,ACCESS Test Bank for Financial Accounting 11th Edition Libby
v v v v v v v v
Financial Accounting Edition 11 by Libby
v v v v v
CORRECT ANSWERS ARE LOCATED IN THE 2ND HALF OF THIS DOC.
v v v v v v v v v v
TRUE/FALSEv-vWritev'T'vifvthevstatementvisvtruevandv'F'vifvthevstatementvisvfalse.
1) Avbusinessventity'svaccountingvsystemvcreatesvfinancialvaccountingvreportsvwhichvarev
providedvtovexternalvdecisionvmakers.
⊚v true
⊚v false
2) Businessvmanagersvutilizevinternalvmanagementvreportsvtovplanvandvmanagevthevdailyvo
perations.
⊚v true
⊚v false
3) Borrowingvmoneyvisvanvinvestingvactivity.
⊚v true
⊚v false
4) Thevbalancevsheetvincludesvassets,vliabilities,vandvstockholders'vequityvatvavpointvinvtime.
⊚v true
⊚v false
5) Revenuevisvrecognizedvwithinvthevincomevstatementvduringvthevperiodvinvwhichvcashvisvc
ollected.
⊚v true
⊚v false
6) Totalvassetsvarev$37,500,vtotalvliabilitiesvarev$20,000vandvcommonvstockvisv$10,000;vtherefore,vr
etainedvearningsvarev$7,500.
⊚v true
⊚v false
7) Forvthevcurrentvyear,vnetvincomevofvCarolvCompanyvisv$20,000vandvdividendsvdeclaredvare
$6,000;vtherefore,vretainedvearningsvhavevincreasedv$26,000vduringvthevyear.
⊚v true
⊚v false
8) Thevincomevstatementvisvavmeasurevofvanventity'sveconomicvperformancevforvavperiodvofvtime.
⊚v true
⊚v false
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,ACCESS Test Bank for Financial Accounting 11th Edition Libby
v v v v v v v v
Financial Accounting Edition 11 by Libby
v v v v v
9) ThevaccountingvequationvstatesvthatvAssetsv=vLiabilitiesv+vStockholders'vEquity.
⊚v true
⊚v false
10) Avdecisionvmakervwhovwantsvtovunderstandvavcompany'svfinancialvstatementsvmustvcarefullyvr
eadvthevnotesvtovthevfinancialvstatementsvbecausevthesevdisclosuresvprovidevusefulvsupplemen
talvinformation.
⊚v true
⊚v false
11) Thevbalancevsheetvshowsvwhatvthevcompanyvownsvandvwhatvthevcompanyvowesvtovcreditorsva
ndvowners.
⊚v true
⊚v false
12) Stockholders'vequityvonvthevbalancevsheetvincludesvcommonvstockvandvretainedvearnings.
⊚v true
⊚v false
13) Thevamountvofvcashvpaidvbyvavbusinessvforvdividendsvwouldvbevreportedvasvanvoperatingva
ctivityvcashvflowvonvthevstatementvofvcashvflows.
⊚v true
⊚v false
14) Avcompany'svretainedvearningsvbalancevincreasedv$50,000vlastvyear;vtherefore,vnetvincomevlastvy
earvmustvhavevbeenv$50,000.
⊚v true
⊚v false
15) Duevtovthevrelationshipsvamongvfinancialvstatements,vthevstatementvofvstockholders'vequityvl
inksvthevincomevstatementvtovthevbalancevsheet.
⊚v true
⊚v false
16) Thevstatementvofvstockholders'vequityvexplainsvthevchangevinvthevretainedvearningsvbalancevc
ausedvbyvstockholdervinvestmentsvandvdividendvdeclarations.
⊚v true
⊚v false
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, ACCESS Test Bank for Financial Accounting 11th Edition Libby
v v v v v v v v
Financial Accounting Edition 11 by Libby
v v v v v
17) ThevFinancialvAccountingvStandardsvBoardv(FASB)vhasvbeenvgivenvthevauthorityvbyvthev
SecuritiesvandvExchangevCommissionv(SEC)vtovdevelopvgenerallyvacceptedvaccountingv
principles.
⊚v true
⊚v false
18) IfvavU.S.vdomesticvcompanyvdoesvbusinessvinvavforeignvcountry,vthevSecuritiesvandvExchangev
Commissionv(SEC)vrequiresvthevusevofvInternationalvFinancialvReportingvStandardsv(IFRS)vfo
rvthevcompany'svfinancialvreportingvinvthevU.S.
⊚v true
⊚v false
19) InvthevUnitedvStates,vgenerallyvacceptedvaccountingvprinciplesvarevpublishedvinvthevFASBv
AccountingvStandardsvCodification.
⊚v true
⊚v false
20) Thevprimaryvresponsibilityvforvthevcontentvofvthevfinancialvstatementsvliesvwithvthevexternalva
uditor.
⊚v true
⊚v false
21) Anvauditvisvanvexaminationvofvthevfinancialvstatementsvtovensurevthatvtheyvrepresentvwhatvtheyvc
laimvandvtovmakevsurevthatvtheyvarevinvcompliancevwithvgenerallyvacceptedvaccountingvprincipl
es.
⊚v true
⊚v false
22) Auditorsvcanvbevheldvlegallyvliablevforvfraudulentvfinancialvstatements.
⊚v true
⊚v false
23) Onevofvthevadvantagesvofvavcorporationvwhenvcomparedvtovavpartnershipvisvthevlimitedvliabilityvo
fvthevowners.
