TEST BANK
SURVEY OF ACCOUNTING
1
, Survey Of Accounting, 7th Edition By Edmonds, Olds Test Bank
Answers Included
Chap 01 7e Edmonds
1) Which Of The Following Groups Has The Primary Responsibility For Establishing
Generally Accepted Accounting Principles For Business Entities In The United States?
A) Securities And Exchange Commission
B) U.S. Congress
C) International Accounting Standards Board
D) Financial Accounting Standards Board
2) The Heritage Company Is A Manufacturer Of Office Furniture. Which Term Best
Describes Heritage's Role In Society?
A) Business
B) Regulatory Agency
C) Consumer
D) Resource Owner
3) Which Resource Providers Lend Financial Resources To A Business With The
Expectation Of Repayment With Interest?
A) Consumers
B) Creditors
C) Investors
D) Owners
4) Which Type Of Accounting Information Is Intended To Satisfy The Needs Of External
Users Of Accounting Information?
A) Cost Accounting
B) Managerial Accounting
C) Tax Accounting
D) Financial Accounting
5) Which Of The Following Is False Regarding Managerial Accounting Information?
A) It Is Often Used By Investors.
B) It Is More Detailed Than Financial Accounting Information.
C) It Can Include Nonfinancial Information.
D) It Focuses On Divisional Rather Than Overall Profitability.
2
,6) Financial Accounting Standards Are Known Collectively As GAAP. What Does That
Acronym Stand For?
A) Generally Accepted Accounting Principles
B) Generally Applied Accounting Procedures
C) Governmentally Approved Accounting Practices
D) Generally Authorized Auditing Principles
7) International Accounting Standards Are Formulated By The IASB. What Does That
Acronym Stand For?
A) Internationally Accepted Standards Board
B) International Accounting Standards Board
C) International Accountability Standards Bureau
D) International Accounting And Sustainability Board
8) Jack Henry Borrowed $800,000 From Walt Bank To Open A New Bike Store Called
Wooden Wheels. Jack Transferred $650,000 Of The Cash That He Borrowed To The Store
On The First Day Of The Year. How Many Reporting Entities Exist In This Scenario?
A) One Reporting Entity
B) Two Reporting Entities
C) Three Reporting Entities
D) Four Reporting Entities
3
,9) Jack Henry Borrowed $800,000 From Walt Bank To Open A New Bike Store Called
Wooden Wheels. Jack Transferred $650,000 Of The Cash He Borrowed To Wooden
Wheels On The First Day Of The Year. Which Of The Following Appropriately Reflects
The Cash Transactions Between These Reporting Entities?
Option Jack Henry Wooden Wheels Walt Bank
A. $ 150,000 Increase $ 650,000 $ 800,000
Increase Decrease
B. $ 800,000 Increase $ 650,000 $ 150,000
Increase Decrease
C. $ 800,000 Decrease $ 800,000 $ 650,000
Increase Decrease
D. $ 650,000 Increase $ 150,000 $ 800,000
Increase Decrease
A) Option A
B) Option B
C) Option C
D) Option D
10) Ellen Gatsby And Her Siblings, Ben And Sarah, Started Gatsby Company When They
Each Invested $100,000 In The Company. After The Investments There Will Be
A) One Reporting Entity.
B) Two Reporting Entities.
C) Three Reporting Entities.
D) Four Reporting Entities.
11) John Hamilton Borrowed $528,000 From Stone Creek Bank To Open A New Restaurant
Called Sauce-It-Up. John Transferred $475,200 Of The Cash He Borrowed To The
Restaurant On The First Day Of The Year. How Many Reporting Entities Exist In This
Scenario?
A) Two Reporting Entities
B) Three Reporting Entities
C) One Reporting Entity
D) Four Reporting Entities
4
,12) John Hamilton Borrowed $540,000 From Stone Creek Bank To Open A New Restaurant
Called Sauce-It-Up. John Transferred $486,000 Of The Cash He Borrowed To The
Company On The First Day Of The Year. Which Of The Following Appropriately Reflects
The Cash Transactions Between These Reporting Entities?
John Hamilton Sauce-It-Up Stone Creek Bank
A. $ 54,000 Increase $ 486,000 Increase $ 540,000 Decrease
B. $ 540,000 Increase $ 486,000 Increase $ 540,000 Decrease
C. $ 540,000 Decrease $ 540,000 Increase $ 540,000 Decrease
D. $ 486,000 Increase $ 54,000 Increase $ 540,000 Decrease
A) Option A
B) Option B
C) Option C
D) Option D
13) Which Of The Following Is An Accurate Definition Of The Term “Asset?”
