TEST BANK
Financial Accounting Tools For Business Decision
Making, 10th Edition, Paul D. Kimmel,
Chapters 1 – 13, Complete
Copyright l2© l22022 l2John l2Wiley l2& l2Sons, l2Inc. l2(For l2Instructor
l2Use l2Only)
,TABLE OF CONTENTS L2 L2
1 Introduction to Financial Statements
l2 l2 l2 l2 l2
2 A Further Look at Financial Statements
l2 l2 l2 l2 l2 l2 l2
3 The Accounting Information System
l2 l2 l2 l2 l2
4 Accrual Accounting Concepts
l2 l2 l2 l2
5 Merchandising Operations and the Multiple-Step Income Statement
l2 l2 l2 l2 l2 l2 l2 l2
6 Reporting and Analyzing Inventory
l2 l2 l2 l2 l2
7 Fraud, Internal Control, and Cash
l2 l2 l2 l2 l2 l2
8 Reporting and Analyzing Receivables
l2 l2 l2 l2 l2
9 Reporting and Analyzing Long-Lived Assets
l2 l2 l2 l2 l2 l2
10 Reporting and Analyzing Liabilities
l2 l2 l2 l2 l2
11 Reporting and Analyzing Stockholders’ Equity
l2 l2 l2 l2 l2 l2
12 Statement of Cash Flows
l2 l2 l2 l2 l2
13 Financial Analysis: The Big Picture
l2 l2 l2 l2 l2 l2
Copyright l2© l22022 l2John l2Wiley l2& l2Sons, l2Inc. l2(For l2Instructor
l2Use l2Only)
,CHAPTER 1 l2
INTRODUCTION TO FINANCIAL STATEMENTS
l2 l2 l2
CHAPTER l2LEARNING l2OBJECTIVES
1. Identify l2the l2forms l2of l2business l2organization l2and l2the l2uses l2of l2accounting l2information. l2A l2sole
l2proprietorship l2is l2a l2business l2owned l2by l2one l2person. l2A l2partnership l2is l2a l2business l2owned l2by
l2two l2or l2more l2people l2associated l2as l2partners. l2A l2corporation l2is l2a l2separate l2legal l2entity l2for
l2which l2evidence l2of l2ownership l2is l2provided l2by l2shares l2of l2stock. l2Internal l2users l2are l2managers
l2who l2need l2accounting l2information l2to l2plan, l2organize, l2and l2run l2business l2operations. l2The
l2primary l2external l2users l2are l2investors l2and l2creditors. l2Investors l2(stockholders) l2use l2accounting
l2information l2to l2decide l2whether l2to l2buy, l2hold, l2or l2sell l2shares l2of l2a l2company‘s l2stock. l2Creditors
l2(suppliers l2and l2bankers) l2 use l2 accounting l2 information l2 to l2 assess l2 the l2 risk l2 of l2 granting l 2 credit
l2 or l2 loaning l2 money l2 to l2a l2business. l2Other l2groups l2who l2have l2an l2indirect l2interest l2in l2a l2business
l2are l2taxing l2authorities, l2customers, l2labor l2unions, l2and l2 regulatory l2agencies.
2. Explain l2the l2three l2principal l2types l2of l2business l2activity. l2Financing l2activities l 2 involve l2collecting
l2the l2necessary l2funds l2to l2support l2the l2business. l2Investing l2activities l2involve l2acquiring l2the
l2resources l2necessary l2to l2run l2the l2business. l2Operating l2activities l2involve l2putting l 2 the l2resources
l2of l2 the l2business l2into l2action l2to l2generate l2a l2 profit.
