Test Bank for Fundamentals of Financial Accounting, 8th Edition by Fred Phillips – Chapter 1, 2, 3 Questions & Answers

TESTV BANKV FOR
FundamentalsVofVFinancialVAccounting,V8thVEditionVbyVFredVPhillips

✅
ChapterV01V8eVPhillips AnswersVIncluded
1) CreditorsVareVownersVofVaVcorporati
on.
⊚V true
⊚V false



2) AllVcorporationsVacquireVfinancingVbyVissuingVstockVonVpublicVstockVexchanges.
⊚V true
⊚V false



3) YouVpaidV$10,000VtoVbuyV1%VofVtheVstockVinVaVcorporationVthatVisVnowVbankrupt.VThe
VcompanyVowesV$10VmillionVdollarsVtoVitsVcreditors.VAsVaVresultVofVtheVbankruptcy,Vyo
uVareVresponsibleVforVpayingV$100,000V(orV$10VmillionV×V1%)VofVtheVamountVowedVtoV
theVcreditors.
⊚V true
⊚V false



4) CashVpaidVforVwagesVisVanVexampleVofVanVoperatingVactivityVonVtheVstatementVofVcashVflow
s.
⊚V true
⊚V false



5) BorrowingVmoneyVfromVaVbankVisVaVfinancingVactivityVonVtheVstatementVofVcashVflows.
⊚V true
⊚V false



6) TheVdailyVbusinessVactivitiesVinvolvedVinVrunningVaVbusiness,VsuchVasVbuyingVsuppl
iesVandVpayingVsalariesVandVwages,VareVclassifiedVasVoperatingVactivitiesVonVtheVsta
tementVofVcashVflows.
⊚V true
⊚V false



7) Stockholders'VequityVisVtheVdifferenceVbetweenVaVcompany'sVassetsVandVitsVliabilities.
⊚V true
⊚V false

,8) AVcompanyVowesV$200,000VonVaVbankVloan.VItVwillVbeVreportedVbyVtheVcompanyVasV
AccountsVPayable.
⊚V true
⊚V false



9) TheVamountsVreportedVonVfinancialVstatementsVareVsometimesVroundedVtoVtheVnearestVth
ousandVorVmillion.
⊚V true
⊚V false



10) AccountsVPayable,VNotesVPayable,VandVSalariesVandVWagesVPayableVareVexamp
lesVofVliabilities.
⊚V true
⊚V false



11) DividendsVareVsubtractedVfromVrevenuesVonVtheVincomeVstatement.
⊚V true
⊚V false



12) IfVaVcompanyVreportsVnetVincomeVonVtheVincomeVstatement,VthenVtheVstatementVofVca
shVflowsVwillVreportVtheVsameVamountVasVcashVflowsVfromVoperatingVactivitiesVforVth
eVperiod.
⊚V true
⊚V false



13) RevenueVisVreportedVonVtheVincomeVstatementVonlyVifVcashVwasVreceivedVatVtheVpointVofVsa
le.
⊚V true
⊚V false



14) GenerallyVAcceptedVAccountingVPrinciplesV(GAAP)VrequireVprofitableVcompani
⊚V fals
e

,esVtoVdistributeVsomeVofVtheirVearningsVtoVtheirVstockholders.
⊚V true




⊚V fals
e

, 15) CommonVStockVisVreportedVasVanVassetVonVtheVbalanceVsheet.
⊚V true
⊚V false



16) InvestorsVareVmainlyVinterestedVinVtheVprofitabilityVofVaVcompany.
⊚V true
⊚V false



17) AVstockVthatVdoesVnotVpayVaVdividendVisVanVundesirableVinvestment.
⊚V true
⊚V false



18) ToVensureVthatVcompaniesVproduceVusefulVinformation,VitVmustVhaveVtwoVfunda
mentalVcharacteristics:VreliabilityVandVunderstandability.
⊚V true
⊚V false



19) TheVSecuritiesVandVExchangeVCommissionV(SEC)VisVtheVgovernmentVagencyVthatVhasVp
rimaryVresponsibilityVforVsettingVaccountingVstandardsVinVtheVU.S.
⊚V true
⊚V false



20) TheVSarbanes-
OxleyVActV(SOX)VrequiresVtopVmanagementVofVcompaniesVtoVsignVaVreportVcertifyi
ngVthatVtheVfinancialVstatementsVareVfreeVofVerror.
⊚V true
⊚V false



21) CompaniesVmustVuseVaVDecemberV31stVyear-endVforVallVfinancialVstatements.
⊚V fals
e