Test Bank for Fundamental Financial Accounting Concepts
o o o o o o
11th Edition
o
by Thomas Edmonds, Philip Olds, Christopher Edmonds
o o o o o o
,Student oname:
1) Indicate owhether oeach oof othe ofollowing ostatements oabout omarkets ois otrue oor ofalse.
a) oFinancial oresources ocan obe oprovided oto oa obusiness oby oinvestors.
b) oResource oowners oare othe obusinesses othat otransform oresources ointo oproducts
othat osatisfy oconsumer odesires.
c) oLabor oresources oinclude oboth othe ophysical oand ointellectual olabor oof oa
obusiness's oemployees.
d) oBusinesses opurchase otheir oresources ofrom oresource oowners.
e) oConsumers oare othe omain oproviders oof oresources oin oany omarket.
2) Indicate owhether oeach oof othe ofollowing ostatements oabout oaccounting oinformation ois otrue
oor ofalse.
a) oFinancial oaccounting ois oprimarily ointended oto osatisfy othe oinformation oneeds
oof ointernal ostakeholders.
b) oManagerial oaccounting oinformation oincludes ofinancial oand
ononfinancial oinformation.
c) oThe oaccounting oinformation ointended oto osatisfy othe oneeds oof oa
ocompany's oemployees ois omanagerial oaccounting oinformation.
d) oGAAP orequires othat ocompanies oadhere oto ofinancial oaccounting ostandards.
e) oManagerial oaccounting oinformation ois ousually oless odetailed othan
ofinancial oaccounting oinformation.
3) Indicate owhether oeach oof othe ofollowing ostatements oabout o liabilities ois otrue oor ofalse.
a) oA onet oloss oon othe oincome ostatement odecreases oliabilities.
b) oThe oacquisition oof oa obank oloan oincreases oboth oassets oand oliabilities.
c) oThe oaccounting oequation orequires othat oliabilities obe oequal oto ostockholders’ oequity.
d) oThe oamount oof oa ocompany's oliabilities ois oequal oto othe odifference obetween oits
oassets oand oits ostockholders’ oequity.
e) oLiabilities oare oreported oon othe ostatement oof ocash oflows oof oa obusiness.
,4) Indicate owhether oeach oof othe ofollowing ostatements oabout oretained oearnings ois otrue oor ofalse.
a) oA odividend opaid oto ostockholders odecreases oretained oearnings.
b) oIssuing ocommon ostock ofor ocash oincreases oretained oearnings.
c) oThe oamount oof onet oincome ofor oa operiod omust oequal oretained oearnings.
d) oThe opurchase oof oa otruck odecreases oretained oearnings.
e) oNet oincome oincreases oretained oearnings.
5) Indicate owhether oeach oof othe ofollowing ostatements oabout othe otypes oof otransactions ois
otrue oor ofalse.
a) oAn oasset osource otransaction oincreases ototal oassets oand oincreases oclaims oto oassets.
b) oThe oissuance oof ostock oto oowners ofor ocash owould obe oan oexample oof oan
oasset oexchange otransaction.
c) oPurchasing oequipment ofor ocash ois oan oexample oof oan oasset ouse otransaction.
d) oPaying oa odividend oto ostockholders ois oan oexample oof oan oasset ouse otransaction.
e) oMaking oa opayment oon oa obank oloan ois oan oexample oof oan oasset oexchange otransaction.
6) Indicate owhether oeach oof othe ofollowing ostatements oabout ofinancial ostatements ois otrue
oor ofalse.
a) oA ocash odividend opaid oto ostockholders ois oreported oin othe oinvesting oactivities
osection oof othe ostatement oof ocash oflows.
b) oA ocash odividend opaid oto ostockholders ois oreported oon othe ostatement oof
ochanges oin ostockholders' oequity.
c) oA ocash odividend opaid oto ostockholders ois oreported oon othe oincome ostatement.
d) oThe obalance osheet oreports othe oending obalances oof opermanent oaccounts oas oof othe
olast oday oof othe oaccounting operiod.
e) oChanges oin oretained oearnings oduring othe oaccounting operiod oare oreported oon
othe oincome ostatement.
