Test vbBank vbfor vbFundamental vbFinancial
vbAccounting vbConcepts
11th vbEdition
by
vbThom
as
vbEdmo
nds,
vbPhilip
vbOlds,
vbChrist
opher
vbEdmo
nds
,Student vbname:
1) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout vbmarkets vbis
vbtrue vbor vbfalse.
a) vbFinancial vbresources vbcan vbbe vbprovided vbto vba vbbusiness vbby vbinvestors.
b) vbResource vbowners vbare vbthe vbbusinesses vbthat vbtransform
vbresources vbinto vbproducts vbthat vbsatisfy vbconsumer vbdesires.
c) vbLabor vbresources vbinclude vbboth vbthe vbphysical vband vbintellectual
vblabor vbof vba vbbusiness's vbemployees.
d) vbBusinesses vbpurchase vbtheir vbresources vbfrom vbresource vbowners.
e) vbConsumers vbare vbthe vbmain vbproviders vbof vbresources vbin vbany vbmarket.
2) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout vbaccounting
vbinformation vbis vbtrue vbor vbfalse.
a) vbFinancial vbaccounting vbis vbprimarily vbintended vbto vbsatisfy vbthe
vbinformation vbneeds vbof vbinternal vbstakeholders.
b) vbManagerial vbaccounting vbinformation vbincludes vbfinancial
vband vbnonfinancial vbinformation.
c) vbThe vbaccounting vbinformation vbintended vbto vbsatisfy vbthe
vbneeds vbof vba vbcompany's vbemployees vbis vbmanagerial vbaccounting
vbinformation.
d) vbGAAP vbrequires vbthat vbcompanies vbadhere vbto vbfinancial vbaccounting
vbstandards.
e) vbManagerial vbaccounting vbinformation vbis vbusually vbless
vbdetailed vbthan vbfinancial vbaccounting vbinformation.
3) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout vbliabilities vbis
vbtrue vbor vbfalse.
a) vbA vbnet vbloss vbon vbthe vbincome vbstatement vbdecreases vbliabilities.
b) vbThe vbacquisition vbof vba vbbank vbloan vbincreases vbboth vbassets vband
vbliabilities.
c) vbThe vbaccounting vbequation vbrequires vbthat vbliabilities vbbe vbequal vbto
vbstockholders’ vbequity.
d) vbThe vbamount vbof vba vbcompany's vbliabilities vbis vbequal vbto vbthe
vbdifference vbbetween vbits vbassets vband vbits vbstockholders’ vbequity.
e) vbLiabilities vbare vbreported vbon vbthe vbstatement vbof vbcash vbflows vbof vba
vbbusiness.
,4) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout vbretained
vbearnings vbis vbtrue vbor vbfalse.
a) vbA vbdividend vbpaid vbto vbstockholders vbdecreases vbretained vbearnings.
b) vbIssuing vbcommon vbstock vbfor vbcash vbincreases vbretained vbearnings.
c) vbThe vbamount vbof vbnet vbincome vbfor vba vbperiod vbmust vbequal vbretained
vbearnings.
d) vbThe vbpurchase vbof vba vbtruck vbdecreases vbretained vbearnings.
e) vbNet vbincome vbincreases vbretained vbearnings.
5) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout vbthe vbtypes
vbof vbtransactions vbis vbtrue vbor vbfalse.
a) vbAn vbasset vbsource vbtransaction vbincreases vbtotal vbassets vband vbincreases
vbclaims vbto vbassets.
b) vbThe vbissuance vbof vbstock vbto vbowners vbfor vbcash vbwould
vbbe vban vbexample vbof vban vbasset vbexchange vbtransaction.
c) vbPurchasing vbequipment vbfor vbcash vbis vban vbexample vbof vban vbasset vbuse
vbtransaction.
d) vbPaying vba vbdividend vbto vbstockholders vbis vban vbexample vbof vban vbasset
vbuse vbtransaction.
e) vbMaking vba vbpayment vbon vba vbbank vbloan vbis vban vbexample vbof vban
vbasset vbexchange vbtransaction.
6) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout vbfinancial
vbstatements vbis vbtrue vbor vbfalse.
a) vbA vbcash vbdividend vbpaid vbto vbstockholders vbis vbreported vbin vbthe
vbinvesting vbactivities vbsection vbof vbthe vbstatement vbof vbcash vbflows.
b) vbA vbcash vbdividend vbpaid vbto vbstockholders vbis vbreported vbon vbthe
vbstatement vbof vbchanges vbin vbstockholders' vbequity.
c) vbA vbcash vbdividend vbpaid vbto vbstockholders vbis vbreported vbon vbthe
vbincome vbstatement.
d) vbThe vbbalance vbsheet vbreports vbthe vbending vbbalances vbof vbpermanent
vbaccounts vbas vbof vbthe vblast vbday vbof vbthe vbaccounting vbperiod.
e) vbChanges vbin vbretained vbearnings vbduring vbthe vbaccounting vbperiod
vbare vbreported vbon vbthe vbincome vbstatement.
, 7) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout
vbstockholders’ vbequity vbis vbtrue vbor vbfalse.
a) vbExpenses vbdecrease vbretained vbearnings.
b) vbStockholders' vbequity vband vbliabilities vbcan vbbe vbviewed vbeither
vbas vbsources vbof vbassets vbor vbclaims vbto vbassets vbof vbthe vbbusiness.
c) vbRetained vbearnings vbis vbincreased vbby vbloans vbreceived vbfrom vba vbbank.
d) vbDividends vbpaid vbto vbstockholders vbdecrease vbcommon vbstock.
e) vbGenerally, vbassets vbare vbreported vbat vbthe vbactual vbprice vbpaid
vbfor vbthem vbwhen vbpurchased vbregardless vbof vbsubsequent vbchanges vbin
vbmarket vbvalue.
8) Jessup vbCompany vbwas vbfounded vbin vbYear vb1. vbIt vbacquired vb$45,000
vbcash vbby vbissuing vbstock vbto vbinvestors vband vban vbadditional vb$15,000 vbcash
vbby vbborrowing vbfrom vbcreditors. vbDuring vbYear vb1 vbit vbreceived
$25,000 vbcash vbrevenues vband vbpaid vb$32,000 vbin vbcash vbexpenses. vbThe
vbcompany vbthen vbwent vbout vbof vbbusiness.
Required:
a) Explain vbthe vbterm, vb"business vbliquidation."
b) What vbamount vbof vbcash vbshould vbJessup vbCompany vbhave vbhad vbon vbhand
vbimmediately vbbefore vbgoing vbout vbof vbbusiness?
c) What vbamount vbof vbcash vbwill vbJessup's vbcreditors vbreceive?
d) What vbamount vbof vbcash vbwill vbJessup's vbstockholders vbreceive?
9) Bates vbCompany vbentered vbinto vbthe vbfollowing vbtransactions vbduring vbits
vbfirst vbyear vbin vbbusiness. vbAssume vbthat vball vbtransactions vbinvolve vbthe
vbreceipt vbor vbpayment vbof vbcash.
1) Issued vbcommon vbstock vbto vbinvestors vbfor vb$25,000 vbcash.
2) Borrowed vb$18,000 vbfrom vbthe vblocal vbbank.
3) Provided vbservices vbto vbcustomers vbfor vb$28,000.
4) Paid vbexpenses vbamounting vbto vb$21,400.
5) Purchased vba vbplot vbof vbland vbcosting vb$22,000.
6) Paid vba vbdividend vbof vb$15,000 vbto vbits vbstockholders.
7) Repaid vb$12,000 vbof vbthe vbloan vblisted vbin vbitem vb2.
Required:
(a) Fill vbin vbthe vbthree vbcolumn vbheadings vbof vbthe vbaccounting vbequation vbin
vbthe vbfirst vbrow vbof vbthe vbtable vbshown vbbelow.
