Test Bank for Fundamental Financial Accounting Concepts
11th Edition
by Thomas Edmonds, Philip Olds, Christopher Edmonds
,Student qpname:
1) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpmarkets qpis qptrue qpor qpfalse.
a) qpFinancial qpresources qpcan qpbe qpprovided qpto qpa qpbusiness qpby qpinvestors.
b) qpResource qpowners qpare qpthe qpbusinesses qpthat qptransform qpresources qpinto
qpproducts qpthat qpsatisfy qpconsumer qpdesires.
c) qpLabor qpresources qpinclude qpboth qpthe qpphysical qpand qpintellectual qplabor qpof qpa
qpbusiness's qpemployees.
d) qpBusinesses qppurchase qptheir qpresources qpfrom qpresource qpowners.
e) qpConsumers qpare qpthe qpmain qpproviders qpof qpresources qpin qpany qpmarket.
2) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpaccounting qpinformation
qpis qptrue qpor qpfalse.
a) qpFinancial qpaccounting qpis qpprimarily qpintended qpto qpsatisfy qpthe qpinformation
qpneeds qpof qpinternal qpstakeholders.
b) qpManagerial qpaccounting qpinformation qpincludes qpfinancial qpand
qpnonfinancial qpinformation.
c) qpThe qpaccounting qpinformation qpintended qpto qpsatisfy qpthe qpneeds qpof qpa
qpcompany's qpemployees qpis qpmanagerial qpaccounting qpinformation.
d) qpGAAP qprequires qpthat qpcompanies qpadhere qpto qpfinancial qpaccounting qpstandards.
e) qpManagerial qpaccounting qpinformation qpis qpusually qpless qpdetailed qpthan
qpfinancial qpaccounting qpinformation.
3) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpliabilities qpis qptrue qpor qpfalse.
a) qpA qpnet qploss qpon qpthe qpincome qpstatement qpdecreases qpliabilities.
b) qpThe qpacquisition qpof qpa qpbank qploan qpincreases qpboth qpassets qpand qpliabilities.
c) qpThe qpaccounting qpequation qprequires qpthat qpliabilities qpbe qpequal qpto qpstockholders’
qp equity.
d) qpThe qpamount qpof qpa qpcompany's qpliabilities qpis qpequal qpto qpthe qpdifference
qpbetween qpits qpassets qpand qpits qpstockholders’ qpequity.
e) qpLiabilities qpare qpreported qpon qpthe qpstatement qpof qpcash qpflows qpof qpa qpbusiness.
,4) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpretained qpearnings qpis qptrue qpor
qpfalse.
a) qpA qpdividend qppaid qpto qpstockholders qpdecreases qpretained qpearnings.
b) qpIssuing qpcommon qpstock qpfor qpcash qpincreases qpretained qpearnings.
c) qpThe qpamount qpof qpnet qpincome qpfor qpa qpperiod qpmust qpequal qpretained qpearnings.
d) qpThe qppurchase qpof qpa qptruck qpdecreases qpretained qpearnings.
e) qpNet qpincome qpincreases qpretained qpearnings.
5) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpthe qptypes qpof
qptransactions qpis qptrue qpor qpfalse.
a) qpAn qpasset qpsource qptransaction qpincreases qptotal qpassets qpand qpincreases qpclaims qpto
qp assets.
b) qpThe qpissuance qpof qpstock qpto qpowners qpfor qpcash qpwould qpbe qpan qpexample
qpof qpan qpasset qpexchange qptransaction.
c) qpPurchasing qpequipment qpfor qpcash qpis qpan qpexample qpof qpan qpasset qpuse qptransaction.
d) qpPaying qpa qpdividend qpto qpstockholders qpis qpan qpexample qpof qpan qpasset qpuse qptransaction.
e) qpMaking qpa qppayment qpon qpa qpbank qploan qpis qpan qpexample qpof qpan qpasset qpexchange
qptransaction.
6) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpfinancial qpstatements
qpis qptrue qpor qpfalse.
a) qpA qpcash qpdividend qppaid qpto qpstockholders qpis qpreported qpin qpthe qpinvesting
qpactivities qpsection qpof qpthe qpstatement qpof qpcash qpflows.
b) qpA qpcash qpdividend qppaid qpto qpstockholders qpis qpreported qpon qpthe qpstatement qpof
qpchanges qpin qpstockholders' qpequity.
c) qpA qpcash qpdividend qppaid qpto qpstockholders qpis qpreported qpon qpthe qpincome qpstatement.
d) qpThe qpbalance qpsheet qpreports qpthe qpending qpbalances qpof qppermanent qpaccounts qpas
qpof qpthe qplast qpday qpof qpthe qpaccounting qpperiod.
e) qpChanges qpin qpretained qpearnings qpduring qpthe qpaccounting qpperiod qpare
qpreported qpon qpthe qpincome qpstatement.
, 7) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpstockholders’ qpequity
qpis qptrue qpor qpfalse.
a) qpExpenses qpdecrease qpretained qpearnings.
b) qpStockholders' qpequity qpand qpliabilities qpcan qpbe qpviewed qpeither qpas qpsources
qpof qpassets qpor qpclaims qpto qpassets qpof qpthe qpbusiness.
c) qpRetained qpearnings qpis qpincreased qpby qploans qpreceived qpfrom qpa qpbank.
d) qpDividends qppaid qpto qpstockholders qpdecrease qpcommon qpstock.
e) qpGenerally, qpassets qpare qpreported qpat qpthe qpactual qpprice qppaid qpfor qpthem qpwhen
qppurchased qpregardless qpof qpsubsequent qpchanges qpin qpmarket qpvalue.
8) Jessup qpCompany qpwas qpfounded qpin qpYear qp1. qpIt qpacquired qp$45,000 qpcash qpby qpissuing
qpstock qpto qpinvestors qpand qpan qpadditional qp$15,000 qpcash qpby qpborrowing qpfrom qpcreditors.
qpDuring qpYear qp1 qpit qpreceived
$25,000 qpcash qprevenues qpand qppaid qp$32,000 qpin qpcash qpexpenses. qpThe qpcompany qpthen
qpwent qpout qpof qpbusiness.
Required:
a) Explain qpthe qpterm, qp"business qpliquidation."
b) What qpamount qpof qpcash qpshould qpJessup qpCompany qphave qphad qpon qphand qpimmediately
qpbefore qpgoing qpout qpof qpbusiness?
c) What qpamount qpof qpcash qpwill qpJessup's qpcreditors qpreceive?
d) What qpamount qpof qpcash qpwill qpJessup's qpstockholders qpreceive?
9) Bates qpCompany qpentered qpinto qpthe qpfollowing qptransactions qpduring qpits qpfirst qpyear qpin
qpbusiness. qpAssume qpthat qpall qptransactions qpinvolve qpthe qpreceipt qpor qppayment qpof qpcash.
1) Issued qpcommon qpstock qpto qpinvestors qpfor qp$25,000 qpcash.
2) Borrowed qp$18,000 qpfrom qpthe qplocal qpbank.
3) Provided qpservices qpto qpcustomers qpfor qp$28,000.
4) Paid qpexpenses qpamounting qpto qp$21,400.
5) Purchased qpa qpplot qpof qpland qpcosting qp$22,000.
6) Paid qpa qpdividend qpof qp$15,000 qpto qpits qpstockholders.
7) Repaid qp$12,000 qpof qpthe qploan qplisted qpin qpitem qp2.
Required:
(a) Fill qpin qpthe qpthree qpcolumn qpheadings qpof qpthe qpaccounting qpequation qpin qpthe qpfirst qprow
qpof qpthe qptable qpshown qpbelow.
(b) Show qpthe qpeffects qpof qpthe qpabove qptransactions qpon qpthe qpaccounting qpequation.
