Test Bank for
Fundamentals Of Financial Accounting 6CE Fred Phillips, Robert Libby, Patricia Libby, Brandy
Mackintosh
Chapter 1-12 Answers are at the End of Each Chapter
Chapter 1
Student name:__________
1) Building a new warehouse is an investing activity.
⊚ true
⊚ false
2) The payment of dividends is a financing activity.
⊚ true
⊚ false
3) Daily activities involved in running a business such as buying supplies and paying wages are
operating activities.
⊚ true
⊚ false
4) Financing activities include borrowing and obtaining money by issuing shares of ownership
(called share certificates).
⊚ true
⊚ false
5) Shareholders are creditors of a company.
⊚ true
⊚ false
Version 1 1
,6) All corporations acquire financing by issuing shares of ownership (called share certificates)
for sale on public stock exchanges.
⊚ true
⊚ false
7) You paid $10,000 to buy 1% of the shares in a corporation that has now gone bankrupt. The
company owes $10 million dollars to creditors. As a result of the bankruptcy, you will lose
$100,000.
⊚ true
⊚ false
8) The shareholders' equity in a company is the difference between assets and liabilities.
⊚ true
⊚ false
9) A company owes $200,000 on a bank loan. If this loan is documented using a formal written
debt contract, it will be reported as a liability called Notes Payable.
⊚ true
⊚ false
10) The accounting decisions that were made when preparing a company's financial statements
are explained in the auditor's report.
⊚ true
⊚ false
11) Under both ASPE and IFRS, a Canadian company would report the data on the financial
statements in Canadian dollars.
⊚ true
⊚ false
Version 1 2
,12) SUNFLOWER COMPANY
BALANCE SHEET
SEPTEMBER 30, 2020
Assets
Cash $1,568,000
Accounts Receivable 310,500
Inventories 208,200
Property, Plant, and Equipment 391,600
Other Assets 869,400
Total Assets $3,347,700
Liabilities
Accounts Payable $1,439,200
Notes Payable ?
Total Liabilities ?
Shareholders ’ Equity
Contributed Capital 1,263,600
Retained Earnings 207,100
Total Shareholders ’ Equity 1,470,700
Total Liabilities and shareholders ’ Equity $3,347,700
Notes Payable would equal $437,800 and Total Liabilities would equal $1,877,000 on the
Balance Sheet.
⊚ true
⊚ false
Version 1 3
, 13) CACTUS COMPANY
BALANCE SHEET
SEPTEMBER 30, 2020
Assets
Cash $1,568,000
Accounts Receivable 310,500
Inventories 208,200
Property, Plant, and Equipment 391,600
Other Assets 869,400
Total Assets $3,347,700
Liabilities
Accounts Payable $1,439,200
Notes Payable ?
Total Liabilities ?
Shareholders ’ Equity
Contributed Capital 1,263,600
Retained Earnings 207,100
Total Shareholders ’ Equity 1,470,700
Total Liabilities and shareholders ’ Equity $3,347,700
The $207,100 shown on the Balance Sheet has been distributed to shareholders as dividends.
⊚ true
⊚ false
Version 1 4
Fundamentals Of Financial Accounting 6CE Fred Phillips, Robert Libby, Patricia Libby, Brandy
Mackintosh
Chapter 1-12 Answers are at the End of Each Chapter
Chapter 1
Student name:__________
1) Building a new warehouse is an investing activity.
⊚ true
⊚ false
2) The payment of dividends is a financing activity.
⊚ true
⊚ false
3) Daily activities involved in running a business such as buying supplies and paying wages are
operating activities.
⊚ true
⊚ false
4) Financing activities include borrowing and obtaining money by issuing shares of ownership
(called share certificates).
⊚ true
⊚ false
5) Shareholders are creditors of a company.
⊚ true
⊚ false
Version 1 1
,6) All corporations acquire financing by issuing shares of ownership (called share certificates)
for sale on public stock exchanges.
⊚ true
⊚ false
7) You paid $10,000 to buy 1% of the shares in a corporation that has now gone bankrupt. The
company owes $10 million dollars to creditors. As a result of the bankruptcy, you will lose
$100,000.
⊚ true
⊚ false
8) The shareholders' equity in a company is the difference between assets and liabilities.
⊚ true
⊚ false
9) A company owes $200,000 on a bank loan. If this loan is documented using a formal written
debt contract, it will be reported as a liability called Notes Payable.
⊚ true
⊚ false
10) The accounting decisions that were made when preparing a company's financial statements
are explained in the auditor's report.
⊚ true
⊚ false
11) Under both ASPE and IFRS, a Canadian company would report the data on the financial
statements in Canadian dollars.
⊚ true
⊚ false
Version 1 2
,12) SUNFLOWER COMPANY
BALANCE SHEET
SEPTEMBER 30, 2020
Assets
Cash $1,568,000
Accounts Receivable 310,500
Inventories 208,200
Property, Plant, and Equipment 391,600
Other Assets 869,400
Total Assets $3,347,700
Liabilities
Accounts Payable $1,439,200
Notes Payable ?
Total Liabilities ?
Shareholders ’ Equity
Contributed Capital 1,263,600
Retained Earnings 207,100
Total Shareholders ’ Equity 1,470,700
Total Liabilities and shareholders ’ Equity $3,347,700
Notes Payable would equal $437,800 and Total Liabilities would equal $1,877,000 on the
Balance Sheet.
⊚ true
⊚ false
Version 1 3
, 13) CACTUS COMPANY
BALANCE SHEET
SEPTEMBER 30, 2020
Assets
Cash $1,568,000
Accounts Receivable 310,500
Inventories 208,200
Property, Plant, and Equipment 391,600
Other Assets 869,400
Total Assets $3,347,700
Liabilities
Accounts Payable $1,439,200
Notes Payable ?
Total Liabilities ?
Shareholders ’ Equity
Contributed Capital 1,263,600
Retained Earnings 207,100
Total Shareholders ’ Equity 1,470,700
Total Liabilities and shareholders ’ Equity $3,347,700
The $207,100 shown on the Balance Sheet has been distributed to shareholders as dividends.
⊚ true
⊚ false
Version 1 4
