TEST BANK FOR
#z #z
Fundamentals of Financial Accounting, 8th Edition by Fred Phillips
#z #z #z #z #z #z #z #z
✅
Chapter 01 8e Phillips
#z #z #z Answers Included
#z
1) Creditors #zare #zowners #zof #za
corporation.
#z
⊚ # z true
⊚ # z false
2) All #zcorporations #zacquire #zfinancing #zby #zissuing #zstock #zon #zpublic #zstock #zexchanges.
⊚ # z true
⊚ # z false
3) You #zpaid #z$10,000 #zto #zbuy #z1% #zof #zthe #zstock #zin #za #zcorporation #zthat #zis #znow #zbankrupt. #zThe
#zcompany #zowes #z$10 #zmillion #zdollars #zto #zits #zcreditors. #zAs #za #zresult #zof #zthe #zbankruptcy,
#z you #zare #zresponsible #zfor #zpaying #z$100,000 #z(or #z$10 #zmillion #z× #z1%) #zof #zthe #zamount #zowed
#zto #zthe #zcreditors.
⊚ # z true
⊚ # z false
4) Cash #zpaid #zfor #zwages #zis #zan #zexample #zof #zan #zoperating #zactivity #zon #zthe #zstatement #zof #zcash
#z flows.
⊚ # z true
⊚ # z false
5) Borrowing #zmoney #zfrom #za #zbank #zis #za #zfinancing #zactivity #zon #zthe #zstatement #zof #zcash #zflows.
⊚ # z true
⊚ # z false
6) The #zdaily #zbusiness #zactivities #zinvolved #zin #zrunning #za #zbusiness, #zsuch #zas #zbuying
#zsupplies #zand #zpaying #zsalaries #zand #zwages, #zare #zclassified #zas #zoperating #zactivities #zon
#zthe #zstatement #zof #zcash #zflows.
⊚ # z true
⊚ # z false
7) Stockholders' #zequity #zis #zthe #zdifference #zbetween #za #zcompany's #zassets #zand #zits #zliabilities.
⊚ # z true
⊚ # z false
,8) A #zcompany #zowes #z$200,000 #zon #za #zbank #zloan. #zIt #zwill #zbe #zreported #zby #zthe #zcompany #zas
#z Accounts #zPayable.
⊚ # z true
⊚ # z false
9) The #zamounts #zreported #zon #zfinancial #zstatements #zare #zsometimes #zrounded #zto #zthe #znearest
thousand #zor #zmillion.
#z
⊚ # z true
⊚ # z false
10) Accounts #zPayable, #zNotes #zPayable, #zand #zSalaries #zand #zWages #zPayable #zare
examples #zof #zliabilities.
#z
⊚ # z true
⊚ # z false
11) Dividends #zare #zsubtracted #zfrom #zrevenues #zon #zthe #zincome #zstatement.
⊚ # z true
⊚ # z false
12) If #za #zcompany #zreports #znet #zincome #zon #zthe #zincome #zstatement, #zthen #zthe #zstatement #zof
#zcash #zflows #zwill #zreport #zthe #zsame #zamount #zas #zcash #zflows #zfrom #zoperating #zactivities
#zfor #zthe #zperiod.
⊚ # z true
⊚ # z false
13) Revenue #zis #zreported #zon #zthe #zincome #zstatement #zonly #zif #zcash #zwas #zreceived #zat #zthe #zpoint #zof
#z sale.
⊚ # z true
⊚ # z false
14) Generally #zAccepted #zAccounting #zPrinciples #z(GAAP) #zrequire #zprofitable
⊚
# z false
, companies #zto #zdistribute #zsome #zof #ztheir #zearnings #zto #ztheir #zstockholders.
#z
⊚ # z true
15) Common #zStock #zis #zreported #zas #zan #zasset #zon #zthe #zbalance #zsheet.
⊚ # z true
⊚ # z false
16) Investors #zare #zmainly #zinterested #zin #zthe #zprofitability #zof #za #zcompany.
⊚ # z true
⊚ # z false
17) A #zstock #zthat #zdoes #znot #zpay #za #zdividend #zis #zan #zundesirable #zinvestment.