11th Edition
by Thomas Edmonds, Philip Olds, Christopher Edmonds
,Student qpname:
1) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpmarkets qpis qptrue qpor qpfalse.
a) qpFinancial qpresources qpcan qpbe qpprovided qpto qpa qpbusiness qpby qpinvestors.
b) qpResource qpowners qpare qpthe qpbusinesses qpthat qptransform qpresources qpinto
qpproducts qpthat qpsatisfy qpconsumer qpdesires.
c) qpLabor qpresources qpinclude qpboth qpthe qpphysical qpand qpintellectual qplabor qpof qpa
qpbusiness's qpemployees.
d) qpBusinesses qppurchase qptheir qpresources qpfrom qpresource qpowners.
e) qpConsumers qpare qpthe qpmain qpproviders qpof qpresources qpin qpany qpmarket.
2) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpaccounting qpinformation
qpis qptrue qpor qpfalse.
a) qpFinancial qpaccounting qpis qpprimarily qpintended qpto qpsatisfy qpthe qpinformation
qpneeds qpof qpinternal qpstakeholders.
b) qpManagerial qpaccounting qpinformation qpincludes qpfinancial qpand
qpnonfinancial qpinformation.
c) qpThe qpaccounting qpinformation qpintended qpto qpsatisfy qpthe qpneeds qpof qpa
qpcompany's qpemployees qpis qpmanagerial qpaccounting qpinformation.
d) qpGAAP qprequires qpthat qpcompanies qpadhere qpto qpfinancial qpaccounting qpstandards.
e) qpManagerial qpaccounting qpinformation qpis qpusually qpless qpdetailed qpthan
qpfinancial qpaccounting qpinformation.
3) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpliabilities qpis qptrue qpor qpfalse.
a) qpA qpnet qploss qpon qpthe qpincome qpstatement qpdecreases qpliabilities.
b) qpThe qpacquisition qpof qpa qpbank qploan qpincreases qpboth qpassets qpand qpliabilities.
c) qpThe qpaccounting qpequation qprequires qpthat qpliabilities qpbe qpequal qpto qpstockholders’
qp equity.
d) qpThe qpamount qpof qpa qpcompany's qpliabilities qpis qpequal qpto qpthe qpdifference
qpbetween qpits qpassets qpand qpits qpstockholders’ qpequity.
e) qpLiabilities qpare qpreported qpon qpthe qpstatement qpof qpcash qpflows qpof qpa qpbusiness.
,4) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpretained qpearnings qpis qptrue qpor
qpfalse.
a) qpA qpdividend qppaid qpto qpstockholders qpdecreases qpretained qpearnings.
b) qpIssuing qpcommon qpstock qpfor qpcash qpincreases qpretained qpearnings.
c) qpThe qpamount qpof qpnet qpincome qpfor qpa qpperiod qpmust qpequal qpretained qpearnings.
d) qpThe qppurchase qpof qpa qptruck qpdecreases qpretained qpearnings.
e) qpNet qpincome qpincreases qpretained qpearnings.
5) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpthe qptypes qpof
qptransactions qpis qptrue qpor qpfalse.
a) qpAn qpasset qpsource qptransaction qpincreases qptotal qpassets qpand qpincreases qpclaims qpto
qp assets.
b) qpThe qpissuance qpof qpstock qpto qpowners qpfor qpcash qpwould qpbe qpan qpexample
qpof qpan qpasset qpexchange qptransaction.
c) qpPurchasing qpequipment qpfor qpcash qpis qpan qpexample qpof qpan qpasset qpuse qptransaction.
d) qpPaying qpa qpdividend qpto qpstockholders qpis qpan qpexample qpof qpan qpasset qpuse qptransaction.
e) qpMaking qpa qppayment qpon qpa qpbank qploan qpis qpan qpexample qpof qpan qpasset qpexchange
qptransaction.
6) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpfinancial qpstatements
qpis qptrue qpor qpfalse.
a) qpA qpcash qpdividend qppaid qpto qpstockholders qpis qpreported qpin qpthe qpinvesting
qpactivities qpsection qpof qpthe qpstatement qpof qpcash qpflows.
b) qpA qpcash qpdividend qppaid qpto qpstockholders qpis qpreported qpon qpthe qpstatement qpof
qpchanges qpin qpstockholders' qpequity.
c) qpA qpcash qpdividend qppaid qpto qpstockholders qpis qpreported qpon qpthe qpincome qpstatement.
d) qpThe qpbalance qpsheet qpreports qpthe qpending qpbalances qpof qppermanent qpaccounts qpas
qpof qpthe qplast qpday qpof qpthe qpaccounting qpperiod.
e) qpChanges qpin qpretained qpearnings qpduring qpthe qpaccounting qpperiod qpare
qpreported qpon qpthe qpincome qpstatement.
, 7) Indicate qpwhether qpeach qpof qpthe qpfollowing qpstatements qpabout qpstockholders’ qpequity
qpis qptrue qpor qpfalse.
a) qpExpenses qpdecrease qpretained qpearnings.
b) qpStockholders' qpequity qpand qpliabilities qpcan qpbe qpviewed qpeither qpas qpsources
qpof qpassets qpor qpclaims qpto qpassets qpof qpthe qpbusiness.
c) qpRetained qpearnings qpis qpincreased qpby qploans qpreceived qpfrom qpa qpbank.
d) qpDividends qppaid qpto qpstockholders qpdecrease qpcommon qpstock.
e) qpGenerally, qpassets qpare qpreported qpat qpthe qpactual qpprice qppaid qpfor qpthem qpwhen
qppurchased qpregardless qpof qpsubsequent qpchanges qpin qpmarket qpvalue.
8) Jessup qpCompany qpwas qpfounded qpin qpYear qp1. qpIt qpacquired qp$45,000 qpcash qpby qpissuing
qpstock qpto qpinvestors qpand qpan qpadditional qp$15,000 qpcash qpby qpborrowing qpfrom qpcreditors.
qpDuring qpYear qp1 qpit qpreceived
$25,000 qpcash qprevenues qpand qppaid qp$32,000 qpin qpcash qpexpenses. qpThe qpcompany qpthen
qpwent qpout qpof qpbusiness.
Required:
a) Explain qpthe qpterm, qp"business qpliquidation."
b) What qpamount qpof qpcash qpshould qpJessup qpCompany qphave qphad qpon qphand qpimmediately
qpbefore qpgoing qpout qpof qpbusiness?
c) What qpamount qpof qpcash qpwill qpJessup's qpcreditors qpreceive?
d) What qpamount qpof qpcash qpwill qpJessup's qpstockholders qpreceive?
9) Bates qpCompany qpentered qpinto qpthe qpfollowing qptransactions qpduring qpits qpfirst qpyear qpin
qpbusiness. qpAssume qpthat qpall qptransactions qpinvolve qpthe qpreceipt qpor qppayment qpof qpcash.
1) Issued qpcommon qpstock qpto qpinvestors qpfor qp$25,000 qpcash.
2) Borrowed qp$18,000 qpfrom qpthe qplocal qpbank.
3) Provided qpservices qpto qpcustomers qpfor qp$28,000.
4) Paid qpexpenses qpamounting qpto qp$21,400.
5) Purchased qpa qpplot qpof qpland qpcosting qp$22,000.
6) Paid qpa qpdividend qpof qp$15,000 qpto qpits qpstockholders.
7) Repaid qp$12,000 qpof qpthe qploan qplisted qpin qpitem qp2.
Required:
(a) Fill qpin qpthe qpthree qpcolumn qpheadings qpof qpthe qpaccounting qpequation qpin qpthe qpfirst qprow
qpof qpthe qptable qpshown qpbelow.
(b) Show qpthe qpeffects qpof qpthe qpabove qptransactions qpon qpthe qpaccounting qpequation.
