Test Bank for Fundamental Financial Accounting Concepts
u u u u u u
11th Edition
u
by Thomas Edmonds, Philip Olds, Christopher Edmonds
u u u u u u
,Student uname:
1) Indicate uwhether ueach uof uthe ufollowing ustatements uabout umarkets uis utrue uor ufalse.
a) uFinancial uresources ucan ube uprovided uto ua ubusiness uby uinvestors.
b) uResource uowners uare uthe ubusinesses uthat utransform uresources uinto uproducts
uthat usatisfy uconsumer udesires.
c) uLabor uresources uinclude uboth uthe uphysical uand uintellectual ulabor uof ua
ubusiness's uemployees.
d) uBusinesses upurchase utheir uresources ufrom uresource uowners.
e) uConsumers uare uthe umain uproviders uof uresources uin uany umarket.
2) Indicate uwhether ueach uof uthe ufollowing ustatements uabout uaccounting uinformation uis utrue
uor ufalse.
a) uFinancial uaccounting uis uprimarily uintended uto usatisfy uthe uinformation uneeds
uof uinternal ustakeholders.
b) uManagerial uaccounting uinformation uincludes ufinancial uand
unonfinancial uinformation.
c) uThe uaccounting uinformation uintended uto usatisfy uthe uneeds uof ua
ucompany's uemployees uis umanagerial uaccounting uinformation.
d) uGAAP urequires uthat ucompanies uadhere uto ufinancial uaccounting ustandards.
e) uManagerial uaccounting uinformation uis uusually uless udetailed uthan
ufinancial uaccounting uinformation.
3) Indicate uwhether ueach uof uthe ufollowing ustatements uabout uliabilities uis utrue uor ufalse.
a) uA unet uloss uon uthe uincome ustatement udecreases uliabilities.
b) uThe uacquisition uof ua ubank uloan uincreases uboth uassets uand uliabilities.
c) uThe uaccounting uequation urequires uthat uliabilities ube uequal uto ustockholders’ uequity.
d) uThe uamount uof ua ucompany's uliabilities uis uequal uto uthe udifference ubetween uits
uassets uand uits ustockholders’ uequity.
e) uLiabilities uare ureported uon uthe ustatement uof ucash uflows uof ua ubusiness.
,4) Indicate uwhether ueach uof uthe ufollowing ustatements uabout uretained uearnings uis utrue uor ufalse.
a) uA udividend upaid uto ustockholders udecreases uretained uearnings.
b) uIssuing ucommon ustock ufor ucash uincreases uretained uearnings.
c) uThe uamount uof unet uincome ufor ua uperiod umust uequal uretained uearnings.
d) uThe upurchase uof ua utruck udecreases uretained uearnings.
e) uNet uincome uincreases uretained uearnings.
5) Indicate uwhether ueach uof uthe ufollowing ustatements uabout uthe utypes uof utransactions uis
utrue uor ufalse.
a) uAn uasset usource utransaction uincreases utotal uassets uand uincreases uclaims uto uassets.
b) uThe uissuance uof ustock uto uowners ufor ucash uwould ube uan uexample uof uan
uasset uexchange utransaction.
c) uPurchasing uequipment ufor ucash uis uan uexample uof uan uasset uuse utransaction.
d) uPaying ua udividend uto ustockholders uis uan uexample uof uan uasset uuse utransaction.
e) uMaking ua upayment uon ua ubank uloan uis uan uexample uof uan uasset uexchange utransaction.
6) Indicate uwhether ueach uof uthe ufollowing ustatements uabout ufinancial ustatements uis utrue
uor ufalse.
a) uA ucash udividend upaid uto ustockholders uis ureported uin uthe uinvesting uactivities
usection uof uthe ustatement uof ucash uflows.
b) uA ucash udividend upaid uto ustockholders uis ureported uon uthe ustatement uof
uchanges uin ustockholders' uequity.
c) uA ucash udividend upaid uto ustockholders uis ureported uon uthe uincome ustatement.
d) uThe ubalance usheet ureports uthe uending ubalances uof upermanent uaccounts uas uof uthe
ulast uday uof uthe uaccounting uperiod.
e) uChanges uin uretained uearnings uduring uthe uaccounting uperiod uare ureported uon
uthe uincome ustatement.