⊚ # z true
⊚ # z false
18) To #zensure #zthat #zcompanies #zproduce #zuseful #zinformation, #zit #zmust #zhave #ztwo
fundamental #zcharacteristics: #zreliability #zand #zunderstandability.
#z
⊚ # z true
⊚ # z false
19) The #zSecurities #zand #zExchange #zCommission #z(SEC) #zis #zthe #zgovernment #zagency #zthat #zhas
primary #zresponsibility #zfor #zsetting #zaccounting #zstandards #zin #zthe #zU.S.
#z
⊚ # z true
⊚ # z false
20) The #zSarbanes-Oxley #zAct #z(SOX) #zrequires #ztop #zmanagement #zof #zcompanies #zto #zsign #za
report #zcertifying #zthat #zthe #zfinancial #zstatements #zare #zfree #zof #zerror.
#z
⊚ # z true
⊚ # z false
21) Companies #zmust #zuse #za #zDecember #z31st #zyear-end #zfor #zall #zfinancial #zstatements.
⊚ # z true
⊚
# z false
, 22) Public corporations are businesses:
A) owned by two or more people, each of whom is personally liable for the debts of the
business.
B) whose stock is bought and sold on a stock exchange.
C) whose stock is bought and sold privately.
D) where stock is not used as evidence of ownership.
23) The owner(s) of a business are not taxed on the profits of the business if the business is a:
A) sole proprietorship.
B) partnership.
C) corporation.
D) public partnership.
24) Which of the following is typically considered a disadvantage of sole proprietorships?
A) Income taxes are paid by both the business and its owner.
B) The business is considered a separate legal entity from its owner.
C) Establishing the business usually requires legal assistance.
D) Owner is personally liable for all debts of the business.
25) Considering the targeted audience for financial accounting reports, which of the following
parties is not an external user?
A) Directors of the company issuing the reports
B) Creditors of the company issuing the reports
C) Managers of the company issuing the reports
D) Stockholders of the company issuing the reports
26) Accounting systems:
A) are summarized in publicly published reports.
B) analyze, record, and summarize the activities affecting its financial condition and
performance.
C) monitor business activities only in financial terms.
D) capture only the information that is needed by the owners of the company.
⊚
# z false
#z #z
Fundamentals of Financial Accounting, 8th Edition by Fred Phillips
#z #z #z #z #z #z #z #z
✅
Chapter 01 8e Phillips
#z #z #z Answers Included
#z
1) Creditors #zare #zowners #zof #za
corporation.
#z
⊚ # z true
⊚ # z false
2) All #zcorporations #zacquire #zfinancing #zby #zissuing #zstock #zon #zpublic #zstock #zexchanges.
⊚ # z true
⊚ # z false
3) You #zpaid #z$10,000 #zto #zbuy #z1% #zof #zthe #zstock #zin #za #zcorporation #zthat #zis #znow #zbankrupt. #zThe
#zcompany #zowes #z$10 #zmillion #zdollars #zto #zits #zcreditors. #zAs #za #zresult #zof #zthe #zbankruptcy,
#z you #zare #zresponsible #zfor #zpaying #z$100,000 #z(or #z$10 #zmillion #z× #z1%) #zof #zthe #zamount #zowed
#zto #zthe #zcreditors.
⊚ # z true
⊚ # z false
4) Cash #zpaid #zfor #zwages #zis #zan #zexample #zof #zan #zoperating #zactivity #zon #zthe #zstatement #zof #zcash
#z flows.
⊚ # z true
⊚ # z false
5) Borrowing #zmoney #zfrom #za #zbank #zis #za #zfinancing #zactivity #zon #zthe #zstatement #zof #zcash #zflows.
⊚ # z true
⊚ # z false
6) The #zdaily #zbusiness #zactivities #zinvolved #zin #zrunning #za #zbusiness, #zsuch #zas #zbuying
#zsupplies #zand #zpaying #zsalaries #zand #zwages, #zare #zclassified #zas #zoperating #zactivities #zon
#zthe #zstatement #zof #zcash #zflows.
⊚ # z true
⊚ # z false
7) Stockholders' #zequity #zis #zthe #zdifference #zbetween #za #zcompany's #zassets #zand #zits #zliabilities.