, 7) Indicate owhether oeach oof othe ofollowing ostatements oabout ostockholders’ oequity ois
otrue oor ofalse.
a) oExpenses odecrease oretained oearnings.
b) oStockholders' oequity oand oliabilities ocan obe oviewed oeither oas osources oof
oassets oor oclaims oto oassets oof othe obusiness.
c) oRetained oearnings ois oincreased oby oloans oreceived ofrom oa obank.
d) oDividends opaid oto ostockholders odecrease ocommon ostock.
e) oGenerally, oassets oare oreported oat othe oactual oprice opaid ofor othem owhen
opurchased oregardless oof osubsequent ochanges oin omarket ovalue.
8) Jessup oCompany owas ofounded oin oYear o1. oIt oacquired o$45,000 ocash oby oissuing ostock
oto oinvestors oand oan oadditional o$15,000 ocash oby oborrowing ofrom ocreditors. oDuring oYear o1 oit
oreceived
$25,000 ocash orevenues oand opaid o$32,000 oin ocash oexpenses. oThe ocompany othen owent oout
oof obusiness.
Required:
a) Explain othe oterm, o"business oliquidation."
b) What oamount oof ocash oshould oJessup oCompany ohave ohad oon ohand oimmediately obefore
ogoing oout oof obusiness?
c) What oamount oof ocash owill oJessup's ocreditors oreceive?
d) What oamount oof ocash owill oJessup's ostockholders oreceive?
9) Bates oCompany oentered ointo othe ofollowing otransactions oduring oits ofirst oyear oin
obusiness. oAssume othat oall otransactions oinvolve othe oreceipt oor opayment oof ocash.
1) Issued ocommon ostock oto oinvestors ofor o$25,000 ocash.
2) Borrowed o$18,000 ofrom othe olocal obank.
3) Provided oservices oto ocustomers ofor o$28,000.
4) Paid oexpenses oamounting oto o$21,400.
5) Purchased oa oplot oof oland ocosting o$22,000.
6) Paid oa odividend oof o$15,000 oto oits ostockholders.
7) Repaid o$12,000 oof othe oloan olisted oin oitem o2.
Required:
(a) Fill oin othe othree ocolumn oheadings oof othe oaccounting oequation oin othe ofirst orow oof othe
otable oshown obelow.
(b) Show othe oeffects oof othe oabove otransactions oon othe oaccounting oequation.
o o o o o o
11th Edition
o
by Thomas Edmonds, Philip Olds, Christopher Edmonds
o o o o o o
,Student oname:
1) Indicate owhether oeach oof othe ofollowing ostatements oabout omarkets ois otrue oor ofalse.
a) oFinancial oresources ocan obe oprovided oto oa obusiness oby oinvestors.
b) oResource oowners oare othe obusinesses othat otransform oresources ointo oproducts
othat osatisfy oconsumer odesires.
c) oLabor oresources oinclude oboth othe ophysical oand ointellectual olabor oof oa
obusiness's oemployees.
d) oBusinesses opurchase otheir oresources ofrom oresource oowners.
e) oConsumers oare othe omain oproviders oof oresources oin oany omarket.
2) Indicate owhether oeach oof othe ofollowing ostatements oabout oaccounting oinformation ois otrue
oor ofalse.
a) oFinancial oaccounting ois oprimarily ointended oto osatisfy othe oinformation oneeds
oof ointernal ostakeholders.
b) oManagerial oaccounting oinformation oincludes ofinancial oand
ononfinancial oinformation.
c) oThe oaccounting oinformation ointended oto osatisfy othe oneeds oof oa
ocompany's oemployees ois omanagerial oaccounting oinformation.
d) oGAAP orequires othat ocompanies oadhere oto ofinancial oaccounting ostandards.
e) oManagerial oaccounting oinformation ois ousually oless odetailed othan
ofinancial oaccounting oinformation.
3) Indicate owhether oeach oof othe ofollowing ostatements oabout o liabilities ois otrue oor ofalse.
a) oA onet oloss oon othe oincome ostatement odecreases oliabilities.
b) oThe oacquisition oof oa obank oloan oincreases oboth oassets oand oliabilities.
c) oThe oaccounting oequation orequires othat oliabilities obe oequal oto ostockholders’ oequity.
d) oThe oamount oof oa ocompany's oliabilities ois oequal oto othe odifference obetween oits
oassets oand oits ostockholders’ oequity.
e) oLiabilities oare oreported oon othe ostatement oof ocash oflows oof oa obusiness.
