Chap 01 7e Edmon
N N N
ds
Answers are at the end of each chapter
N N N N N N N
1) WhichNofNtheNfollowingNgroupsNhasNtheNprimaryNresponsibilityNforNestablishingNge
nerallyNacceptedNaccountingNprinciplesNforNbusinessNentitiesNinNtheNUnitedNState
s?
A) SecuritiesNandNExchangeNCommission
B) U.S.NCongress
C) InternationalNAccountingNStandardsNBoard
D) FinancialNAccountingNStandardsNBoard
2) TheNHeritageNCompanyNisNaNmanufacturerNofNofficeNfurniture.NWhichNtermNbestNd
escribesNHeritage'sNroleNinNsociety?
A) Business
B) RegulatoryNagency
C) Consumer
D) ResourceNowner
3) WhichNresourceNprovidersNlendNfinancialNresourcesNtoNaNbusinessNwithNtheNexpe
ctationNofNrepaymentNwithNinterest?
A) Consumers
B) Creditors
C) Investors
D) Owners
4) WhichNtypeNofNaccountingNinformationNisNintendedNtoNsatisfyNtheNneedsNofNexternal
NusersNofNaccountingNinformation?
A) CostNaccounting
B) ManagerialNaccounting
C) TaxNaccounting
D) FinancialNaccounting
5) WhichNofNtheNfollowingNisNfalseNregardingNmanagerialNaccountingNinformation?
A) ItNisNoftenNusedNbyNinvestors.
B) ItNisNmoreNdetailedNthanNfinancialNaccountingNinformation.
C) ItNcanNincludeNnonfinancialNinformation.
D) ItNfocusesNonNdivisionalNratherNthanNoverallNprofitability.
3
,6) FinancialNaccountingNstandardsNareNknownNcollectivelyNasNGAAP.NWhatNdoesNthatN
acronymNstandNfor?
A) GenerallyNAcceptedNAccountingNPrinciples
B) GenerallyNAppliedNAccountingNProcedures
C) GovernmentallyNApprovedNAccountingNPractices
D) GenerallyNAuthorizedNAuditingNPrinciples
7) InternationalNaccountingNstandardsNareNformulatedNbyNtheNIASB.NWhatNdoesNthatN
acronymNstandNfor?
A) InternationallyNAcceptedNStandardsNBoard
B) InternationalNAccountingNStandardsNBoard
C) InternationalNAccountabilityNStandardsNBureau
D) InternationalNAccountingNandNSustainabilityNBoard
8) JackNHenryNborrowedN$800,000NfromNWaltNBankNtoNopenNaNnewNbikeNstoreNcalledN
WoodenNWheels.NJackNtransferredN$650,000NofNtheNcashNthatNheNborrowedNtoNtheNs
toreNonNtheNfirstNdayNofNtheNyear.NHowNmanyNreportingNentitiesNexistNinNthisNscenario?
A) OneNreportingNentity
B) TwoNreportingNentities
C) ThreeNreportingNentities
D) FourNreportingNentities
4
,9) JackNHenryNborrowedN$800,000NfromNWaltNBankNtoNopenNaNnewNbikeNstoreNcalledNW
oodenNWheels.NJackNtransferredN$650,000NofNtheNcashNheNborrowedNtoNWoodenNW
heelsNonNtheNfirstNdayNofNtheNyear.NWhichNofNtheNfollowingNappropriatelyNreflectsNtheN
cashNtransactionsNbetweenNtheseNreportingNentities?
Option JackNHenry WoodenNWheels WaltNBank
A. $ 150,000Nincrease $N650,000 $N800,000
increase decrease
B. $ 800,000Nincrease $N650,000 $N150,000
increase decrease
C. $ 800,000Ndecrease $N800,000 $N650,000
increase decrease
D. $ 650,000Nincrease $N150,000 $N800,000
increase decrease
A) OptionNA
B) OptionNB
C) OptionNC
D) OptionND
10) EllenNGatsbyNandNherNsiblings,NBenNandNSarah,NstartedNGatsbyNCompanyNwhen
NtheyNeachNinvestedN$100,000NinNtheNcompany.NAfterNtheNinvestmentsNthereNwillN
be
A) oneNreportingNentity.
B) twoNreportingNentities.
C) threeNreportingNentities.
D) fourNreportingNentities.
11) JohnNHamiltonNborrowedN$528,000NfromNStoneNCreekNBankNtoNopenNaNnewNrestaura
ntNcalledNSauce-It-
Up.NJohnNtransferredN$475,200NofNtheNcashNheNborrowedNtoNtheNrestaurantNonNtheNfir
stNdayNofNtheNyear.NHowNmanyNreportingNentitiesNexistNinNthisNscenario?