3. Describe l2the l2four l2financial l2statements l2and l2how l2they l2are l2prepared. l2An l2income l2statement
l2presents l2the l2revenues l2and l2expenses l2of l2a l2company l2for l2a l2specific l2period l2of l2time. l2A l2retained
l2earnings l2statement l2summarizes l2the l2changes l2in l2retained l2earnings l2that l2have l2occurred l2for l2a
l2specific l2period l2of l2time. l2A l2balance l2sheet l2reports l2the l2assets, l2liabilities, l2and l2stockholders‘
l2equity l2of l2a l2business l2at l2a l2specific l2date. l2A l2statement l2of l2cash l2flows l 2 summarizes
l 2 information l2concerning l2the l2cash l2inflows l2(receipts) l2and l2outflows l2(payments) l2for l2a l2specific
l2period l2of l2time. l2Assets l2are l2resources l2owned l2by l2a l2business. l2Liabilities l2are l2the l2debts l2and
l2obligations l2of l2the l2business. l2Liabilities l2represent l2claims l2of l2creditors l2on l2the l2assets l2of l2the
l2business. l2Stockholders‘ l2equity l2represents l2the l2claims l2of l2owners l2on l2the l2assets l2of l2the
l2business. l2Stockholders‘ l2equity l2is l2subdivided l2into l2two l2parts: l2common l2stock l2and l2retained
l2earnings. l2The l2basic l2accounting l2equation l2is l2Assets l2= l2Liabilities l2+ l2Stockholders‘ l2Equity. l2Within
l2the l2annual l2report, l2the l2management l2discussion l2and l2analysis l2provides l2management‘s
l2interpretation l2of l2the l2company‘sl2results l2and l2financial l2position l2as l2well l2as l2a l2discussion l2of l2plans
l2for l2the l2future. l2Notes l2to l2the l2financial l2statements l2provide l2additional l2explanation l2or l2detail l2to
l2make l2the l2financial l2statements l2more l2informative. l2The l2auditor‘s l2report l2expresses l2an l2opinion
l2as l2to l2whether l2the l2financial l2statements l2present l2fairly l2the l2company‘s l2results l2of l2operations
l2and l2financial l2position.
*4. l2Explain l2the l2career l2opportunities l2in l2accounting. l2Accounting l2offers l2many l2different l2jobs l2in
l2fields l2such l2as l2public l2and l2private l2accounting, l2governmental, l2and l2forensic l2accounting.
l2Accounting l2is l2a l2popular l2major l2because l2there l2are l2many l2different l2types l2of l2jobs, l2with
l2unlimited l2potential l2for l2career l2advancement
Copyright l2© l22022 l2John l2Wiley l2& l2Sons, l2Inc. l2(For l2Instructor
l2Use l2Only)
, 2-2 Test l2Bank l2for l2Kimmel, l2Financial l2Accounting: l2Tools l2for l2Business l2Decision
l2Making, l2 10e
Difficulties:
Easy: l2143
Medium: l2101
Hard: l212
Question l2List l2by l2Section
Business l2Organization l2and l2Accounting l2Information
l2Uses:l2Forms l2of l2Business l2Organization; l247, l248, l2202,
l2246
Sole l2Proprietorship: l25, l244, l249, l258, l259
Partnership: l21, l24, l246, l256
Corporation: l22, l23, l245, l250, l251, l252, l253, l255, l257, l2233, l2245
Hybrid l2Forms l2of l2Organization: l260, l261
Users l2and l2Uses l2of l2Financial l2Information: l26, l27, l211, l274, l287
Internal l2Users: l262, l263, l264, l275, l277, l282, l2234
External l2Users: l28, l29, l210, l212, l265, l276, l278, l279, l280, l281, l283, l284, l285, l286, l288, l289