A) An Obligation To Creditors
B) A Resource That Will Be Used To Produce Revenue
C) A Transfer Of Wealth From The Business To Its Stockholders
D) A Sacrifice Incurred From Operating The Business
14) Which Of The Following Is (Are) Source(S) Of Assets To A Business?
A) Creditors
B) Investors
C) Operations
D) All The Answers Represent Sources Of Assets.
15) If Total Assets Decrease, Then Which Of The Following Statements Is True?
A) Liabilities Must Increase And Retained Earnings Must Decrease.
B) Common Stock Must Decrease And Retained Earnings Must Increase.
C) Liabilities, Common Stock, Or Retained Earnings Must Decrease.
D) Liabilities, Common Stock, Or Retained Earnings Must Increase.
5
,16) Which Of The Following Statements About Liabilities Is True?
A) They Represent Obligations To Repay Debts.
B) They May Increase When Assets Increase.
C) They Are Found On The Claims Side Of The Accounting Equation.
D) All Of The Answers Are Characteristics Of Liabilities.
17) Which Term Describes Assets Generated Through Operations That Have Been Reinvested
Into The Business?
A) Liability
B) Dividend
C) Common Stock
D) Retained Earnings
18) Which Of The Following Is An Accurate Depiction Of The Accounting Equation?
A) Assets = Liabilities + Common Stock + Retained Earnings
B) Assets = Liabilities + Common Stock − Expenses
C) Assets = Liabilities + Retained Earnings − Dividends
D) Assets = Liabilities + Common Stock + Dividends
19) Which Term Describes A Distribution Of The Business’s Assets Back To The
Owners Of The Business?
A) Liability
B) Dividend
C) Retained Earnings
D) Common Stock
20) Finn Company Reported Assets Of $1,000 And Stockholders’ Equity Of $600. What Amount
Will Finn Report For Liabilities?
A) $400
B) $600
C) $1,600
D) Cannot Be Determined
6
,21) Which Of The Following Items Is An Example Of Revenue?
A) Cash Received From A Bank Loan
B) Cash Received From Investors From The Sale Of Common Stock
C) Cash Received From Customers At The Time Services Were Provided
D) Cash Received From The Sale Of Land For Its Original Selling Price
22) Which Of The Following Is Not An Element Of The Accounting Equation?
A) Stockholders’ Equity
B) Liabilities
C) Assets
D) Net Income
23) The Balance Sheet Of The Algonquin Company Reported Assets Of $50,000, Liabilities Of
$22,000 And Common Stock Of $15,000. Based On This Information Only, What Is The
Amount Of Retained Earnings?
A) $7,000.
B) $57,000.
C) $13,000.
D) $87,000.
24) Stosch Company's Balance Sheet Reported Assets Of $87,000, Liabilities Of $24,000
And Common Stock Of $21,000 As Of December 31, Year 1. If Retained Earnings On
The Balance Sheet As Of December 31, Year 2, Amount To $54,000 And Stosch Paid A
$23,000 Dividend During Year 2, Then The Amount Of Net Income For Year 2 Was
Which Of The Following?
A) $42,000
B) $35,000
C) $12,000
D) $23,000
7
,25) Stosch Company's Balance Sheet Reported Assets Of $40,000, Liabilities Of $15,000
And Common Stock Of $12,000 As Of December 31, Year 1. If Retained Earnings On
The Balance Sheet As Of December 31, Year 2, Amount To $18,000 And Stosch Paid A
$14,000 Dividend During Year 2, Then The Amount Of Net Income For Year 2 Was
Which Of The Following?
A) $17,000
B) $19,000
C) $13,000
D) $21,000
26) Hazeltine Company Issued Common Stock For $200,000 Cash. As A Result Of This Event,
Which Of The Following Statements Is True?
A) Assets Increased.
B) Stockholders’ Equity Increased.
C) Claims Increased.
D) Assets, Claims, And Stockholders’ Equity All Increased.
27) If Ballard Company Reported Assets Of $500 And Liabilities Of $200, Ballard's
Stockholders' Equity Equals:
A) $300.
B) $500.
C) $700.
