@PROFDOCDIGITALLIBRARIES
TEST BANK
Financial Accounting for Managers 1st Edition by Wayne Thomas, David
Spiceland and Mark Nelson
SO
LU
TI
O
N
Answers at the end of each chapter
Chapter 1 Version 1
S
Student name:
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Accounting is a system of maintaining records of a company's operations and
communicating that information to decision makers.
⊚ true
⊚ false
2) Accounting information is used by investors to decide whether to invest in a company's
stock.
,@PROFDOCDIGITALLIBRARIES
⊚ true
⊚ false
3) Accounting information is used by creditors to decide whether to invest in a company's
stock.
⊚ true
⊚ false
SO
4) The primary functions of financial accounting are to measure business activities of a
company and to communicate those measurements to internal parties for decision-making
purposes.
⊚ true
⊚ false
LU
TI
O
N
S
,@PROFDOCDIGITALLIBRARIES
5) Financing activities include transactions the company has with investors and creditors.
⊚ true
⊚ false
6) Investing activities include transactions involving the purchase and sale of resources that
are expected to benefit the company for several years.
⊚ true
⊚ false
SO
7) Operating activities include transactions that relate to the primary operations of the
company, such as providing products and services to customers and the associated costs.
⊚ true
⊚ false
LU
8) A corporation is an entity that is legally separate from its owners.
⊚ true
⊚ false
TI
9) Cash, inventory for sale to customers, supplies, and buildings are examples of liabilities.
⊚ true
O
⊚ false
N
10) Amounts owed to suppliers, employees, the government in the form of taxes, and utility
companies are examples of liabilities.
S
⊚ true
⊚ false
11) If total assets of a company equal $12,000 and total stockholders' equity equals $4,000,
then total liabilities equal $8,000.
⊚ true
⊚ false
, @PROFDOCDIGITALLIBRARIES
12) If total liabilities of a company equal $16,000 and total stockholders' equity equals
$9,000, then total assets equal $7,000.
⊚ true
⊚ false
13) The accounting equation shows that a company's total resources equal creditors' and
owners' claims to those resources.
⊚ true
⊚ false
SO
14) The costs related to rent, utilities, and salaries in the current reporting period are
examples of liabilities.
⊚ true
⊚ false
LU
15) The difference between revenues and expenses is referred to as net income or net loss.
⊚ true
⊚ false
TI
16) If a company reports revenues of $17,000 and expenses of $12,000, then net income
O
equals $5,000.
⊚ true
⊚ false
N
S
17) Expenses include a company’s costs of providing products and services to customers, as
well as cash payments to its stockholders.
⊚ true
⊚ false
18) Dividends represent a return of the company's profits to its owners, the stockholders.
⊚ true
⊚ false
TEST BANK
Financial Accounting for Managers 1st Edition by Wayne Thomas, David
Spiceland and Mark Nelson
SO
LU
TI
O
N
Answers at the end of each chapter
Chapter 1 Version 1
S
Student name:
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Accounting is a system of maintaining records of a company's operations and
communicating that information to decision makers.
⊚ true
⊚ false
2) Accounting information is used by investors to decide whether to invest in a company's
stock.
,@PROFDOCDIGITALLIBRARIES
⊚ true
⊚ false
3) Accounting information is used by creditors to decide whether to invest in a company's
stock.
⊚ true
⊚ false
SO
4) The primary functions of financial accounting are to measure business activities of a
company and to communicate those measurements to internal parties for decision-making
purposes.
⊚ true
⊚ false
LU
TI
O
N
S
,@PROFDOCDIGITALLIBRARIES
5) Financing activities include transactions the company has with investors and creditors.
⊚ true
⊚ false
6) Investing activities include transactions involving the purchase and sale of resources that
are expected to benefit the company for several years.
⊚ true
⊚ false
SO
7) Operating activities include transactions that relate to the primary operations of the
company, such as providing products and services to customers and the associated costs.
⊚ true
⊚ false
LU
8) A corporation is an entity that is legally separate from its owners.
⊚ true
⊚ false
TI
9) Cash, inventory for sale to customers, supplies, and buildings are examples of liabilities.
⊚ true
O
⊚ false
N
10) Amounts owed to suppliers, employees, the government in the form of taxes, and utility
companies are examples of liabilities.
S
⊚ true
⊚ false
11) If total assets of a company equal $12,000 and total stockholders' equity equals $4,000,
then total liabilities equal $8,000.
⊚ true
⊚ false
, @PROFDOCDIGITALLIBRARIES
12) If total liabilities of a company equal $16,000 and total stockholders' equity equals
$9,000, then total assets equal $7,000.
⊚ true
⊚ false
13) The accounting equation shows that a company's total resources equal creditors' and
owners' claims to those resources.
⊚ true
⊚ false
SO
14) The costs related to rent, utilities, and salaries in the current reporting period are
examples of liabilities.
⊚ true
⊚ false
LU
15) The difference between revenues and expenses is referred to as net income or net loss.
⊚ true
⊚ false
TI
16) If a company reports revenues of $17,000 and expenses of $12,000, then net income
O
equals $5,000.
⊚ true
⊚ false
N
S
17) Expenses include a company’s costs of providing products and services to customers, as
well as cash payments to its stockholders.
⊚ true
⊚ false
18) Dividends represent a return of the company's profits to its owners, the stockholders.
⊚ true
⊚ false
