Test bank for financial accounting 17th edition williams full chapter

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Chapter 02 Basic Financial Statements
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1) Thensalenofnadditionalnsharesnofncapitalnstocknwillncausenretainednearningsntonincrease.
A) True
B) False

2) Anbusinessnentitynisnregardednasnseparatenfromnthenpersonalnactivitiesnofnitsnownersnwhethernitnisnansolenp
roprietorship,nanpartnership,nornancorporation.
A) True
B) False

3) Assetsnneednnotnalwaysnhavenphysicalncharacteristicsnasndonbuildings,nmachinery,norninventory.
A) True
B) False

4) Thengoingnconcernnprinciplenassumesnthatnthenbusinessnwillncontinuenindefinitely.
A) True
B) False

5) Notesnpayablenandnaccountsnpayablenbothnrequirenancompanyntonpaynannamountnowednbynancertainndate.n
Notesnpayablengenerallynhaveninterest,nwhilenaccountsnpayablengenerallyndonnot.
A) True
B) False

6) Anynbusinessneventnthatnmightnaffectnthenfuturenprofitabilitynofnanbusinessnshouldnbenreportedninnitsnbalancens
heet.
A) True
B) False

7) Thenpracticenofnshowingnassetsnonnthenbalancensheetnatntheirncost,nrathernthannatntheirncurrentnmarketnvaluenis
nexplained,ninnpart,nbynthenfactnthatncostnisnsupportednbynobjectivenevidencenthatncannbenverifiednbynindependen

tnexperts.
A) True
B) False

8) Liabilitiesnarenusuallynlistedninnordernofnmagnitude,nfromnsmallestndollarnamountntonlargestndollarnamount.
A) True
B) False

9) Thenentitynprinciplenstatesnthatnthenaffairsnofnthenownersnarennotnpartnofnthenfinancialnoperationsnofnanb
usinessnentitynandnshouldnbenseparated.
A) True
B) False

10) Thenaccountingnequationnmaynbenstatednasn"assetsnminusnliabilitiesnequalsnowners'nequity."
A) True
B) False

11) Totalnassetsnplusntotalnliabilitiesnmustnequalntotalnowners'nequity.
A) True

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B) False

12) Antransactionnthatncausesnannincreaseninnannassetnmaynalsoncausenandecreaseninnanothernasset,nannincreaseni
nnanliability,nornannincreaseninnowners'nequity.
A) True
B) False

13) Thencollectionnofnannaccountnreceivablenwillncausentotalnassetsntondecrease.
A) True
B) False

14) Thenpaymentnofnanliabilityncausesnannincreaseninnowners'nequity.
A) True
B) False

15) Whennanbusinessnborrowsnmoneynfromnanbank,nthenimmediateneffectnisnannincreaseninntotalnassetsnandnand
ecreaseninnliabilitiesnornowners'nequity.
A) True
B) False

16) Thenpurchasenofnannasset,nsuchnasnofficenequipment,nforncashnwillncausenowners'nequityntondecrease.
A) True
B) False

17) Totalnassetsnmustnalwaysnequalntotalnliabilitiesnplusntotalnowners'nequity.
A) True
B) False

18) Ifnancompanynpurchasesnequipmentnwithncash,nitsntotalnassetsnwillnincrease.
A) True
B) False

19) Ifnancompanynpurchasesnequipmentnbynissuingnannotenpayable,nitsntotalnassetsnwillnnotnchange.
A) True
B) False

20) Thenbalancensheetnshowsnassets,nliabilities,nandnequity,nasnannextensionnofnthenaccountingnequation.
A) True
B) False

21) Annetnprofitnresultsnfromnhavingnmorenrevenuesnthannliabilities.
A) True
B) False

22) Anstatementnofncashnflowsnreportsnrevenuenandnexpensenactivitiesnfornanspecificntimenperiodnsuchnasnonen
monthnornonenyear.
A) True
B) False

23) Itnisnnotnunusualnfornannentityntonreportnansignificantnincreaseninncashnfromnoperatingnactivities,nbutnand
ecreaseninnthentotalnamountnofncash.

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A) True
B) False

24) Thenstatementnofncashnflowsnprovidesnanlinknbetweenntwonbalancensheetsnbynshowingnhownnetnincomen(ornl
oss)nhasnchangednowners'nequitynfromnonenbalancensheetndatentonthennext.
A) True
B) False

25) Articulationnbetweennthenfinancialnstatementsnmeansnthatntheynrelatencloselyntoneachnothernonnthenbasisnofnt
hensamenunderlyingntransactionninformation.
A) True
B) False

26) Limitednliabilitynmeansnthatnownersnofnanbusinessnarenonlynliablenfornthendebtsnofnthenbusinessnupntonthena
mountsntheyncannafford.
A) True
B) False

27) Innanbusinessnorganizednasnancorporation,nitnisnnotnnecessaryntonlistnthenequitynofneachnstockholdernonnthenb
alancensheet.
A) True
B) False

28) Thenownernofnansolenproprietorshipnisnpersonallynliablenfornthendebtsnofnthenbusiness,nwhereasnthenst
ockholdersnofnancorporationnarennotnpersonallynliablenfornthendebtsnofnthenbusiness.
A) True
B) False

29) Windowndressingnoccursnwhennmanagementnattemptsntonmakenancompanynlooknfinanciallynstrongernthanni
tnactuallynis.
A) True
B) False

30) Decisionnmakersnoutsidenthenorganizationnbasentheirncreditndecisionsnonnweekly,nornevenndaily,nfinancialns
tatements.
A) True
B) False

31) Thenmajornoutgrowthnfromnbusinessnfailuresnandnallegationsnofnfraudulentnfinancialnreportingnduringnthen1
990snwasnthenpassagenofnthenSecuritiesnandnExchangenAct.
A) True
B) False

32) Whichnofnthenfollowingnisnthenprimarynobjectivenofnannincomenstatement?
A) Providingnmanagersnwithndetailedninformationnaboutnwherenthenenterprisenstandsnatnanspecificndate.
B) Providingnusersnoutsidenthenbusinessnorganizationnwithninformationnaboutnthencompany'snoperatingnresultsnf
ornanperiodnofntime.
C) ReportingntonthenInternalnRevenuenServicenthencompany'sntaxablenincome.
D) Indicatingntoninvestorsninnanparticularncompanynthencurrentnmarketnvaluesnofntheirninvestments.

33) Whichnofnthenfollowingndescribesnthenpropernformnofnanbalancensheet?

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