,4) Indicate owhether oeach oof othe ofollowing ostatements oabout oretained oearnings ois otrue oor ofalse.
a) oA odividend opaid oto ostockholders odecreases oretained oearnings.
b) oIssuing ocommon ostock ofor ocash oincreases oretained oearnings.
c) oThe oamount oof onet oincome ofor oa operiod omust oequal oretained oearnings.
d) oThe opurchase oof oa otruck odecreases oretained oearnings.
e) oNet oincome oincreases oretained oearnings.
5) Indicate owhether oeach oof othe ofollowing ostatements oabout othe otypes oof otransactions ois
otrue oor ofalse.
a) oAn oasset osource otransaction oincreases ototal oassets oand oincreases oclaims oto oassets.
b) oThe oissuance oof ostock oto oowners ofor ocash owould obe oan oexample oof oan
oasset oexchange otransaction.
c) oPurchasing oequipment ofor ocash ois oan oexample oof oan oasset ouse otransaction.
d) oPaying oa odividend oto ostockholders ois oan oexample oof oan oasset ouse otransaction.
e) oMaking oa opayment oon oa obank oloan ois oan oexample oof oan oasset oexchange otransaction.
6) Indicate owhether oeach oof othe ofollowing ostatements oabout ofinancial ostatements ois otrue
oor ofalse.
a) oA ocash odividend opaid oto ostockholders ois oreported oin othe oinvesting oactivities
osection oof othe ostatement oof ocash oflows.
b) oA ocash odividend opaid oto ostockholders ois oreported oon othe ostatement oof
ochanges oin ostockholders' oequity.
c) oA ocash odividend opaid oto ostockholders ois oreported oon othe oincome ostatement.
d) oThe obalance osheet oreports othe oending obalances oof opermanent oaccounts oas oof othe
olast oday oof othe oaccounting operiod.
e) oChanges oin oretained oearnings oduring othe oaccounting operiod oare oreported oon
othe oincome ostatement.
, 7) Indicate owhether oeach oof othe ofollowing ostatements oabout ostockholders’ oequity ois
otrue oor ofalse.
a) oExpenses odecrease oretained oearnings.
b) oStockholders' oequity oand oliabilities ocan obe oviewed oeither oas osources oof
oassets oor oclaims oto oassets oof othe obusiness.
c) oRetained oearnings ois oincreased oby oloans oreceived ofrom oa obank.
d) oDividends opaid oto ostockholders odecrease ocommon ostock.
e) oGenerally, oassets oare oreported oat othe oactual oprice opaid ofor othem owhen
opurchased oregardless oof osubsequent ochanges oin omarket ovalue.
8) Jessup oCompany owas ofounded oin oYear o1. oIt oacquired o$45,000 ocash oby oissuing ostock
oto oinvestors oand oan oadditional o$15,000 ocash oby oborrowing ofrom ocreditors. oDuring oYear o1 oit
oreceived
$25,000 ocash orevenues oand opaid o$32,000 oin ocash oexpenses. oThe ocompany othen owent oout
oof obusiness.
Required:
a) Explain othe oterm, o"business oliquidation."
b) What oamount oof ocash oshould oJessup oCompany ohave ohad oon ohand oimmediately obefore
ogoing oout oof obusiness?
c) What oamount oof ocash owill oJessup's ocreditors oreceive?
d) What oamount oof ocash owill oJessup's ostockholders oreceive?
9) Bates oCompany oentered ointo othe ofollowing otransactions oduring oits ofirst oyear oin
obusiness. oAssume othat oall otransactions oinvolve othe oreceipt oor opayment oof ocash.
1) Issued ocommon ostock oto oinvestors ofor o$25,000 ocash.
2) Borrowed o$18,000 ofrom othe olocal obank.
3) Provided oservices oto ocustomers ofor o$28,000.
4) Paid oexpenses oamounting oto o$21,400.
5) Purchased oa oplot oof oland ocosting o$22,000.
6) Paid oa odividend oof o$15,000 oto oits ostockholders.
7) Repaid o$12,000 oof othe oloan olisted oin oitem o2.
Required:
(a) Fill oin othe othree ocolumn oheadings oof othe oaccounting oequation oin othe ofirst orow oof othe
otable oshown obelow.
(b) Show othe oeffects oof othe oabove otransactions oon othe oaccounting oequation.