D) Cannot Be Determined.
28) If A Company's Total Assets Increased While Liabilities And Common Stock Were
Unchanged, Then Which Of The Following Statements Is True?
A) Revenues Were Greater Than Expenses.
B) Retained Earnings Were Less Than Net Income During The Period.
C) No Dividends Were Paid During The Period.
D) The Company Must Have Purchased Assets With Cash.
8
,29) Li Company Paid Cash To Purchase Land. As A Result Of This Accounting Event,
Which Of The Following Statements Is True?
A) Total Assets Decreased.
B) Total Assets Were Unaffected.
C) Total Stockholders’ Equity Decreased.
D) Both Assets And Total Stockholders’ Equity Decreased.
30) Wyatt Company Was Formed On January 1, Year 1, When It Acquired $50,000 Cash
From Issuing Common Stock. Which Of The Following Shows The Impact Of This
Transaction On Wyatt’s Accounting Equation?
Assets = Liabilities + Stockholders’ Equity
A. +/− NA NA
B. + NA +
C. − NA −
D. + + NA
A) Option A
B) Option B
C) Option C
D) Option D
31) Wing Company Borrowed $70,000 Cash From Metropolitan Bank. Which Of The
Following Shows The Impact Of This Transaction On Wing’s Accounting Equation?
Assets = Liabilities + Stockholders’ Equity
A. +/− NA NA
B. + NA +
C. − NA −
D. + + NA
A) Option A
B) Option B
C) Option C
D) Option D
9
, 32) Wing Company Provided Services For $30,000 Cash. Which Of The Following Shows
The Impact Of This Transaction On Wing’s Accounting Equation?
Assets = Liabilities + Stockholders’ Equity
A. +/− NA NA
B. + NA +
C. − NA −
D. + + NA
A) Option A
B) Option B
C) Option C
D) Option D
33) Wing Company Paid $20,000 Cash In Salaries To Its Employees. Which Of The Following
Shows The Impact Of This Transaction On Wing’s Accounting Equation?
Assets = Liabilities + Stockholders’ Equity
A. +/− NA NA
B. + NA +
C. − NA −
D. + + NA
A) Option B
B) Option A
C) Option C
D) Option D
10
SURVEY OF ACCOUNTING
1
, Survey Of Accounting, 7th Edition By Edmonds, Olds Test Bank
Answers Included
Chap 01 7e Edmonds
1) Which Of The Following Groups Has The Primary Responsibility For Establishing
Generally Accepted Accounting Principles For Business Entities In The United States?
A) Securities And Exchange Commission
B) U.S. Congress
C) International Accounting Standards Board
D) Financial Accounting Standards Board
2) The Heritage Company Is A Manufacturer Of Office Furniture. Which Term Best
Describes Heritage's Role In Society?
A) Business
B) Regulatory Agency
C) Consumer
D) Resource Owner
3) Which Resource Providers Lend Financial Resources To A Business With The
Expectation Of Repayment With Interest?
A) Consumers
B) Creditors
C) Investors
D) Owners
4) Which Type Of Accounting Information Is Intended To Satisfy The Needs Of External
Users Of Accounting Information?
A) Cost Accounting
B) Managerial Accounting
C) Tax Accounting
D) Financial Accounting
5) Which Of The Following Is False Regarding Managerial Accounting Information?
A) It Is Often Used By Investors.
B) It Is More Detailed Than Financial Accounting Information.
C) It Can Include Nonfinancial Information.
D) It Focuses On Divisional Rather Than Overall Profitability.
2
,6) Financial Accounting Standards Are Known Collectively As GAAP. What Does That
Acronym Stand For?
A) Generally Accepted Accounting Principles
B) Generally Applied Accounting Procedures
C) Governmentally Approved Accounting Practices
D) Generally Authorized Auditing Principles
7) International Accounting Standards Are Formulated By The IASB. What Does That
Acronym Stand For?
A) Internationally Accepted Standards Board
B) International Accounting Standards Board
C) International Accountability Standards Bureau
D) International Accounting And Sustainability Board
8) Jack Henry Borrowed $800,000 From Walt Bank To Open A New Bike Store Called
Wooden Wheels. Jack Transferred $650,000 Of The Cash That He Borrowed To The Store
On The First Day Of The Year. How Many Reporting Entities Exist In This Scenario?
