Solutions Manual For Financial Accounting 10th Edition By
Robert Libby 9781259964947 ALL Chapters .
Which financial statement is prepared as of a specific date?
A) Income Statement
B) Balance sheet
C) Statement of Cash Flows
D) None - ANSWER: Balance sheet
Internal users of financial accounting information include all of the following EXCEPT
A) Chief Financial Officer
B) Chief Executive Officer
C) Investors
D) Managers - ANSWER: Managers
The general-purpose financial statements prepared annually by a corporation would NOT include the
A) Balance Sheet
B) Income Tax Return
C) Income Statement
D) Statement of Cash Flows - ANSWER: Income Tax Return
It is the function of management accounting to perform the following activities, EXCEPT
A) create financial forecasts
B) perform cost accounting
C) complete internal audits
D) audit financial statements - ANSWER: Audit financial statements
Financial accounting information is
A) submitted to the IRS in lieu of a tax form
B) designed to assist investors and creditors
C) called "special-purpose" accounting information
D) not applicable to individuals - ANSWER: Designed to assist investors and creditors
Audits of financial statements are performed by
A) the controller of the reporting company
B) the Financial Accounting Standards Board (FASB)
C) the management of the reporting company
D) independent certified public accountants (CPAs) - ANSWER: Independent Certified Public
Accountants
The FASB's conceptual framework
A) is not recognized by the Securities and Exchange Commission
B) has been superseded by generally accepted accounting principles
C) explains and guides the future development of accounting standards
D) sets forth the accounting standards referred to as generally accepted accounting principles -
ANSWER: explains and guides the future development of accounting standards
The body created by the Sarbanes Oxley Act and charged with oversight of the accounting profession
is the
A) Public Company Accounting Oversight Board
B) Auditing Standards Board
C) International Accounting Standards Board
D) Securities and Exchange Commission - ANSWER: Public Company Accounting Oversight Board
The basic purpose of an audit is to
,A) assure outsiders that financial statements are prepared in conformity with generally accepted
accounting principles (GAAP)
B) provide as much useful information to decision makers as possible, regardless of cost
C) record changes in the financial position of an organization by applying the concepts of double entry
accounting
D) meet an organization's need for accounting information as efficiently as possible - ANSWER: assure
outsiders that financial statements are prepared in conformity with generally accepted accounting
principles (GAAP)
Publicly owned companies are those whose ownership shares are
A) bought and sold through stock exchanges or over-the-counter markets
B) bought and sold by public banks
C) owned by other publicly owned companies
D) owned by foreign corporations - ANSWER: bought and sold through stock exchanges or over-the-
counter markets
Each year, the accountant for Southern Real Estate Company adjusts the recorded value of each asset
to its market value. Using these market value figures on the balance sheet violates the
A) accounting equation
B) stable-dollar assumption
C) business entity concept
D) cost principle - ANSWER: Cost principle
The accounting principle that assumes that a company will operate in the foreseeable future is
A) going concern
B) objectivity
C) liquidity
D) disclosure - ANSWER: going concern
Blue Wholesale Shirt Company sold shirts to Pink Retail Shoppe. The owner of Pink Retail said she
would pay Blue at a later date, which Blue Wholesale agreed to. Blue Wholesale Shirt Company is
considered to be a
A) borrower
B) liability
C) creditor
D) debtor - ANSWER: Creditor
What does a balance sheet do?
A) Provides owners, investors, and other interested parties with all the financial information they
need to evaluate the financial strength, profitability, and future prospects of a given business entity
B) Shows the current market value of the owners' equity in the business at the balance sheet date
C) Assists creditors in evaluating the debt-paying ability of a business by showing the assets and
liabilities of the business, plus the assets and liabilities of its owner (or owners)
D) Shows the assets, liabilities, and owners' equity of a business entity, valued in conformity with
generally accepted accounting principles - ANSWER: Shows the assets, liabilities, and owners' equity
of a business entity, valued in conformity with generally accepted accounting principles
Which of the following is correct if at the end of Crystal Imports' first year of operations, Assets are
$800,000 and Owners' Equity is $720,000?
A) The owner(s) must have invested $800,000 to start the business.
B) The business must be operating profitably.
C) Liabilities are $80,000.