Data l2Analytics: l266, l267, l268, l269, l270, l2235, l2236
Ethics l2in l2Financial l2Reporting: l271, l272, l273, l2237,
l2255l2The l2 Three l2 Types l2of l2 Business l2Activity: l297
Financing l2Activities: l213, l215, l218, l290, l291, l293, l294, l295, l296, l297, l2102, l2109, l2117, l2118, l2119, l2238
Investing l2Activities: l214, l216, l298, l299, l2115, l2116
Operating l2Activities: l217, l219, l220, l2100, l2101, l2103, l2104, l2105, l2106, l2107, l2108, l2110, l2111, l2112, l2113,
114
The l2Four l2Financial l2Statements:
Income l2Statement: l221, l222, l223, l224,127, l2128, l2132, l2133, l2134, l2138, l2142, l2143
Retained l2Earnings l2Statement: l2120, l2122, l2123, l2 124, l2125, l2126, l2129, l2130, l2131, l2135, l2137, l2139, l2140,
141, l2144, l2145, l2146, l2147, l2148, l2149, l2150, l2154, l2164, l2169, l2178, l2181, l2252
Balance l2Sheet: l225, l227, l228, l229, l230, l231, l232, l233, l234, l235, l2136, l2151, l2152, l2153, l2163, l2165, l2166, l2168,
170, l2173, l2177, l2179, l2180, l2182, l2185, l2186, l2187, l2188, l2199, l2200, l2201, l2207, l2208, l2213, l2214, l2215, l2216,
217, l2218, l2219, l2220, l2221, l2222, l2225, l2229, l2239, l2240, l2241, l2253
Statement l2of l2Cash l2Flows: l226, l2121, l2171, l2174, l2183, l2242, l2249
Interrelationships l2of l2Statements: l2155, l2156, l2157, l2158, l2159, l2160, l2161, l2162, l2167, l2175, l2176, l2184,
250, l2251, l2256
Elements l2of l2an l2Annual l2Report: l236, l241, l2192, l2196, l2197
Management l2Discussion l2and l2Analysis: l240, l2191
Notes l2to l2the l2Financial l2Statements: l237, l242, l2190, l2193, l2194, l2198, l2254
Auditor‘s l2Report: l238, l239, l2195
Copyright l2© l22022 l2John l2Wiley l2& l2Sons, l2Inc. l2(For l2Instructor
l2Use l2Only)
Financial Accounting Tools For Business Decision
Making, 10th Edition, Paul D. Kimmel,
Chapters 1 – 13, Complete
Copyright l2© l22022 l2John l2Wiley l2& l2Sons, l2Inc. l2(For l2Instructor
l2Use l2Only)
,TABLE OF CONTENTS L2 L2
1 Introduction to Financial Statements
l2 l2 l2 l2 l2
2 A Further Look at Financial Statements
l2 l2 l2 l2 l2 l2 l2
3 The Accounting Information System
l2 l2 l2 l2 l2
4 Accrual Accounting Concepts
l2 l2 l2 l2
5 Merchandising Operations and the Multiple-Step Income Statement
l2 l2 l2 l2 l2 l2 l2 l2
6 Reporting and Analyzing Inventory
l2 l2 l2 l2 l2
7 Fraud, Internal Control, and Cash
l2 l2 l2 l2 l2 l2
8 Reporting and Analyzing Receivables
l2 l2 l2 l2 l2
9 Reporting and Analyzing Long-Lived Assets
l2 l2 l2 l2 l2 l2
10 Reporting and Analyzing Liabilities
l2 l2 l2 l2 l2
11 Reporting and Analyzing Stockholders’ Equity
l2 l2 l2 l2 l2 l2
12 Statement of Cash Flows
l2 l2 l2 l2 l2
13 Financial Analysis: The Big Picture
l2 l2 l2 l2 l2 l2
Copyright l2© l22022 l2John l2Wiley l2& l2Sons, l2Inc. l2(For l2Instructor
l2Use l2Only)
,CHAPTER 1 l2
INTRODUCTION TO FINANCIAL STATEMENTS
l2 l2 l2
CHAPTER l2LEARNING l2OBJECTIVES
1. Identify l2the l2forms l2of l2business l2organization l2and l2the l2uses l2of l2accounting l2information. l2A l2sole
l2proprietorship l2is l2a l2business l2owned l2by l2one l2person. l2A l2partnership l2is l2a l2business l2owned l2by