A) TwoNreportingNentities
B) ThreeNreportingNentities
C) OneNreportingNentity
D) FourNreportingNentities
5
, 12) JohnNHamiltonNborrowedN$540,000NfromNStoneNCreekNBankNtoNopenNaNnewNrestaura
ntNcalledNSauce-It-
Up.NJohnNtransferredN$486,000NofNtheNcashNheNborrowedNtoNtheNCompanyNonNtheNfirs
tNdayNofNtheNyear.NWhichNofNtheNfollowingNappropriatelyNreflectsNtheNcashNtransactions
NbetweenN theseNreportingNentities?
JohnNHamilton Sauce-It-Up StoneNCreekNBank
A. $N54,000N increase $N486,000N increase $N540,000N decrease
B. $N540,000N increase $N486,000N increase $N540,000N decrease
C. $N540,000N decrease $N540,000N increase $N540,000N decrease
D. $N486,000N increase $N54,000N increase $N540,000N decrease
A) OptionNA
B) OptionNB
C) OptionNC
D) OptionND
13) WhichNofNtheNfollowingNisNanNaccurateNdefinitionNofNtheNtermN“asset?”
A) AnNobligationNtoNcreditors
B) ANresourceNthatNwillNbeNusedNtoNproduceNrevenue
C) ANtransferNofNwealthNfromNtheNbusinessNtoNitsNstockholders
D) ANsacrificeNincurredNfromNoperatingNtheNbusiness
14) WhichNofNtheNfollowingNisN(are)Nsource(s)NofNassetsNtoNaNbusiness?
A) Creditors
B) Investors
C) Operations
D) AllNtheNanswersNrepresentNsourcesNofNassets.
15) IfNtotalNassetsNdecrease,NthenNwhichNofNtheNfollowingNstatementsNisNtrue?
A) LiabilitiesNmustNincreaseNandNretainedNearningsNmustNdecrease.
B) CommonNstockNmustNdecreaseNandNretainedNearningsNmustNincrease.
C) Liabilities,NcommonNstock,NorNretainedNearningsNmustNdecrease.
D) Liabilities,NcommonNstock,NorNretainedNearningsNmustNincrease.
6
N N N
ds
Answers are at the end of each chapter
N N N N N N N
1) WhichNofNtheNfollowingNgroupsNhasNtheNprimaryNresponsibilityNforNestablishingNge
nerallyNacceptedNaccountingNprinciplesNforNbusinessNentitiesNinNtheNUnitedNState
s?
A) SecuritiesNandNExchangeNCommission
B) U.S.NCongress
C) InternationalNAccountingNStandardsNBoard
D) FinancialNAccountingNStandardsNBoard
2) TheNHeritageNCompanyNisNaNmanufacturerNofNofficeNfurniture.NWhichNtermNbestNd
escribesNHeritage'sNroleNinNsociety?
A) Business
B) RegulatoryNagency
C) Consumer
D) ResourceNowner
3) WhichNresourceNprovidersNlendNfinancialNresourcesNtoNaNbusinessNwithNtheNexpe
ctationNofNrepaymentNwithNinterest?
A) Consumers
B) Creditors
C) Investors
D) Owners
4) WhichNtypeNofNaccountingNinformationNisNintendedNtoNsatisfyNtheNneedsNofNexternal
NusersNofNaccountingNinformation?
A) CostNaccounting
B) ManagerialNaccounting
C) TaxNaccounting
D) FinancialNaccounting
5) WhichNofNtheNfollowingNisNfalseNregardingNmanagerialNaccountingNinformation?
A) ItNisNoftenNusedNbyNinvestors.
B) ItNisNmoreNdetailedNthanNfinancialNaccountingNinformation.
C) ItNcanNincludeNnonfinancialNinformation.
D) ItNfocusesNonNdivisionalNratherNthanNoverallNprofitability.
3
,6) FinancialNaccountingNstandardsNareNknownNcollectivelyNasNGAAP.NWhatNdoesNthatN
acronymNstandNfor?
A) GenerallyNAcceptedNAccountingNPrinciples
B) GenerallyNAppliedNAccountingNProcedures
C) GovernmentallyNApprovedNAccountingNPractices
D) GenerallyNAuthorizedNAuditingNPrinciples
7) InternationalNaccountingNstandardsNareNformulatedNbyNtheNIASB.NWhatNdoesNthatN
acronymNstandNfor?