D) Liabilities are $1,520,000. - ANSWER: Liabilities are 80k
If total assets equal $270,000 and total liabilities equal $202,500, the total owners' equity must equal
A) $67,500
B) $270,000
, C) $472,500
D) cannot be determined from the information given - ANSWER: 270 - 202500 = 67500
An expense is best defined as
A) any payment of cash for the benefit of the company
B) past, present, or future payments of cash required to generate revenues
C) financial obligations of the company's owners
D) purchases of long-term assets to generate revenues - ANSWER: Past, present, or future payments
of cash required to generate revenues
If $9,600 cash and a $31,000 note payable are given in exchange for some office machines to be used
in a business
A) total assets are increased
B) total liabilities are decreased
C) total assets are decreased
D) the owners' equity is increased - ANSWER: total assets are increased
Which of the following will NOT cause a change in the owners' equity of a business?
A) Withdrawal of cash by the owner
B) Sale of land at a profit
C) Losses from unprofitable operations
D) Purchase of land with cash - ANSWER: Purchase of land with cash
Decreases in owners' equity are caused by
A) purchases of assets and payment of liabilities
B) purchases of assets and incurrence of liabilities
C) payment of liabilities and unprofitable operations
D) distributions of assets to the owners and unprofitable operations - ANSWER: distributions of assets
to the owners and unprofitable operations
Which of the following is considered a return "on" investment?
A) Dividends
B) Repayment of a loan
C) Purchase of an asset
D) Securing a loan - ANSWER: Dividends
Which of the following is NOT a characteristic of internal accounting information?
A) It is audited by a CPA.
B) It must be timely.
C) It is generally oriented toward the future
D) It measures efficiency and effectiveness. - ANSWER: It is audited by a CPA
Which financial statement is primarily concerned with reporting the financial position of a business at
a particular time?
A) Balance Sheet
B) Income Sheet
C) Statement of cash flows
D) Consolidated statement of stockholders' equity - ANSWER: Balance sheet
Generally accepted accounting principles are intended to assist accountants in preparing financial
statements that
A) comply with all income tax rules and regulations
B) show the business to be both solvent and profitable
C) are relevant, verifiable, comparable, and understandable
D) are ideally suited to the specific needs of each user of the financial statements - ANSWER: are
relevant, verifiable, comparable, and understandable
Robert Libby 9781259964947 ALL Chapters .
Which financial statement is prepared as of a specific date?
A) Income Statement
B) Balance sheet
C) Statement of Cash Flows
D) None - ANSWER: Balance sheet
Internal users of financial accounting information include all of the following EXCEPT
A) Chief Financial Officer
B) Chief Executive Officer
C) Investors
D) Managers - ANSWER: Managers
The general-purpose financial statements prepared annually by a corporation would NOT include the
A) Balance Sheet
B) Income Tax Return
C) Income Statement
D) Statement of Cash Flows - ANSWER: Income Tax Return
It is the function of management accounting to perform the following activities, EXCEPT
A) create financial forecasts
B) perform cost accounting
C) complete internal audits
D) audit financial statements - ANSWER: Audit financial statements
Financial accounting information is
A) submitted to the IRS in lieu of a tax form
B) designed to assist investors and creditors
C) called "special-purpose" accounting information
D) not applicable to individuals - ANSWER: Designed to assist investors and creditors
Audits of financial statements are performed by
A) the controller of the reporting company
B) the Financial Accounting Standards Board (FASB)
C) the management of the reporting company
D) independent certified public accountants (CPAs) - ANSWER: Independent Certified Public
Accountants
The FASB's conceptual framework
A) is not recognized by the Securities and Exchange Commission
B) has been superseded by generally accepted accounting principles
C) explains and guides the future development of accounting standards
D) sets forth the accounting standards referred to as generally accepted accounting principles -
ANSWER: explains and guides the future development of accounting standards
The body created by the Sarbanes Oxley Act and charged with oversight of the accounting profession
is the
A) Public Company Accounting Oversight Board
B) Auditing Standards Board
C) International Accounting Standards Board
D) Securities and Exchange Commission - ANSWER: Public Company Accounting Oversight Board
The basic purpose of an audit is to
,A) assure outsiders that financial statements are prepared in conformity with generally accepted
accounting principles (GAAP)
B) provide as much useful information to decision makers as possible, regardless of cost
C) record changes in the financial position of an organization by applying the concepts of double entry
accounting
D) meet an organization's need for accounting information as efficiently as possible - ANSWER: assure
outsiders that financial statements are prepared in conformity with generally accepted accounting
principles (GAAP)
Publicly owned companies are those whose ownership shares are
A) bought and sold through stock exchanges or over-the-counter markets
B) bought and sold by public banks
C) owned by other publicly owned companies
D) owned by foreign corporations - ANSWER: bought and sold through stock exchanges or over-the-
counter markets
Each year, the accountant for Southern Real Estate Company adjusts the recorded value of each asset
to its market value. Using these market value figures on the balance sheet violates the
A) accounting equation
B) stable-dollar assumption
C) business entity concept
D) cost principle - ANSWER: Cost principle
The accounting principle that assumes that a company will operate in the foreseeable future is
A) going concern
B) objectivity
C) liquidity
D) disclosure - ANSWER: going concern
Blue Wholesale Shirt Company sold shirts to Pink Retail Shoppe. The owner of Pink Retail said she
would pay Blue at a later date, which Blue Wholesale agreed to. Blue Wholesale Shirt Company is
considered to be a
A) borrower
B) liability
C) creditor
D) debtor - ANSWER: Creditor
What does a balance sheet do?