, 7) Indicate uwhether ueach uof uthe ufollowing ustatements uabout ustockholders’ uequity uis
utrue uor ufalse.
a) uExpenses udecrease uretained uearnings.
b) uStockholders' uequity uand uliabilities ucan ube uviewed ueither uas usources uof
uassets uor uclaims uto uassets uof uthe ubusiness.
c) uRetained uearnings uis uincreased uby uloans ureceived ufrom ua ubank.
d) uDividends upaid uto ustockholders udecrease ucommon ustock.
e) uGenerally, uassets uare ureported uat uthe uactual uprice upaid ufor uthem uwhen
upurchased uregardless uof usubsequent uchanges uin umarket uvalue.
8) Jessup uCompany uwas ufounded uin uYear u1. uIt uacquired u$45,000 ucash uby uissuing ustock
uto uinvestors uand uan uadditional u$15,000 ucash uby uborrowing ufrom ucreditors. uDuring uYear u1 uit
ureceived
$25,000 ucash urevenues uand upaid u$32,000 uin ucash uexpenses. uThe ucompany uthen uwent uout
uof ubusiness.
Required:
a) Explain uthe uterm, u"business uliquidation."
b) What uamount uof ucash ushould uJessup uCompany uhave uhad uon uhand uimmediately ubefore
ugoing uout uof ubusiness?
c) What uamount uof ucash uwill uJessup's ucreditors ureceive?
d) What uamount uof ucash uwill uJessup's ustockholders ureceive?
9) Bates uCompany uentered uinto uthe ufollowing utransactions uduring uits ufirst uyear uin
ubusiness. uAssume uthat uall utransactions uinvolve uthe ureceipt uor upayment uof ucash.
1) Issued ucommon ustock uto uinvestors ufor u$25,000 ucash.
2) Borrowed u$18,000 ufrom uthe ulocal ubank.
3) Provided uservices uto ucustomers ufor u$28,000.
4) Paid uexpenses uamounting uto u$21,400.
5) Purchased ua uplot uof uland ucosting u$22,000.
6) Paid ua udividend uof u$15,000 uto uits ustockholders.
7) Repaid u$12,000 uof uthe uloan ulisted uin uitem u2.
Required:
(a) Fill uin uthe uthree ucolumn uheadings uof uthe uaccounting uequation uin uthe ufirst urow uof uthe
utable ushown ubelow.
(b) Show uthe ueffects uof uthe uabove utransactions uon uthe uaccounting uequation.
u u u u u u
11th Edition
u
by Thomas Edmonds, Philip Olds, Christopher Edmonds
u u u u u u
,Student uname:
1) Indicate uwhether ueach uof uthe ufollowing ustatements uabout umarkets uis utrue uor ufalse.
a) uFinancial uresources ucan ube uprovided uto ua ubusiness uby uinvestors.
b) uResource uowners uare uthe ubusinesses uthat utransform uresources uinto uproducts
uthat usatisfy uconsumer udesires.
c) uLabor uresources uinclude uboth uthe uphysical uand uintellectual ulabor uof ua
ubusiness's uemployees.
d) uBusinesses upurchase utheir uresources ufrom uresource uowners.
e) uConsumers uare uthe umain uproviders uof uresources uin uany umarket.
2) Indicate uwhether ueach uof uthe ufollowing ustatements uabout uaccounting uinformation uis utrue
uor ufalse.
a) uFinancial uaccounting uis uprimarily uintended uto usatisfy uthe uinformation uneeds
uof uinternal ustakeholders.
b) uManagerial uaccounting uinformation uincludes ufinancial uand
unonfinancial uinformation.
c) uThe uaccounting uinformation uintended uto usatisfy uthe uneeds uof ua
ucompany's uemployees uis umanagerial uaccounting uinformation.
d) uGAAP urequires uthat ucompanies uadhere uto ufinancial uaccounting ustandards.
e) uManagerial uaccounting uinformation uis uusually uless udetailed uthan
ufinancial uaccounting uinformation.
3) Indicate uwhether ueach uof uthe ufollowing ustatements uabout uliabilities uis utrue uor ufalse.
a) uA unet uloss uon uthe uincome ustatement udecreases uliabilities.
b) uThe uacquisition uof ua ubank uloan uincreases uboth uassets uand uliabilities.
c) uThe uaccounting uequation urequires uthat uliabilities ube uequal uto ustockholders’ uequity.
d) uThe uamount uof ua ucompany's uliabilities uis uequal uto uthe udifference ubetween uits
uassets uand uits ustockholders’ uequity.
e) uLiabilities uare ureported uon uthe ustatement uof ucash uflows uof ua ubusiness.