A) InternationallyNAcceptedNStandardsNBoard
B) InternationalNAccountingNStandardsNBoard
C) InternationalNAccountabilityNStandardsNBureau
D) InternationalNAccountingNandNSustainabilityNBoard
8) JackNHenryNborrowedN$800,000NfromNWaltNBankNtoNopenNaNnewNbikeNstoreNcalledN
WoodenNWheels.NJackNtransferredN$650,000NofNtheNcashNthatNheNborrowedNtoNtheNs
toreNonNtheNfirstNdayNofNtheNyear.NHowNmanyNreportingNentitiesNexistNinNthisNscenario?
A) OneNreportingNentity
B) TwoNreportingNentities
C) ThreeNreportingNentities
D) FourNreportingNentities
4
,9) JackNHenryNborrowedN$800,000NfromNWaltNBankNtoNopenNaNnewNbikeNstoreNcalledNW
oodenNWheels.NJackNtransferredN$650,000NofNtheNcashNheNborrowedNtoNWoodenNW
heelsNonNtheNfirstNdayNofNtheNyear.NWhichNofNtheNfollowingNappropriatelyNreflectsNtheN
cashNtransactionsNbetweenNtheseNreportingNentities?
Option JackNHenry WoodenNWheels WaltNBank
A. $ 150,000Nincrease $N650,000 $N800,000
increase decrease
B. $ 800,000Nincrease $N650,000 $N150,000
increase decrease
C. $ 800,000Ndecrease $N800,000 $N650,000
increase decrease
D. $ 650,000Nincrease $N150,000 $N800,000
increase decrease
A) OptionNA
B) OptionNB
C) OptionNC
D) OptionND
10) EllenNGatsbyNandNherNsiblings,NBenNandNSarah,NstartedNGatsbyNCompanyNwhen
NtheyNeachNinvestedN$100,000NinNtheNcompany.NAfterNtheNinvestmentsNthereNwillN
be
A) oneNreportingNentity.
B) twoNreportingNentities.
C) threeNreportingNentities.
D) fourNreportingNentities.
11) JohnNHamiltonNborrowedN$528,000NfromNStoneNCreekNBankNtoNopenNaNnewNrestaura
ntNcalledNSauce-It-
Up.NJohnNtransferredN$475,200NofNtheNcashNheNborrowedNtoNtheNrestaurantNonNtheNfir
stNdayNofNtheNyear.NHowNmanyNreportingNentitiesNexistNinNthisNscenario?
A) TwoNreportingNentities
B) ThreeNreportingNentities
C) OneNreportingNentity
D) FourNreportingNentities
5
, 12) JohnNHamiltonNborrowedN$540,000NfromNStoneNCreekNBankNtoNopenNaNnewNrestaura
ntNcalledNSauce-It-
Up.NJohnNtransferredN$486,000NofNtheNcashNheNborrowedNtoNtheNCompanyNonNtheNfirs
tNdayNofNtheNyear.NWhichNofNtheNfollowingNappropriatelyNreflectsNtheNcashNtransactions
NbetweenN theseNreportingNentities?
JohnNHamilton Sauce-It-Up StoneNCreekNBank
A. $N54,000N increase $N486,000N increase $N540,000N decrease
B. $N540,000N increase $N486,000N increase $N540,000N decrease
C. $N540,000N decrease $N540,000N increase $N540,000N decrease
D. $N486,000N increase $N54,000N increase $N540,000N decrease
A) OptionNA
B) OptionNB
C) OptionNC
D) OptionND
13) WhichNofNtheNfollowingNisNanNaccurateNdefinitionNofNtheNtermN“asset?”
A) AnNobligationNtoNcreditors
B) ANresourceNthatNwillNbeNusedNtoNproduceNrevenue
C) ANtransferNofNwealthNfromNtheNbusinessNtoNitsNstockholders
D) ANsacrificeNincurredNfromNoperatingNtheNbusiness
14) WhichNofNtheNfollowingNisN(are)Nsource(s)NofNassetsNtoNaNbusiness?
A) Creditors
B) Investors
C) Operations
D) AllNtheNanswersNrepresentNsourcesNofNassets.
15) IfNtotalNassetsNdecrease,NthenNwhichNofNtheNfollowingNstatementsNisNtrue?
A) LiabilitiesNmustNincreaseNandNretainedNearningsNmustNdecrease.
B) CommonNstockNmustNdecreaseNandNretainedNearningsNmustNincrease.
C) Liabilities,NcommonNstock,NorNretainedNearningsNmustNdecrease.
D) Liabilities,NcommonNstock,NorNretainedNearningsNmustNincrease.
6