A) Provides owners, investors, and other interested parties with all the financial information they
need to evaluate the financial strength, profitability, and future prospects of a given business entity
B) Shows the current market value of the owners' equity in the business at the balance sheet date
C) Assists creditors in evaluating the debt-paying ability of a business by showing the assets and
liabilities of the business, plus the assets and liabilities of its owner (or owners)
D) Shows the assets, liabilities, and owners' equity of a business entity, valued in conformity with
generally accepted accounting principles - ANSWER: Shows the assets, liabilities, and owners' equity
of a business entity, valued in conformity with generally accepted accounting principles
Which of the following is correct if at the end of Crystal Imports' first year of operations, Assets are
$800,000 and Owners' Equity is $720,000?
A) The owner(s) must have invested $800,000 to start the business.
B) The business must be operating profitably.
C) Liabilities are $80,000.
D) Liabilities are $1,520,000. - ANSWER: Liabilities are 80k
If total assets equal $270,000 and total liabilities equal $202,500, the total owners' equity must equal
A) $67,500
B) $270,000
, C) $472,500
D) cannot be determined from the information given - ANSWER: 270 - 202500 = 67500
An expense is best defined as
A) any payment of cash for the benefit of the company
B) past, present, or future payments of cash required to generate revenues
C) financial obligations of the company's owners
D) purchases of long-term assets to generate revenues - ANSWER: Past, present, or future payments
of cash required to generate revenues
If $9,600 cash and a $31,000 note payable are given in exchange for some office machines to be used
in a business
A) total assets are increased
B) total liabilities are decreased
C) total assets are decreased
D) the owners' equity is increased - ANSWER: total assets are increased
Which of the following will NOT cause a change in the owners' equity of a business?
A) Withdrawal of cash by the owner
B) Sale of land at a profit
C) Losses from unprofitable operations
D) Purchase of land with cash - ANSWER: Purchase of land with cash
Decreases in owners' equity are caused by
A) purchases of assets and payment of liabilities
B) purchases of assets and incurrence of liabilities
C) payment of liabilities and unprofitable operations
D) distributions of assets to the owners and unprofitable operations - ANSWER: distributions of assets
to the owners and unprofitable operations
Which of the following is considered a return "on" investment?
A) Dividends
B) Repayment of a loan
C) Purchase of an asset
D) Securing a loan - ANSWER: Dividends
Which of the following is NOT a characteristic of internal accounting information?
A) It is audited by a CPA.
B) It must be timely.
C) It is generally oriented toward the future
D) It measures efficiency and effectiveness. - ANSWER: It is audited by a CPA
Which financial statement is primarily concerned with reporting the financial position of a business at
a particular time?
A) Balance Sheet
B) Income Sheet
C) Statement of cash flows
D) Consolidated statement of stockholders' equity - ANSWER: Balance sheet
Generally accepted accounting principles are intended to assist accountants in preparing financial
statements that
A) comply with all income tax rules and regulations
B) show the business to be both solvent and profitable
C) are relevant, verifiable, comparable, and understandable
D) are ideally suited to the specific needs of each user of the financial statements - ANSWER: are
relevant, verifiable, comparable, and understandable
