Test Bank for Fundamental Financial Accounting Concepts 9th Edition By Thomas Edmonds Frances McNair Philip Olds (All Chapters, 100% Original Verified, A+ Grade)

This is Test Bank zip file. PDF file is giving error in upload, thats why zip file is added. Check Sample Preview: Chapter 01 An Introduction to Accounting Answer Key Short Answer Questions Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts. 1. Walker Co. issued common stock for $150,000 cash. Answer: (I) (N) (I) (N) (N) (N) (I) Learning Objective: 01-02 Level of Learning: 2 Medium Topic Area: Recording Business Events Under the Accounting Equation AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Blooms: Analyze Feedback: Issuing common stock is an asset source transaction that increases the business’s assets (cash) and its stockholders’ equity (common stock). It does not affect the income statement, but is reported as a cash flow from financing activities in the statement of cash flows. Fundamental Financial Accounting Concepts 9e Thomas Edmonds Frances McNair Philip Olds (Test Bank All Chapters, 100% Original Verified, A+ Grade) Chapter 01 - An Introduction to Accounting 1-2 2. Nguyen Co. borrowed $50,000 cash from Metropolitan Bank. Answer: (I) (I) (N) (N) (N) (N) (I) Learning Objective: 01-08 Topic Area: Recording Business Events Under the Accounting Equation AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Blooms: Analyze Difficulty: 2 Medium Feedback: Borrowing cash is an asset source transaction that increases a business’s assets (cash) and its liabilities (notes payable). It does not affect the income statement, but is reported as a cash flow from financing activities in the statement of cash flows. 3. Bell Co. provided consulting services for $20,000 cash. Answer: (I) (N) (I) (I) (N) (I) (I) Learning Objective: 01-08 Topic Area: Recording Business Events Under the Accounting Equation AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Blooms: Analyze Difficulty: 2 Medium Feedback: This is an asset source transaction that increases the business’s assets (cash). When a business provides services, it earns revenue. Revenue increases net income, which will increase equity (retained earnings) at the end of the accounting period. This event is reported as a cash flow from operating activities in the statement of cash flows. Chapter 01 - An Introduction to Accounting 1-3 4. Pierce Co. paid $40,000 cash to purchase land. Answer: (N) (N) (N) (N) (N) (N) (D) Learning Objective: 01-08 Topic Area: Recording Business Events Under the Accounting Equation AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Blooms: Analyze Difficulty: 2 Medium Feedback: Purchasing land for cash is an asset exchange transaction that increases one asset (land) and decreases another asset (cash). It does not affect the income statement, and is reported as an investing activity in the statement of cash flows. 5. Perez Co. paid $220,000 cash in salaries to its employees. Answer: (D) (N) (D) (N) (I) (D) (D) Learning Objective: 01-08 Topic Area: Recording Business Events Under the Accounting Equation AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Blooms: Analyze Difficulty: 2 Medium Feedback: Paying expenses such as salaries is an asset use transaction that decreases the business’s assets (cash) and decreases its equity (retained earnings). Note that the expense decreases net income, and will decrease retained earnings at the end of the accounting period. It is reported as a cash flow for operating activities in the statement of cash flows. Chapter 01 - An Introduction to Accounting 1-4 6. Epstein Co. paid a $20,000 cash dividend to its owners. Answer: (D) (N) (D) (N) (N) (N) (D) Learning Objective: 01-08 Topic Area: Recording Business Events Under the Accounting Equation AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Blooms: Analyze Difficulty: 2 Medium Feedback: Paying a cash dividend is an asset use transaction that decreases a business’s assets (cash) and its equity. The dividends account will decrease the retained earnings at the end of the accounting period. It does not affect net income, and is reported as a cash flow for financing activities in the statement of cash flows. 7. North Co. issued a note to purchase a building. Answer: (I) (I) (N) (N) (N) (N) (N) Learning Objective: 01-08 Topic Area: Recording Business Events Under the Accounting Equation AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Blooms: Analyze Difficulty: 2 Medium Feedback: Issuing a note to purchase a building is an asset source transaction that increases a business’s assets (building) and increases its liabilities (notes payable). It does not affect net income or the statement of cash flows. 8. Name the group that has the primary authority for establishing U.S. GAAP. Answer: The Financial Accounting Standards Board (FASB) Learning Objective: 01-01 Chapter 01 - An Introduction to Accounting 1-5 Topic Area: Role of Accounting in Society AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Blooms: Remember Difficulty: 1 Easy Feedback: The Financial Accounting Standards Board (FASB) is a privately funded organization with the primary authority for establishing accounting standards in the United States 9. Who are the three distinct types of participants in a market? Briefly describe the role of each group of participants. Answer: Markets include consumers, conversion agents, and resource owners. Consumers use resources. Conversion agents are businesses that convert resources to the form that consumers want. Resource owners control the distribution of resources to conversion agents. Learning Objective: 01-01 Topic Area: Role of Accounting in Society AACSB: Reflective Thinking AICPA: BB Industry Blooms: Understand Difficulty: 2 Medium 10. What is meant by the term "stakeholders?" Answer: Stakeholders are the parties that are interested in operations of an organization. Stakeholders often are users or potential users of accounting information. Stakeholders include resource providers, financial analysts, brokers, attorneys, government regulators and news reporters. Learning Objective: 01-01 Topic Area: Role of Accounting in Society AACSB: Reflective Thinking AICPA: BB Industry AICPA: FN Measurement Blooms: Remember Difficulty: 2 Medium