(b) Show vbthe vbeffects vbof vbthe vbabove vbtransactions vbon vbthe vbaccounting vbequation.
vbAccounting vbConcepts
11th vbEdition
by
vbThom
as
vbEdmo
nds,
vbPhilip
vbOlds,
vbChrist
opher
vbEdmo
nds
,Student vbname:
1) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout vbmarkets vbis
vbtrue vbor vbfalse.
a) vbFinancial vbresources vbcan vbbe vbprovided vbto vba vbbusiness vbby vbinvestors.
b) vbResource vbowners vbare vbthe vbbusinesses vbthat vbtransform
vbresources vbinto vbproducts vbthat vbsatisfy vbconsumer vbdesires.
c) vbLabor vbresources vbinclude vbboth vbthe vbphysical vband vbintellectual
vblabor vbof vba vbbusiness's vbemployees.
d) vbBusinesses vbpurchase vbtheir vbresources vbfrom vbresource vbowners.
e) vbConsumers vbare vbthe vbmain vbproviders vbof vbresources vbin vbany vbmarket.
2) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout vbaccounting
vbinformation vbis vbtrue vbor vbfalse.
a) vbFinancial vbaccounting vbis vbprimarily vbintended vbto vbsatisfy vbthe
vbinformation vbneeds vbof vbinternal vbstakeholders.
b) vbManagerial vbaccounting vbinformation vbincludes vbfinancial
vband vbnonfinancial vbinformation.
c) vbThe vbaccounting vbinformation vbintended vbto vbsatisfy vbthe
vbneeds vbof vba vbcompany's vbemployees vbis vbmanagerial vbaccounting
vbinformation.
d) vbGAAP vbrequires vbthat vbcompanies vbadhere vbto vbfinancial vbaccounting
vbstandards.
e) vbManagerial vbaccounting vbinformation vbis vbusually vbless
vbdetailed vbthan vbfinancial vbaccounting vbinformation.
3) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout vbliabilities vbis
vbtrue vbor vbfalse.
a) vbA vbnet vbloss vbon vbthe vbincome vbstatement vbdecreases vbliabilities.
b) vbThe vbacquisition vbof vba vbbank vbloan vbincreases vbboth vbassets vband
vbliabilities.
c) vbThe vbaccounting vbequation vbrequires vbthat vbliabilities vbbe vbequal vbto
vbstockholders’ vbequity.
d) vbThe vbamount vbof vba vbcompany's vbliabilities vbis vbequal vbto vbthe
vbdifference vbbetween vbits vbassets vband vbits vbstockholders’ vbequity.
e) vbLiabilities vbare vbreported vbon vbthe vbstatement vbof vbcash vbflows vbof vba
vbbusiness.
,4) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout vbretained
vbearnings vbis vbtrue vbor vbfalse.
a) vbA vbdividend vbpaid vbto vbstockholders vbdecreases vbretained vbearnings.
b) vbIssuing vbcommon vbstock vbfor vbcash vbincreases vbretained vbearnings.
c) vbThe vbamount vbof vbnet vbincome vbfor vba vbperiod vbmust vbequal vbretained
vbearnings.
d) vbThe vbpurchase vbof vba vbtruck vbdecreases vbretained vbearnings.
e) vbNet vbincome vbincreases vbretained vbearnings.
5) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout vbthe vbtypes
vbof vbtransactions vbis vbtrue vbor vbfalse.
a) vbAn vbasset vbsource vbtransaction vbincreases vbtotal vbassets vband vbincreases
vbclaims vbto vbassets.
b) vbThe vbissuance vbof vbstock vbto vbowners vbfor vbcash vbwould
vbbe vban vbexample vbof vban vbasset vbexchange vbtransaction.
c) vbPurchasing vbequipment vbfor vbcash vbis vban vbexample vbof vban vbasset vbuse
vbtransaction.
d) vbPaying vba vbdividend vbto vbstockholders vbis vban vbexample vbof vban vbasset
vbuse vbtransaction.
e) vbMaking vba vbpayment vbon vba vbbank vbloan vbis vban vbexample vbof vban
vbasset vbexchange vbtransaction.
6) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout vbfinancial
vbstatements vbis vbtrue vbor vbfalse.
a) vbA vbcash vbdividend vbpaid vbto vbstockholders vbis vbreported vbin vbthe
vbinvesting vbactivities vbsection vbof vbthe vbstatement vbof vbcash vbflows.
b) vbA vbcash vbdividend vbpaid vbto vbstockholders vbis vbreported vbon vbthe
vbstatement vbof vbchanges vbin vbstockholders' vbequity.
c) vbA vbcash vbdividend vbpaid vbto vbstockholders vbis vbreported vbon vbthe
vbincome vbstatement.
d) vbThe vbbalance vbsheet vbreports vbthe vbending vbbalances vbof vbpermanent
vbaccounts vbas vbof vbthe vblast vbday vbof vbthe vbaccounting vbperiod.
e) vbChanges vbin vbretained vbearnings vbduring vbthe vbaccounting vbperiod
vbare vbreported vbon vbthe vbincome vbstatement.
, 7) Indicate vbwhether vbeach vbof vbthe vbfollowing vbstatements vbabout
vbstockholders’ vbequity vbis vbtrue vbor vbfalse.
a) vbExpenses vbdecrease vbretained vbearnings.
b) vbStockholders' vbequity vband vbliabilities vbcan vbbe vbviewed vbeither
vbas vbsources vbof vbassets vbor vbclaims vbto vbassets vbof vbthe vbbusiness.
c) vbRetained vbearnings vbis vbincreased vbby vbloans vbreceived vbfrom vba vbbank.
d) vbDividends vbpaid vbto vbstockholders vbdecrease vbcommon vbstock.
e) vbGenerally, vbassets vbare vbreported vbat vbthe vbactual vbprice vbpaid
vbfor vbthem vbwhen vbpurchased vbregardless vbof vbsubsequent vbchanges vbin
vbmarket vbvalue.
8) Jessup vbCompany vbwas vbfounded vbin vbYear vb1. vbIt vbacquired vb$45,000
vbcash vbby vbissuing vbstock vbto vbinvestors vband vban vbadditional vb$15,000 vbcash
vbby vbborrowing vbfrom vbcreditors. vbDuring vbYear vb1 vbit vbreceived
$25,000 vbcash vbrevenues vband vbpaid vb$32,000 vbin vbcash vbexpenses. vbThe
vbcompany vbthen vbwent vbout vbof vbbusiness.
Required:
a) Explain vbthe vbterm, vb"business vbliquidation."
b) What vbamount vbof vbcash vbshould vbJessup vbCompany vbhave vbhad vbon vbhand
vbimmediately vbbefore vbgoing vbout vbof vbbusiness?
c) What vbamount vbof vbcash vbwill vbJessup's vbcreditors vbreceive?
d) What vbamount vbof vbcash vbwill vbJessup's vbstockholders vbreceive?
9) Bates vbCompany vbentered vbinto vbthe vbfollowing vbtransactions vbduring vbits
vbfirst vbyear vbin vbbusiness. vbAssume vbthat vball vbtransactions vbinvolve vbthe
vbreceipt vbor vbpayment vbof vbcash.
1) Issued vbcommon vbstock vbto vbinvestors vbfor vb$25,000 vbcash.
2) Borrowed vb$18,000 vbfrom vbthe vblocal vbbank.
3) Provided vbservices vbto vbcustomers vbfor vb$28,000.
4) Paid vbexpenses vbamounting vbto vb$21,400.
5) Purchased vba vbplot vbof vbland vbcosting vb$22,000.
6) Paid vba vbdividend vbof vb$15,000 vbto vbits vbstockholders.
7) Repaid vb$12,000 vbof vbthe vbloan vblisted vbin vbitem vb2.
Required:
(a) Fill vbin vbthe vbthree vbcolumn vbheadings vbof vbthe vbaccounting vbequation vbin
vbthe vbfirst vbrow vbof vbthe vbtable vbshown vbbelow.
(b) Show vbthe vbeffects vbof vbthe vbabove vbtransactions vbon vbthe vbaccounting vbequation.
