Test Bank - for Financial Accounting 13th Edition by C. William Thomas Wendy M. Tietz All Chapters Complete Guide A+

, FinancialgAccountingg5ce
Chapterg1g–
gThegFinancialgStatements

Chapterg 1g g Theg Financialg Statements

1.1 Explaingwhygaccountinggisgtheglanguagegofgbusiness

1) Whichgofgthegfollowinggpersonsgorggroupsghavegthegultimategcontrolgofgagcorporation?
A) thegchiefgexecutivegofficer
B) thegboardgofgdirectors
C) thegauditgcommittee
D) thegshareholder
sgAnswer:g D
Diff:g2g Type:gMCg
L.O.:g L.O.g1-1

2) Financialgstatementsgare:
A) reportsgissuedgbygoutsidegconsultantsgwhogareghiredgtoganalyzegkeygoperationsgofgthegbusiness
B) reportsgcreatedgbygmanagementgthatgstatesgitgisgresponsiblegforgthegactsgofgthegcorporation
C) standardgdocumentsgthatgtellgusghowgwellgagbusinessgisgperforminggandgwheregitgstandsgingfina
ncialgterms
D) standardgdocumentsgissuedgbygoutsidegconsultantsgwhogareghiredgtoganalyzegkeygoperationsgof
gthegbusinessgingfinancialgterms
Answer:g C
Diff:g1g Type:gMCg
L.O.:g L.O.g1-1

3) Thegaccountinggequationgcangbegstatedgas:
A) Assetsg+gLiabilitiesg=gShareholders'gequity
B) Assetsg=gLiabilitiesg+gShareholders'gequity
C) Assetsg=gLiabilitiesg-gShareholders'gequity
D) Assetsg+gShareholders'gequityg=gLiabiliti
esgAnswer:g B
Diff:g1g Type:gMCg
L.O.:g L.O.g1-1

4) Thegowners'ginterestgingthegassetsgofgagcorporationgisgknowngas:
A) assets
B) shareholders'g equity
C) expenses
D) revenues
gAnswer:g B
Diff:g1g Type:gMCg
L.O.:g L.O.g1-1




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, FinancialgAccountingg5ce
Chapterg1g–
gThegFinancialgStatements

5) OngJanuaryg1,g2014,gtotalgassetsgforgLiftoffgTechnologiesgwereg$125,000;gongDecemberg31,g2014,g
totalgassetsgwereg$145,000.gOngJanuaryg1,g2014,gtotalgliabilitiesgwereg$110,000;gongDecemberg31,g20
14,gtotalgliabilitiesgwereg$115,000.gWhatgaregthegamountgofgthegchangegandgthegdirectiongofgthegch
angegingLiftoffgTechnologiesgshareholders'gequitygforg2014?
A) decreasegofg$15,000
B) increasegofg$15,000
C) increasegofg$30,000
D) decreasegofg$30,00
0gAnswer:g B
Diff:g2g Type:gMCg
L.O.:g L.O.g1-1

6) Claimsgheldgbygthegshareholdersg(owners)gofgagcorporationgaregreferredgtogas:
A) retainedgearnings
B) sharegcapital
C) sharegcapitalgminusgretainedgearnings
D) sharegcapitalgplusgretainedgearning
sgAnswer:g D
Diff:g3g Type:gMCg
L.O.:g L.O.g1-1

7) Payablesgaregclassifiedgas:
A) increasesgingearnings
B) assets
C) decreasesgingearnings
D) liabilities
gAnswer:g
D
Diff:g1g Type:gMCg
L.O.:g L.O.g1-1

8) Receivablesgaregclassifiedgas:
A) increasesgingearnings
B) assets
C) decreasesgingearnings
D) liabilities
gAnswer:g B
Diff:g1g Type:gMCg
L.O.:g L.O.g1-1

9) Revenuesgare:
A) increasesgingliabilitiesgresultinggfromgdeliveringggoodsgorgservicesgtogcustomers
B) increasesgingretainedgearningsgresultinggfromgdeliveringggoodsgorgservicesgtogcustomers
C) decreasesgingassetsgresultinggfromgdeliveringggoodsgorgservicesgtogcustomers
D) decreasesgingretainedgearningsgresultinggfromgdeliveringggoodsgorgservicesgtogcusto
mersgAnswer:g B
Diff:g2g Type:gMCg
L.O.:g L.O.g1-1




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, FinancialgAccountingg5ce
Chapterg1g–
gThegFinancialgStatements

10) Ifgassetsgincreaseg$120,000gduringgaggivengperiodgandgliabilitiesgdecreaseg$25,000gduringgthegs
amegperiod,gshareholders'gequitygmust:
A) increaseg$95,000
B) decreaseg$145,000
C) decreaseg$95,000
D) increaseg$145,00
0gAnswer:g D
Diff:g3g Type:gMCg
L.O.:g L.O.g1-1

11) Ifgliabilitiesgincreaseg$120,000gduringgaggivengperiodgandgshareholders'gequitygdecreasesg$25,000gdu
ringgthegsamegperiod,gassetsgmust:
A) decreaseg$145,000
B) increaseg$145,000
C) increaseg$95,000
D) decreaseg$95,00
0gAnswer:g C
Diff:g3g Type:gMCg
L.O.:g L.O.g1-1

12) Expensesgare:
A) increasesgingassetsgresultinggfromgoperations
B) increasesgingretainedgearningsgresultinggfromgoperations
C) increasesgingliabilitiesgresultinggfromgpurchasinggassets
D) decreasesgingretainedgearningsgresultinggfromgoperatio
nsgAnswer:g D
Diff:g2g Type:gMCg
L.O.:g L.O.g1-1

13) Howgdogrevenuesgforgagperiodgrelategtogthegbeginninggandgendinggbalancesgingretainedgearnings?
A) Revenuesgwillgincreasegthegbeginninggbalancegofgretainedgearningsgforgthegperiod.
B) Revenuesgwillgdecreasegthegbeginninggbalancegofgretainedgearningsgforgthegperiod.
C) Revenuesglessgexpensesgwillgeithergincreasegorgdecreasegthegbeginninggbalancegofgretainedgearning
sgforgthegperiod.
D) Revenuesglessgexpensesgwillgeithergincreasegorgdecreasegthegendinggbalancegofgretainedgearningsgfo
rgthegperiod.
Answer:g D
Diff:g2g Type:gMCg
L.O.:g L.O.g1-1

14) Whichgofgthegfollowinggbestgdescribesgagliability?
A) Liabilitiesgaregagformgofgsharegcapital.
B) Liabilitiesgaregfuturegeconomicgbenefitsgtogwhichgagcompanygisgentitled.
C) Liabilitiesgaregaccountsgreceivablegofgthegcompany.
D) Liabilitiesgaregeconomicgobligationsgtogcreditorsgtogbegpaidgatgsomegfuturegdategbygthegcomp
any.gAnswer:g D
Diff:g1g Type:gMCg
L.O.:g L.O.g1-1



15) Shareholders'gequitygforgRaisingCorporationgongJanuaryg1,g2014gandgDecemberg31,g2014gwereg$60,0
00gandg$75,000,grespectively.gAssetsgongJanuaryg1,g2014gandgDecemberg31,g2014gwereg$115,000gandg$1
05,000,grespectively.gLiabilitiesgongJanuaryg1,g2014gwereg$55,000.gWhatgisgthegamountgofgliabilitiesgong
Decemberg31,g2014?
A) $40,000
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