A) One Reporting Entity
B) Two Reporting Entities
C) Three Reporting Entities
D) Four Reporting Entities
3
,9) Jack Henry Borrowed $800,000 From Walt Bank To Open A New Bike Store Called
Wooden Wheels. Jack Transferred $650,000 Of The Cash He Borrowed To Wooden
Wheels On The First Day Of The Year. Which Of The Following Appropriately Reflects
The Cash Transactions Between These Reporting Entities?
Option Jack Henry Wooden Wheels Walt Bank
A. $ 150,000 Increase $ 650,000 $ 800,000
Increase Decrease
B. $ 800,000 Increase $ 650,000 $ 150,000
Increase Decrease
C. $ 800,000 Decrease $ 800,000 $ 650,000
Increase Decrease
D. $ 650,000 Increase $ 150,000 $ 800,000
Increase Decrease
A) Option A
B) Option B
C) Option C
D) Option D
10) Ellen Gatsby And Her Siblings, Ben And Sarah, Started Gatsby Company When They
Each Invested $100,000 In The Company. After The Investments There Will Be
A) One Reporting Entity.
B) Two Reporting Entities.
C) Three Reporting Entities.
D) Four Reporting Entities.
11) John Hamilton Borrowed $528,000 From Stone Creek Bank To Open A New Restaurant
Called Sauce-It-Up. John Transferred $475,200 Of The Cash He Borrowed To The
Restaurant On The First Day Of The Year. How Many Reporting Entities Exist In This
Scenario?
A) Two Reporting Entities
B) Three Reporting Entities
C) One Reporting Entity
D) Four Reporting Entities
4
,12) John Hamilton Borrowed $540,000 From Stone Creek Bank To Open A New Restaurant
Called Sauce-It-Up. John Transferred $486,000 Of The Cash He Borrowed To The
Company On The First Day Of The Year. Which Of The Following Appropriately Reflects
The Cash Transactions Between These Reporting Entities?
John Hamilton Sauce-It-Up Stone Creek Bank
A. $ 54,000 Increase $ 486,000 Increase $ 540,000 Decrease
B. $ 540,000 Increase $ 486,000 Increase $ 540,000 Decrease
C. $ 540,000 Decrease $ 540,000 Increase $ 540,000 Decrease
D. $ 486,000 Increase $ 54,000 Increase $ 540,000 Decrease
A) Option A
B) Option B
C) Option C
D) Option D
13) Which Of The Following Is An Accurate Definition Of The Term “Asset?”
A) An Obligation To Creditors
B) A Resource That Will Be Used To Produce Revenue
C) A Transfer Of Wealth From The Business To Its Stockholders
D) A Sacrifice Incurred From Operating The Business
14) Which Of The Following Is (Are) Source(S) Of Assets To A Business?
A) Creditors
B) Investors
C) Operations
D) All The Answers Represent Sources Of Assets.
15) If Total Assets Decrease, Then Which Of The Following Statements Is True?
A) Liabilities Must Increase And Retained Earnings Must Decrease.
B) Common Stock Must Decrease And Retained Earnings Must Increase.
C) Liabilities, Common Stock, Or Retained Earnings Must Decrease.
D) Liabilities, Common Stock, Or Retained Earnings Must Increase.
5
,16) Which Of The Following Statements About Liabilities Is True?
A) They Represent Obligations To Repay Debts.
B) They May Increase When Assets Increase.
C) They Are Found On The Claims Side Of The Accounting Equation.
D) All Of The Answers Are Characteristics Of Liabilities.
17) Which Term Describes Assets Generated Through Operations That Have Been Reinvested
Into The Business?
A) Liability
B) Dividend
C) Common Stock
D) Retained Earnings
18) Which Of The Following Is An Accurate Depiction Of The Accounting Equation?
A) Assets = Liabilities + Common Stock + Retained Earnings
B) Assets = Liabilities + Common Stock − Expenses
C) Assets = Liabilities + Retained Earnings − Dividends
D) Assets = Liabilities + Common Stock + Dividends
19) Which Term Describes A Distribution Of The Business’s Assets Back To The
Owners Of The Business?
A) Liability
B) Dividend
C) Retained Earnings
D) Common Stock
20) Finn Company Reported Assets Of $1,000 And Stockholders’ Equity Of $600. What Amount
Will Finn Report For Liabilities?
A) $400
B) $600
C) $1,600
D) Cannot Be Determined
6
,21) Which Of The Following Items Is An Example Of Revenue?
