkactivities.
Difficulty:k1kEasy
Topic:k FinancialkStatements
LearningkObjective:k01-
02kDescribekthekpurpose,kstructure,kandkcontentkofkthekfourkbasickfinancialkstatements.
Bloom's:k UnderstandkAACS
B:k AnalyticalkThinking
Accessibility:k KeyboardkNavigation

6) Thekdailykactivitieskinvolvedkinkrunningkakbusiness,ksuchkaskbuyingksupplieskan
dkpayingksalarieskandkwages,karekclassifiedkaskoperatingkactivitieskonkthekstatement
kofkcashkflows.

Answer:k TRUE
Explanation:k Buyingksupplieskandkpayingksalarieskandkwageskareknormalkoperatingkcostskonkth
ekstatementkofkcashkflows.
Difficulty:k1kEasy
Topic:k FinancialkStatements
LearningkObjective:k01-
02kDescribekthekpurpose,kstructure,kandkcontentkofkthekfourkbasickfinancialkstatements.
Bloom's:k UnderstandkAACS
B:k AnalyticalkThinking
Accessibility:k KeyboardkNavigation




2
Copyrightk2019k©kMcGraw-
HillkEducation.kAllkrightskreserved.kNokreproductionkorkdistributionkwithoutkthekpriorkwrittenkconsentkofk
McGraw-HillkEducation.

, 7) Stockholders'kequitykiskthekdifferencekbetweenkakcompany'skassetskandkitskliabilities.

Answer:k TRUE
Explanation:k Assetsk=kLiabilitiesk+kStockholders'kEquity;ktherefore,kAssetsk–
kLiabilitiesk=kStockholders'kEquity
Difficulty:k2kMedium
Topic:k ThekBasickAccountingkEquation
LearningkObjective:k01-
02kDescribekthekpurpose,kstructure,kandkcontentkofkthekfourkbasickfinancialkstatements.
Bloom's:k UnderstandkAACS
B:k AnalyticalkThinking
Accessibility:k KeyboardkNavigation

8) Akcompanykowesk$200,000konkakbankkloan.kItkwillkbekreportedkbykthekcompanykas
kAccountskPayable.

Answer:k FALSE
Explanation:kFormalkdebt,kevidencedkbykakwrittenkcontractkorknote,kiskreportedkaskNotesk
Payable.kDifficulty:k1kEasy
Topic:k FinancialkStatements
LearningkObjective:k01-
02kDescribekthekpurpose,kstructure,kandkcontentkofkthekfourkbasickfinancialkstatements.
Bloom's:k UnderstandkAACS
B:k AnalyticalkThinking
Accessibility:k KeyboardkNavigation

9) Amountskreportedkonkfinancialkstatementskareksometimeskroundedktoktheknearestkmillion.

Answer:k TRUE
Explanation:kLargekbusinesseskoftenkroundktheknumberskonktheirkfinancialkstatementsktokth
eknearestkthousandkorkmillion.
Difficulty:k1kEasy
Topic:k FinancialkStatements
LearningkObjective:k01-
02kDescribekthekpurpose,kstructure,kandkcontentkofkthekfourkbasickfinancialkstatements.
Bloom's:kkkRememberkAAC
SB:k AnalyticalkThinking
Accessibility:k KeyboardkNavigation




3
Copyrightk2019k©kMcGraw-
HillkEducation.kAllkrightskreserved.kNokreproductionkorkdistributionkwithoutkthekpriorkwrittenkconsentkofk
McGraw-HillkEducation.