l2two l2or l2more l2people l2associated l2as l2partners. l2A l2corporation l2is l2a l2separate l2legal l2entity l2for
l2which l2evidence l2of l2ownership l2is l2provided l2by l2shares l2of l2stock. l2Internal l2users l2are l2managers
l2who l2need l2accounting l2information l2to l2plan, l2organize, l2and l2run l2business l2operations. l2The
l2primary l2external l2users l2are l2investors l2and l2creditors. l2Investors l2(stockholders) l2use l2accounting
l2information l2to l2decide l2whether l2to l2buy, l2hold, l2or l2sell l2shares l2of l2a l2company‘s l2stock. l2Creditors
l2(suppliers l2and l2bankers) l2 use l2 accounting l2 information l2 to l2 assess l2 the l2 risk l2 of l2 granting l 2 credit
l2 or l2 loaning l2 money l2 to l2a l2business. l2Other l2groups l2who l2have l2an l2indirect l2interest l2in l2a l2business
l2are l2taxing l2authorities, l2customers, l2labor l2unions, l2and l2 regulatory l2agencies.
2. Explain l2the l2three l2principal l2types l2of l2business l2activity. l2Financing l2activities l 2 involve l2collecting
l2the l2necessary l2funds l2to l2support l2the l2business. l2Investing l2activities l2involve l2acquiring l2the
l2resources l2necessary l2to l2run l2the l2business. l2Operating l2activities l2involve l2putting l 2 the l2resources
l2of l2 the l2business l2into l2action l2to l2generate l2a l2 profit.
3. Describe l2the l2four l2financial l2statements l2and l2how l2they l2are l2prepared. l2An l2income l2statement
l2presents l2the l2revenues l2and l2expenses l2of l2a l2company l2for l2a l2specific l2period l2of l2time. l2A l2retained
l2earnings l2statement l2summarizes l2the l2changes l2in l2retained l2earnings l2that l2have l2occurred l2for l2a
l2specific l2period l2of l2time. l2A l2balance l2sheet l2reports l2the l2assets, l2liabilities, l2and l2stockholders‘
l2equity l2of l2a l2business l2at l2a l2specific l2date. l2A l2statement l2of l2cash l2flows l 2 summarizes
l 2 information l2concerning l2the l2cash l2inflows l2(receipts) l2and l2outflows l2(payments) l2for l2a l2specific
l2period l2of l2time. l2Assets l2are l2resources l2owned l2by l2a l2business. l2Liabilities l2are l2the l2debts l2and
l2obligations l2of l2the l2business. l2Liabilities l2represent l2claims l2of l2creditors l2on l2the l2assets l2of l2the
l2business. l2Stockholders‘ l2equity l2represents l2the l2claims l2of l2owners l2on l2the l2assets l2of l2the
l2business. l2Stockholders‘ l2equity l2is l2subdivided l2into l2two l2parts: l2common l2stock l2and l2retained
l2earnings. l2The l2basic l2accounting l2equation l2is l2Assets l2= l2Liabilities l2+ l2Stockholders‘ l2Equity. l2Within
l2the l2annual l2report, l2the l2management l2discussion l2and l2analysis l2provides l2management‘s
l2interpretation l2of l2the l2company‘sl2results l2and l2financial l2position l2as l2well l2as l2a l2discussion l2of l2plans
l2for l2the l2future. l2Notes l2to l2the l2financial l2statements l2provide l2additional l2explanation l2or l2detail l2to
l2make l2the l2financial l2statements l2more l2informative. l2The l2auditor‘s l2report l2expresses l2an l2opinion
l2as l2to l2whether l2the l2financial l2statements l2present l2fairly l2the l2company‘s l2results l2of l2operations
l2and l2financial l2position.
