Test Bank Fundamentals of Financial Accounting, 8th Edition by
Fred Phillips
Chapter 01 8e Phillips Answers Included
✅1)Creditors are owners of a corporation.
⊚true
⊚false
2)All corporations acquire financing by issuing stock on public
stock exchanges.⊚true
⊚false
3)You paid $10,000 to buy 1% of the stock in a corporation that is now
bankrupt. The company owes $10 million dollars to its creditors. As a result
of the bankruptcy, you are responsible for paying $100,000 (or $10 million
× 1%) of the amount owed to the creditors.
⊚true
⊚false
4)Cash paid for wages is an example of an operating activity on the
statement of cash flows.⊚true
⊚false
5)Borrowing money from a bank is a financing activity on the
statement of cash flows.⊚true
⊚false
6)The daily business activities involved in running a business, such as
buying supplies and paying salaries and wages, are classified as
operating activities on the statement of cash flows.
⊚true
⊚false
7)Stockholders' equity is the difference between a company's assets
and its liabilities.⊚true
⊚false
,1
,8)A company owes $200,000 on a bank loan. It will be reported by the
company as Accounts Payable.
⊚true
⊚false
9)The amounts reported on financial statements are sometimes rounded to
the nearest thousand or million.
⊚true
⊚false
10)Accounts Payable, Notes Payable, and Salaries and Wages Payable
are examples of liabilities.
⊚true
⊚false
11)Dividends are subtracted from revenues on the
income statement.⊚true
⊚false
12)If a company reports net income on the income statement, then the
statement of cash flows will report the same amount as cash flows
from operating activities for the period.
⊚true
⊚false
13)Revenue is reported on the income statement only if cash was received
at the point of sale.⊚true
⊚false
14)Generally Accepted Accounting Principles (GAAP) require profitable
companies to distribute some of their earnings to their
stockholders.
⊚true
⊚false
, 2
Fred Phillips
Chapter 01 8e Phillips Answers Included
✅1)Creditors are owners of a corporation.
⊚true
⊚false
2)All corporations acquire financing by issuing stock on public
stock exchanges.⊚true
⊚false
3)You paid $10,000 to buy 1% of the stock in a corporation that is now
bankrupt. The company owes $10 million dollars to its creditors. As a result
of the bankruptcy, you are responsible for paying $100,000 (or $10 million
× 1%) of the amount owed to the creditors.
⊚true
⊚false
4)Cash paid for wages is an example of an operating activity on the
statement of cash flows.⊚true
⊚false
5)Borrowing money from a bank is a financing activity on the
statement of cash flows.⊚true
⊚false
6)The daily business activities involved in running a business, such as
buying supplies and paying salaries and wages, are classified as
operating activities on the statement of cash flows.
⊚true
⊚false
7)Stockholders' equity is the difference between a company's assets
and its liabilities.⊚true
⊚false
,1
,8)A company owes $200,000 on a bank loan. It will be reported by the
company as Accounts Payable.
⊚true
⊚false
9)The amounts reported on financial statements are sometimes rounded to
the nearest thousand or million.
⊚true
⊚false
10)Accounts Payable, Notes Payable, and Salaries and Wages Payable
are examples of liabilities.
⊚true
⊚false
11)Dividends are subtracted from revenues on the
income statement.⊚true
⊚false
12)If a company reports net income on the income statement, then the
statement of cash flows will report the same amount as cash flows
from operating activities for the period.
⊚true
⊚false
13)Revenue is reported on the income statement only if cash was received
at the point of sale.⊚true
⊚false
14)Generally Accepted Accounting Principles (GAAP) require profitable
companies to distribute some of their earnings to their
stockholders.
⊚true
⊚false
, 2