A) Cash Received From A Bank Loan
B) Cash Received From Investors From The Sale Of Common Stock
C) Cash Received From Customers At The Time Services Were Provided
D) Cash Received From The Sale Of Land For Its Original Selling Price
22) Which Of The Following Is Not An Element Of The Accounting Equation?
A) Stockholders’ Equity
B) Liabilities
C) Assets
D) Net Income
23) The Balance Sheet Of The Algonquin Company Reported Assets Of $50,000, Liabilities Of
$22,000 And Common Stock Of $15,000. Based On This Information Only, What Is The
Amount Of Retained Earnings?
A) $7,000.
B) $57,000.
C) $13,000.
D) $87,000.
24) Stosch Company's Balance Sheet Reported Assets Of $87,000, Liabilities Of $24,000
And Common Stock Of $21,000 As Of December 31, Year 1. If Retained Earnings On
The Balance Sheet As Of December 31, Year 2, Amount To $54,000 And Stosch Paid A
$23,000 Dividend During Year 2, Then The Amount Of Net Income For Year 2 Was
Which Of The Following?
A) $42,000
B) $35,000
C) $12,000
D) $23,000
7
,25) Stosch Company's Balance Sheet Reported Assets Of $40,000, Liabilities Of $15,000
And Common Stock Of $12,000 As Of December 31, Year 1. If Retained Earnings On
The Balance Sheet As Of December 31, Year 2, Amount To $18,000 And Stosch Paid A
$14,000 Dividend During Year 2, Then The Amount Of Net Income For Year 2 Was
Which Of The Following?
A) $17,000
B) $19,000
C) $13,000
D) $21,000
26) Hazeltine Company Issued Common Stock For $200,000 Cash. As A Result Of This Event,
Which Of The Following Statements Is True?
A) Assets Increased.
B) Stockholders’ Equity Increased.
C) Claims Increased.
D) Assets, Claims, And Stockholders’ Equity All Increased.
27) If Ballard Company Reported Assets Of $500 And Liabilities Of $200, Ballard's
Stockholders' Equity Equals:
A) $300.
B) $500.
C) $700.
D) Cannot Be Determined.
28) If A Company's Total Assets Increased While Liabilities And Common Stock Were
Unchanged, Then Which Of The Following Statements Is True?
A) Revenues Were Greater Than Expenses.
B) Retained Earnings Were Less Than Net Income During The Period.
C) No Dividends Were Paid During The Period.
D) The Company Must Have Purchased Assets With Cash.
8
,29) Li Company Paid Cash To Purchase Land. As A Result Of This Accounting Event,
Which Of The Following Statements Is True?
A) Total Assets Decreased.
B) Total Assets Were Unaffected.
C) Total Stockholders’ Equity Decreased.
D) Both Assets And Total Stockholders’ Equity Decreased.
30) Wyatt Company Was Formed On January 1, Year 1, When It Acquired $50,000 Cash
From Issuing Common Stock. Which Of The Following Shows The Impact Of This
Transaction On Wyatt’s Accounting Equation?
Assets = Liabilities + Stockholders’ Equity
A. +/− NA NA
B. + NA +
C. − NA −
D. + + NA
A) Option A
B) Option B
C) Option C
D) Option D
31) Wing Company Borrowed $70,000 Cash From Metropolitan Bank. Which Of The
Following Shows The Impact Of This Transaction On Wing’s Accounting Equation?
Assets = Liabilities + Stockholders’ Equity
A. +/− NA NA
B. + NA +
C. − NA −
D. + + NA
A) Option A
B) Option B
C) Option C
D) Option D
9
, 32) Wing Company Provided Services For $30,000 Cash. Which Of The Following Shows
The Impact Of This Transaction On Wing’s Accounting Equation?
Assets = Liabilities + Stockholders’ Equity
A. +/− NA NA
B. + NA +
C. − NA −
D. + + NA
A) Option A
B) Option B
C) Option C
D) Option D
33) Wing Company Paid $20,000 Cash In Salaries To Its Employees. Which Of The Following
Shows The Impact Of This Transaction On Wing’s Accounting Equation?
Assets = Liabilities + Stockholders’ Equity
A. +/− NA NA
B. + NA +
C. − NA −
D. + + NA
A) Option B
B) Option A
C) Option C
D) Option D
10
