Test bank for fundamentals of financial accounting fred phillips 6thedition exam guide

,FundamentalsRofRFinancialRAccounting,R6eR(Phillips)RChap
terR1R BusinessRDecisionsRandRFinancialRAccounting

1) StockholdersRareRownersRofRaRcorporation.

Answer:R TRUE
Explanation:R StockholdersRareRtheRownersRofRaRcorporation.RD
ifficulty:R1REasy
Topic:R AccountingRforRBusinessRDecisions
LearningRObjective:R 01-
01RDescribeRvariousRorganizationalRformsRandRbusinessRdecisionRmakers.RBloom's:R Understand
AACSB:R AnalyticalRThinkingRAccessi
bility:R KeyboardRNavigation

2) AllRcorporationsRacquireRfinancingRbyRissuingRstockRforRsaleRonRpublicRstockRexchanges.

Answer:R FALSE
Explanation:R MostRcorporationsRstartRoutRasRprivateRcompaniesRandRwillRapplyRtoRbecomeRpublic
RcompaniesR("goRpublic")RifRtheyRneedRaRlot RofRfinancing. RFinancingRcanRalsoRbeRacquiredRbyRbor

rowingRfromRbanks.
Difficulty:R2RMedium
Topic:R OrganizationalRForms
LearningRObjective:R 01-
01RDescribeRvariousRorganizationalRformsRandRbusinessRdecisionRmakers.RBloom's:R Understand
AACSB:R AnalyticalRThinkingRAccessi
bility:R KeyboardRNavigation

3) YouRpaidR$10,000RtoRbuyR1%RofRtheRstockRinRaRcorporationRthatRisRnowRbankrupt.RTheRcompan
yRowesR$10RmillionRdollarsRtoRitsRcreditors.RAsRaRresultRofRtheRbankruptcy,RyouRareRresponsibleRf
orRpayingR$100,000R(orR$10RmillionR×R1%)RofRtheRamountRowedRtoRtheRcreditors.

Answer:R FALSE
Explanation:R UnlikeRsoleRproprietorshipsRandRpartnerships,RaRcorporationRisRaRseparateRentityRfro
mRbothRlegalRandRaccountingRperspectives.RThisRmeansRthatRaRcorporation,RnotRitsRowners,RisRlegal
lyRresponsibleRforRitsRownRtaxesRandRdebts.
Difficulty:R2RMedium
Topic:R OrganizationalRForms
LearningRObjective:R 01-
01RDescribeRvariousRorganizationalRformsRandRbusinessRdecisionRmakers.RBloom's:R Apply
AACSB:R AnalyticalRThinkingRAccessi
bility:R KeyboardRNavigation




1
CopyrightR2019R©RMcGraw-
HillREducation.RAllRrightsRreserved.RNoRreproductionRorRdistributionRwithoutRtheRpriorRwrittenRconsentRofRMcGr
aw-HillREducation.

,4) CashRpaidRforRwagesRisRanRexampleRofRanRoperatingRactivityRonRtheRstatementRofRcashRflows.

Answer:R TRUE
Explanation:R CashRflowsRfromRrunningRtheRbusiness,RincludingRcashRpaidRforRwages,RareRoperatin
gRactivitiesRonRtheRstatementRofRcashRflows.
Difficulty:R1REasy
Topic:R FinancialRStatements
LearningRObjective:R 01-
02RDescribeRtheRpurpose,Rstructure,RandRcontentRofRtheRfourRbasicRfinancialRstatements.
Bloom's:R UnderstandRAACS
B:R AnalyticalRThinking
Accessibility:R KeyboardRNavigation

5) BorrowingRmoneyRfromRaRbankRisRaRfinancingRactivityRonRtheRstatementRofRcashRflows.

Answer:R TRUE
Explanation:R OnRtheRstatementRofRcashRflows,RborrowingRandRrepayingRbankRloansRareRfinancingRactivi
ties.
Difficulty:R1REasy
Topic:R FinancialRStatements
LearningRObjective:R 01-
02RDescribeRtheRpurpose,Rstructure,RandRcontentRofRtheRfourRbasicRfinancialRstatements.
Bloom's:R UnderstandRAACS
B:R AnalyticalRThinking
Accessibility:R KeyboardRNavigation

6) TheRdailyRactivitiesRinvolvedRinRrunningRaRbusiness,RsuchRasRbuyingRsuppliesRandRpayin
gRsalariesRandRwages,RareRclassifiedRasRoperatingRactivitiesRonRtheRstatementRofRcashRflows
.

Answer:R TRUE
Explanation:R BuyingRsuppliesRandRpayingRsalariesRandRwagesRareRnormalRoperatingRcostsRonRtheRs
tatementRofRcashRflows.
Difficulty:R1REasy
Topic:R FinancialRStatements
LearningRObjective:R 01-
02RDescribeRtheRpurpose,Rstructure,RandRcontentRofRtheRfourRbasicRfinancialRstatements.
Bloom's:R UnderstandRAACS
B:R AnalyticalRThinking
Accessibility:R KeyboardRNavigation




2
CopyrightR2019R©RMcGraw-
HillREducation.RAllRrightsRreserved.RNoRreproductionRorRdistributionRwithoutRtheRpriorRwrittenRconsentRofRMcGr
aw-HillREducation.

, 7) Stockholders'RequityRisRtheRdifferenceRbetweenRaRcompany'sRassetsRandRitsRliabilities.

Answer:R TRUE
Explanation:R AssetsR=RLiabilitiesR+RStockholders'REquity;Rtherefore,RAssetsR–
RLiabilitiesR=RStockholders'REquity

Difficulty:R2RMedium
Topic:R TheRBasicRAccountingREquation
LearningRObjective:R 01-
02RDescribeRtheRpurpose,Rstructure,RandRcontentRofRtheRfourRbasicRfinancialRstatements.
Bloom's:R UnderstandRAACS
B:R AnalyticalRThinking
Accessibility:R KeyboardRNavigation

8) ARcompanyRowesR$200,000RonRaRbankRloan.RItRwillRbeRreportedRbyRtheRcompanyRasRAccount
sRPayable.

Answer:R FALSE
Explanation:R FormalRdebt,RevidencedRbyRaRwrittenRcontractRorRnote,RisRreportedRasRNotesRPayable.RDiff
iculty:R1REasy
Topic:R FinancialRStatements
LearningRObjective:R 01-
02RDescribeRtheRpurpose,Rstructure,RandRcontentRofRtheRfourRbasicRfinancialRstatements.
Bloom's:R UnderstandRAACS
B:R AnalyticalRThinking
Accessibility:R KeyboardRNavigation

9) AmountsRreportedRonRfinancialRstatementsRareRsometimesRroundedRtoRtheRnearestRmillion.

Answer:R TRUE
Explanation:R LargeRbusinessesRoftenRroundRtheRnumbersRonRtheirRfinancialRstatementsRtoRtheRnea
restRthousandRorRmillion.
Difficulty:R1REasy
Topic:R FinancialRStatements
LearningRObjective:R 01-
02RDescribeRtheRpurpose,Rstructure,RandRcontentRofRtheRfourRbasicRfinancialRstatements.
Bloom's:R RememberR AACSB
:R AnalyticalRThinking
Accessibility:R KeyboardRNavigation




3
CopyrightR2019R©RMcGraw-
HillREducation.RAllRrightsRreserved.RNoRreproductionRorRdistributionRwithoutRtheRpriorRwrittenRconsentRofRMcGr
aw-HillREducation.