Test Bank for Understanding Financial Accounting 4th Canadian Edition – Christopher D. Burnley

Understanding Financial Accounting
4th Canadian Edition

Christopher D. Burnley




TEST BANK


Includes All Chapters (1 to 12) + Appx B,C,D


|| Answers Included ||

,Understanding Financial Accounting, 4Ce (Burnley)
Chapter 1 Overview of Corporate Financial Reporting

TRUE-FALSE STATEMENTS

1) Decision makers are often referred to as users of the financial statements and include investors
and creditors.
Answer: TRUE
Diff: 2
Bloomcode: Knowledge
Learning Objective: Define financial accounting and understand its relationship to economic
decision-making.
CPA: Financial Reporting
AACSB: Analytic

2) The primary purpose of financial accounting information is to aid users in their economic
decision-making relative to the organization.
Answer: TRUE
Diff: 1
Bloomcode: Knowledge
Learning Objective: Define financial accounting and understand its relationship to economic
decision-making.
CPA: Financial Reporting
AACSB: Analytic

3) The section of an annual report that contains management's discussion of the company's
operating results is referred to as the Statement of Management's Responsibility.
Answer: FALSE
Diff: 2
Bloomcode: Knowledge
Learning Objective: Define financial accounting and understand its relationship to economic
decision-making.; Identify and explain the content and reporting objectives of the four basic
financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic

4) The shareholders are an example of an internal user of annual report information.
Answer: FALSE
Diff: 1
Bloomcode: Knowledge
Learning Objective: Identify the main users of financial accounting information and explain
how they use this information.
CPA: Financial Reporting
AACSB: Analytic




1

,5) Information contained in the financial statements of a company is of use to both internal and
external users.
Answer: TRUE
Diff: 1
Bloomcode: Knowledge
Learning Objective: Identify the main users of financial accounting information and explain
how they use this information.
CPA: Financial Reporting
AACSB: Analytic

6) A private company may have a single shareholder, while a public company may have many
shareholders.
Answer: TRUE
Diff: 1
Bloomcode: Knowledge
Learning Objective: Identify the main users of financial accounting information and explain
how they use this information.
CPA: Financial Reporting
AACSB: Analytic

7) A firm's activities can be divided into borrowing, investing, and operating.
Answer: FALSE
Diff: 1
Bloomcode: Knowledge
Learning Objective: Explain the three categories of business activities and identify examples of
transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic

8) If an investor owns 10% of the shares of a company, they normally own 10 shares of the
company.
Answer: FALSE
Diff: 2
Bloomcode: Knowledge
Learning Objective: Explain the three categories of business activities and identify examples of
transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic

9) Dividends are payments made by the company to distribute future profits.
Answer: FALSE
Diff: 2
Bloomcode: Knowledge
Learning Objective: Explain the three categories of business activities and identify examples of
transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic

2

, 10) A gain or increase in the value of shares is known as capital appreciation.
Answer: TRUE
Diff: 2
Bloomcode: Knowledge
Learning Objective: Explain the three categories of business activities and identify examples of
transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic

11) Creditors are entities that lend money to a company rather than buying shares of a company.
Answer: TRUE
Diff: 1
Bloomcode: Knowledge
Learning Objective: Explain the three categories of business activities and identify examples of
transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic

12) The financial statements of a company are prepared by the shareholders.
Answer: FALSE
Diff: 1
Bloomcode: Knowledge
Learning Objective: Identify and explain the content and reporting objectives of the four basic
financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic

13) Assets are typically listed in the order of their liquidity on the classified Statement of
Financial Position.
Answer: TRUE
Diff: 1
Bloomcode: Knowledge
Learning Objective: Identify and explain the content and reporting objectives of the four basic
financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic

14) Prepaid expenses can be found on the Statement of Income.
Answer: FALSE
Diff: 1
Bloomcode: Knowledge
Learning Objective: Identify and explain the content and reporting objectives of the four basic
financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic




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