⊚v true
⊚v false
Versionv1 3
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v v v v v v v v
Financial Accounting Edition 11 by Libby
v v v v v
CORRECT ANSWERS ARE LOCATED IN THE 2ND HALF OF THIS DOC.
v v v v v v v v v v
TRUE/FALSEv-vWritev'T'vifvthevstatementvisvtruevandv'F'vifvthevstatementvisvfalse.
1) Avbusinessventity'svaccountingvsystemvcreatesvfinancialvaccountingvreportsvwhichvarev
providedvtovexternalvdecisionvmakers.
⊚v true
⊚v false
2) Businessvmanagersvutilizevinternalvmanagementvreportsvtovplanvandvmanagevthevdailyvo
perations.
⊚v true
⊚v false
3) Borrowingvmoneyvisvanvinvestingvactivity.
⊚v true
⊚v false
4) Thevbalancevsheetvincludesvassets,vliabilities,vandvstockholders'vequityvatvavpointvinvtime.
⊚v true
⊚v false
5) Revenuevisvrecognizedvwithinvthevincomevstatementvduringvthevperiodvinvwhichvcashvisvc
ollected.
⊚v true
⊚v false
6) Totalvassetsvarev$37,500,vtotalvliabilitiesvarev$20,000vandvcommonvstockvisv$10,000;vtherefore,vr
etainedvearningsvarev$7,500.
⊚v true
⊚v false
7) Forvthevcurrentvyear,vnetvincomevofvCarolvCompanyvisv$20,000vandvdividendsvdeclaredvare
$6,000;vtherefore,vretainedvearningsvhavevincreasedv$26,000vduringvthevyear.
⊚v true
⊚v false
8) Thevincomevstatementvisvavmeasurevofvanventity'sveconomicvperformancevforvavperiodvofvtime.
⊚v true
⊚v false
Versionv1 1
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,ACCESS Test Bank for Financial Accounting 11th Edition Libby
v v v v v v v v
Financial Accounting Edition 11 by Libby
v v v v v
9) ThevaccountingvequationvstatesvthatvAssetsv=vLiabilitiesv+vStockholders'vEquity.
⊚v true
⊚v false
10) Avdecisionvmakervwhovwantsvtovunderstandvavcompany'svfinancialvstatementsvmustvcarefullyvr
eadvthevnotesvtovthevfinancialvstatementsvbecausevthesevdisclosuresvprovidevusefulvsupplemen
talvinformation.
⊚v true
⊚v false
11) Thevbalancevsheetvshowsvwhatvthevcompanyvownsvandvwhatvthevcompanyvowesvtovcreditorsva
ndvowners.
⊚v true
⊚v false
12) Stockholders'vequityvonvthevbalancevsheetvincludesvcommonvstockvandvretainedvearnings.
⊚v true
⊚v false
13) Thevamountvofvcashvpaidvbyvavbusinessvforvdividendsvwouldvbevreportedvasvanvoperatingva
ctivityvcashvflowvonvthevstatementvofvcashvflows.
⊚v true
⊚v false
14) Avcompany'svretainedvearningsvbalancevincreasedv$50,000vlastvyear;vtherefore,vnetvincomevlastvy
earvmustvhavevbeenv$50,000.
⊚v true
⊚v false
15) Duevtovthevrelationshipsvamongvfinancialvstatements,vthevstatementvofvstockholders'vequityvl
inksvthevincomevstatementvtovthevbalancevsheet.
⊚v true
⊚v false
16) Thevstatementvofvstockholders'vequityvexplainsvthevchangevinvthevretainedvearningsvbalancevc
ausedvbyvstockholdervinvestmentsvandvdividendvdeclarations.
⊚v true
⊚v false
Versionv1 2
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, ACCESS Test Bank for Financial Accounting 11th Edition Libby
v v v v v v v v
Financial Accounting Edition 11 by Libby
v v v v v
17) ThevFinancialvAccountingvStandardsvBoardv(FASB)vhasvbeenvgivenvthevauthorityvbyvthev
SecuritiesvandvExchangevCommissionv(SEC)vtovdevelopvgenerallyvacceptedvaccountingv
principles.
⊚v true
⊚v false
18) IfvavU.S.vdomesticvcompanyvdoesvbusinessvinvavforeignvcountry,vthevSecuritiesvandvExchangev
Commissionv(SEC)vrequiresvthevusevofvInternationalvFinancialvReportingvStandardsv(IFRS)vfo
rvthevcompany'svfinancialvreportingvinvthevU.S.
⊚v true
⊚v false
19) InvthevUnitedvStates,vgenerallyvacceptedvaccountingvprinciplesvarevpublishedvinvthevFASBv
AccountingvStandardsvCodification.
⊚v true
⊚v false
20) Thevprimaryvresponsibilityvforvthevcontentvofvthevfinancialvstatementsvliesvwithvthevexternalva
uditor.
⊚v true
⊚v false
21) Anvauditvisvanvexaminationvofvthevfinancialvstatementsvtovensurevthatvtheyvrepresentvwhatvtheyvc
laimvandvtovmakevsurevthatvtheyvarevinvcompliancevwithvgenerallyvacceptedvaccountingvprincipl
es.
⊚v true
⊚v false
22) Auditorsvcanvbevheldvlegallyvliablevforvfraudulentvfinancialvstatements.
⊚v true
⊚v false
23) Onevofvthevadvantagesvofvavcorporationvwhenvcomparedvtovavpartnershipvisvthevlimitedvliabilityvo
fvthevowners.
⊚v true
⊚v false
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