,4) Indicate uwhether ueach uof uthe ufollowing ustatements uabout uretained uearnings uis utrue uor ufalse.
a) uA udividend upaid uto ustockholders udecreases uretained uearnings.
b) uIssuing ucommon ustock ufor ucash uincreases uretained uearnings.
c) uThe uamount uof unet uincome ufor ua uperiod umust uequal uretained uearnings.
d) uThe upurchase uof ua utruck udecreases uretained uearnings.
e) uNet uincome uincreases uretained uearnings.
5) Indicate uwhether ueach uof uthe ufollowing ustatements uabout uthe utypes uof utransactions uis
utrue uor ufalse.
a) uAn uasset usource utransaction uincreases utotal uassets uand uincreases uclaims uto uassets.
b) uThe uissuance uof ustock uto uowners ufor ucash uwould ube uan uexample uof uan
uasset uexchange utransaction.
c) uPurchasing uequipment ufor ucash uis uan uexample uof uan uasset uuse utransaction.
d) uPaying ua udividend uto ustockholders uis uan uexample uof uan uasset uuse utransaction.
e) uMaking ua upayment uon ua ubank uloan uis uan uexample uof uan uasset uexchange utransaction.
6) Indicate uwhether ueach uof uthe ufollowing ustatements uabout ufinancial ustatements uis utrue
uor ufalse.
a) uA ucash udividend upaid uto ustockholders uis ureported uin uthe uinvesting uactivities
usection uof uthe ustatement uof ucash uflows.
b) uA ucash udividend upaid uto ustockholders uis ureported uon uthe ustatement uof
uchanges uin ustockholders' uequity.
c) uA ucash udividend upaid uto ustockholders uis ureported uon uthe uincome ustatement.
d) uThe ubalance usheet ureports uthe uending ubalances uof upermanent uaccounts uas uof uthe
ulast uday uof uthe uaccounting uperiod.
e) uChanges uin uretained uearnings uduring uthe uaccounting uperiod uare ureported uon
uthe uincome ustatement.
, 7) Indicate uwhether ueach uof uthe ufollowing ustatements uabout ustockholders’ uequity uis
utrue uor ufalse.
a) uExpenses udecrease uretained uearnings.
b) uStockholders' uequity uand uliabilities ucan ube uviewed ueither uas usources uof
uassets uor uclaims uto uassets uof uthe ubusiness.
c) uRetained uearnings uis uincreased uby uloans ureceived ufrom ua ubank.
d) uDividends upaid uto ustockholders udecrease ucommon ustock.
e) uGenerally, uassets uare ureported uat uthe uactual uprice upaid ufor uthem uwhen
upurchased uregardless uof usubsequent uchanges uin umarket uvalue.
8) Jessup uCompany uwas ufounded uin uYear u1. uIt uacquired u$45,000 ucash uby uissuing ustock
uto uinvestors uand uan uadditional u$15,000 ucash uby uborrowing ufrom ucreditors. uDuring uYear u1 uit
ureceived
$25,000 ucash urevenues uand upaid u$32,000 uin ucash uexpenses. uThe ucompany uthen uwent uout
uof ubusiness.
Required:
a) Explain uthe uterm, u"business uliquidation."
b) What uamount uof ucash ushould uJessup uCompany uhave uhad uon uhand uimmediately ubefore
ugoing uout uof ubusiness?
c) What uamount uof ucash uwill uJessup's ucreditors ureceive?
d) What uamount uof ucash uwill uJessup's ustockholders ureceive?
9) Bates uCompany uentered uinto uthe ufollowing utransactions uduring uits ufirst uyear uin
ubusiness. uAssume uthat uall utransactions uinvolve uthe ureceipt uor upayment uof ucash.
1) Issued ucommon ustock uto uinvestors ufor u$25,000 ucash.
2) Borrowed u$18,000 ufrom uthe ulocal ubank.
3) Provided uservices uto ucustomers ufor u$28,000.
4) Paid uexpenses uamounting uto u$21,400.
5) Purchased ua uplot uof uland ucosting u$22,000.
6) Paid ua udividend uof u$15,000 uto uits ustockholders.
7) Repaid u$12,000 uof uthe uloan ulisted uin uitem u2.
Required:
(a) Fill uin uthe uthree ucolumn uheadings uof uthe uaccounting uequation uin uthe ufirst urow uof uthe
utable ushown ubelow.
(b) Show uthe ueffects uof uthe uabove utransactions uon uthe uaccounting uequation.