⊚ # z true
⊚ # z false
,8) A #zcompany #zowes #z$200,000 #zon #za #zbank #zloan. #zIt #zwill #zbe #zreported #zby #zthe #zcompany #zas
#z Accounts #zPayable.
⊚ # z true
⊚ # z false
9) The #zamounts #zreported #zon #zfinancial #zstatements #zare #zsometimes #zrounded #zto #zthe #znearest
thousand #zor #zmillion.
#z
⊚ # z true
⊚ # z false
10) Accounts #zPayable, #zNotes #zPayable, #zand #zSalaries #zand #zWages #zPayable #zare
examples #zof #zliabilities.
#z
⊚ # z true
⊚ # z false
11) Dividends #zare #zsubtracted #zfrom #zrevenues #zon #zthe #zincome #zstatement.
⊚ # z true
⊚ # z false
12) If #za #zcompany #zreports #znet #zincome #zon #zthe #zincome #zstatement, #zthen #zthe #zstatement #zof
#zcash #zflows #zwill #zreport #zthe #zsame #zamount #zas #zcash #zflows #zfrom #zoperating #zactivities
#zfor #zthe #zperiod.
⊚ # z true
⊚ # z false
13) Revenue #zis #zreported #zon #zthe #zincome #zstatement #zonly #zif #zcash #zwas #zreceived #zat #zthe #zpoint #zof
#z sale.
⊚ # z true
⊚ # z false
14) Generally #zAccepted #zAccounting #zPrinciples #z(GAAP) #zrequire #zprofitable
⊚
# z false
, companies #zto #zdistribute #zsome #zof #ztheir #zearnings #zto #ztheir #zstockholders.
#z
⊚ # z true
15) Common #zStock #zis #zreported #zas #zan #zasset #zon #zthe #zbalance #zsheet.
⊚ # z true
⊚ # z false
16) Investors #zare #zmainly #zinterested #zin #zthe #zprofitability #zof #za #zcompany.
⊚ # z true
⊚ # z false
17) A #zstock #zthat #zdoes #znot #zpay #za #zdividend #zis #zan #zundesirable #zinvestment.
⊚ # z true
⊚ # z false
18) To #zensure #zthat #zcompanies #zproduce #zuseful #zinformation, #zit #zmust #zhave #ztwo
fundamental #zcharacteristics: #zreliability #zand #zunderstandability.
#z
⊚ # z true
⊚ # z false
19) The #zSecurities #zand #zExchange #zCommission #z(SEC) #zis #zthe #zgovernment #zagency #zthat #zhas
primary #zresponsibility #zfor #zsetting #zaccounting #zstandards #zin #zthe #zU.S.
#z
⊚ # z true
⊚ # z false
20) The #zSarbanes-Oxley #zAct #z(SOX) #zrequires #ztop #zmanagement #zof #zcompanies #zto #zsign #za
report #zcertifying #zthat #zthe #zfinancial #zstatements #zare #zfree #zof #zerror.
#z
⊚ # z true
⊚ # z false
21) Companies #zmust #zuse #za #zDecember #z31st #zyear-end #zfor #zall #zfinancial #zstatements.
⊚ # z true
⊚
# z false
, 22) Public corporations are businesses:
A) owned by two or more people, each of whom is personally liable for the debts of the
business.
B) whose stock is bought and sold on a stock exchange.
C) whose stock is bought and sold privately.
D) where stock is not used as evidence of ownership.
23) The owner(s) of a business are not taxed on the profits of the business if the business is a:
A) sole proprietorship.
B) partnership.
C) corporation.
D) public partnership.
24) Which of the following is typically considered a disadvantage of sole proprietorships?
A) Income taxes are paid by both the business and its owner.
B) The business is considered a separate legal entity from its owner.
C) Establishing the business usually requires legal assistance.
D) Owner is personally liable for all debts of the business.
25) Considering the targeted audience for financial accounting reports, which of the following
parties is not an external user?
A) Directors of the company issuing the reports
B) Creditors of the company issuing the reports
C) Managers of the company issuing the reports
D) Stockholders of the company issuing the reports
26) Accounting systems:
A) are summarized in publicly published reports.
B) analyze, record, and summarize the activities affecting its financial condition and
performance.
C) monitor business activities only in financial terms.
D) capture only the information that is needed by the owners of the company.
⊚
# z false