*4. l2Explain l2the l2career l2opportunities l2in l2accounting. l2Accounting l2offers l2many l2different l2jobs l2in
l2fields l2such l2as l2public l2and l2private l2accounting, l2governmental, l2and l2forensic l2accounting.
l2Accounting l2is l2a l2popular l2major l2because l2there l2are l2many l2different l2types l2of l2jobs, l2with
l2unlimited l2potential l2for l2career l2advancement
Copyright l2© l22022 l2John l2Wiley l2& l2Sons, l2Inc. l2(For l2Instructor
l2Use l2Only)
, 2-2 Test l2Bank l2for l2Kimmel, l2Financial l2Accounting: l2Tools l2for l2Business l2Decision
l2Making, l2 10e
Difficulties:
Easy: l2143
Medium: l2101
Hard: l212
Question l2List l2by l2Section
Business l2Organization l2and l2Accounting l2Information
l2Uses:l2Forms l2of l2Business l2Organization; l247, l248, l2202,
l2246
Sole l2Proprietorship: l25, l244, l249, l258, l259
Partnership: l21, l24, l246, l256
Corporation: l22, l23, l245, l250, l251, l252, l253, l255, l257, l2233, l2245
Hybrid l2Forms l2of l2Organization: l260, l261
Users l2and l2Uses l2of l2Financial l2Information: l26, l27, l211, l274, l287
Internal l2Users: l262, l263, l264, l275, l277, l282, l2234
External l2Users: l28, l29, l210, l212, l265, l276, l278, l279, l280, l281, l283, l284, l285, l286, l288, l289
Data l2Analytics: l266, l267, l268, l269, l270, l2235, l2236
Ethics l2in l2Financial l2Reporting: l271, l272, l273, l2237,
l2255l2The l2 Three l2 Types l2of l2 Business l2Activity: l297
Financing l2Activities: l213, l215, l218, l290, l291, l293, l294, l295, l296, l297, l2102, l2109, l2117, l2118, l2119, l2238
Investing l2Activities: l214, l216, l298, l299, l2115, l2116
Operating l2Activities: l217, l219, l220, l2100, l2101, l2103, l2104, l2105, l2106, l2107, l2108, l2110, l2111, l2112, l2113,
114
The l2Four l2Financial l2Statements:
Income l2Statement: l221, l222, l223, l224,127, l2128, l2132, l2133, l2134, l2138, l2142, l2143
Retained l2Earnings l2Statement: l2120, l2122, l2123, l2 124, l2125, l2126, l2129, l2130, l2131, l2135, l2137, l2139, l2140,
141, l2144, l2145, l2146, l2147, l2148, l2149, l2150, l2154, l2164, l2169, l2178, l2181, l2252
Balance l2Sheet: l225, l227, l228, l229, l230, l231, l232, l233, l234, l235, l2136, l2151, l2152, l2153, l2163, l2165, l2166, l2168,
170, l2173, l2177, l2179, l2180, l2182, l2185, l2186, l2187, l2188, l2199, l2200, l2201, l2207, l2208, l2213, l2214, l2215, l2216,
217, l2218, l2219, l2220, l2221, l2222, l2225, l2229, l2239, l2240, l2241, l2253
Statement l2of l2Cash l2Flows: l226, l2121, l2171, l2174, l2183, l2242, l2249
Interrelationships l2of l2Statements: l2155, l2156, l2157, l2158, l2159, l2160, l2161, l2162, l2167, l2175, l2176, l2184,
250, l2251, l2256
Elements l2of l2an l2Annual l2Report: l236, l241, l2192, l2196, l2197
Management l2Discussion l2and l2Analysis: l240, l2191
Notes l2to l2the l2Financial l2Statements: l237, l242, l2190, l2193, l2194, l2198, l2254
Auditor‘s l2Report: l238, l239, l2195
Copyright l2© l22022 l2John l2Wiley l2& l2Sons, l2Inc. l2(For l2Instructor
l2Use l2Only)
