Test Bank - for Fundamentals of Financial Accounting, 8th Edition by Fred Phillips, All Chapters Fully Covered | Complete Guide A+|LATEST UPDATE.

TEST BANK FOR
Fundamentals of Financial Accounting, 8th Edition by Fred Phillips



Chapter 01 8e Phillips Answers Included
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 company
owes $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 and
paying 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.
⊚ true
⊚ false


NURSINGBYTES

,8) A %ERcompany %ERowes %ER$200,000 %ERon %ERa %ERbank %ERloan. %ERIt %ERwill %ERbe %ERreported %ERby %ERthe
%ER company %ERas %ERAccounts %ERPayable.
⊚ % E R true
⊚ % E R false



9) The %ERamounts %ERreported %ERon %ERfinancial %ERstatements %ERare %ERsometimes %ERrounded %ERto %ERthe
nearest %ERthousand %ERor %ERmillion.
%ER


⊚ % E R true
⊚ % E R false



10) Accounts %ERPayable, %ERNotes %ERPayable, %ERand %ERSalaries %ERand %ERWages %ERPayable
are %ERexamples %ERof %ERliabilities.
%ER


⊚ % E R true
⊚ % E R false



11) Dividends %ERare %ERsubtracted %ERfrom %ERrevenues %ERon %ERthe %ERincome %ERstatement.
⊚ % E R true
⊚ % E R false



12) If %ERa %ERcompany %ERreports %ERnet %ERincome %ERon %ERthe %ERincome %ERstatement, %ERthen %ERthe
%ERstatement %ERof %ERcash %ERflows %ERwill %ERreport %ERthe %ERsame %ERamount %ERas %ERcash %ERflows
%ERfrom %ERoperating %ERactivities %ERfor %ERthe %ERperiod.


⊚ % E R true
⊚ % E R false



13) Revenue %ERis %ERreported %ERon %ERthe %ERincome %ERstatement %ERonly %ERif %ERcash %ERwas %ERreceived %ERat
%ER the %ERpoint %ERof %ERsale.
⊚ % E R true
⊚ % E R false



14) Generally %ERAccepted %ERAccounting %ERPrinciples %ER(GAAP) %ERrequire %ERprofitable
⊚
% E R fal
se




NURSINGBYTES

, companies %ERto %ERdistribute %ERsome %ERof %ERtheir %ERearnings %ERto %ERtheir
%ER


stockholders.
%ER


⊚ % E R true




⊚
% E R fal
se




NURSINGBYTES

, 15) Common %ERStock %ERis %ERreported %ERas %ERan %ERasset %ERon %ERthe %ERbalance %ERsheet.
⊚ % E R true
⊚ % E R false



16) Investors %ERare %ERmainly %ERinterested %ERin %ERthe %ERprofitability %ERof %ERa %ERcompany.
⊚ % E R true
⊚ % E R false



17) A %ERstock %ERthat %ERdoes %ERnot %ERpay %ERa %ERdividend %ERis %ERan %ERundesirable %ERinvestment.
⊚ % E R true
⊚ % E R false



18) To %ERensure %ERthat %ERcompanies %ERproduce %ERuseful %ERinformation, %ERit %ERmust %ERhave
two %ERfundamental %ERcharacteristics: %ERreliability %ERand %ERunderstandability.
%ER


⊚ % E R true
⊚ % E R false



19) The %ERSecurities %ERand %ERExchange %ERCommission %ER(SEC) %ERis %ERthe %ERgovernment %ERagency
%ERthat %ERhas %ERprimary %ERresponsibility %ERfor %ERsetting %ERaccounting %ERstandards %ERin %ERthe
%ERU.S.


⊚ % E R true
⊚ % E R false



20) The %ERSarbanes-Oxley %ERAct %ER(SOX) %ERrequires %ERtop %ERmanagement %ERof %ERcompanies
to %ERsign %ERa %ERreport %ERcertifying %ERthat %ERthe %ERfinancial %ERstatements %ERare %ERfree %ERof
%ER

error.
%ER


⊚ % E R true
⊚ % E R false



⊚
% E R fal
se




NURSINGBYTES