TEST BANK for Fundamentals of Financial Accounting 8th Edition By Phillips, Clor-Proell, Robert Libby and Patricia Libby.pdf

Test Bank Fundamentals of Financial Accounting, 8th Edition by Fred Phillips
m m m m m m m m m m




Chapter 01 8e Phillips
m m m Answers Included
m


1) Creditorsmaremownersmof mamcorporation
.
⊚m true
⊚m false



2) Allmcorporationsmacquiremfinancingmbymissuingmstockmonmpublicmstockmexchanges.
⊚m true
⊚m false



3) Youmpaid m$10,000mtombuym1%mof mthemstockminmamcorporationmthat mismnow mbankrupt.mThemcomp
anymowesm$10mmillionmdollarsmtomitsmcreditors.mAsmamresult mof mthembankruptcy,myoumarem respon
siblemformpayingm$100,000m(orm$10mmillionm×m1%)mof mthemamount mowed mtomthemcreditors.
⊚m true
⊚m false



4) Cashmpaid mformwagesmismanmexamplemof manmoperatingmactivitymonmthemstatement mof mcashmflows.
⊚m true
⊚m false



5) Borrowingmmoneymfrommambankmismamfinancingmactivitymonmthemstatement mof mcashmflows.
⊚m true
⊚m false



6) Themdailymbusinessmactivitiesminvolved minmrunningmambusiness,m suchmasmbuyingm suppliesma
nd mpayingmsalariesmand mwages,maremclassified masmoperatingmactivitiesmonmthemstatement mof
mcashmflows.

⊚m true
⊚m false



7) Stockholders'mequitymismthemdifferencembetweenmamcompany'smassetsmand mitsmliabilities.
⊚m true
⊚m false




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,8) A mcompanymowesm$200,000monmambankmloan.mIt mwillmbemreported mbymthemcompanymasmAccou
ntsmPayable.
⊚m true
⊚m false



9) Themamountsmreported monmfinancialmstatementsmaremsometimesmrounded mtomthemnearest mthousa
nd mormmillion.
⊚m true
⊚m false



10) AccountsmPayable,mNotesmPayable,mand mSalariesmand mWagesmPayablemaremexamplesm
of mliabilities.
⊚m true
⊚m false



11) Dividendsmaremsubtracted mfrommrevenuesmonmthemincomemstatement.
⊚m true
⊚m false



12) If mamcompanymreportsmnet mincomemonmthemincomemstatement,mthenmthemstatement mof mcashmflo
wsmwillmreport mthemsamemamount masmcashmflowsmfrommoperatingmactivitiesmformthemperiod.
⊚m true
⊚m false



13) Revenuemismreported monmthemincomemstatement monlymif mcashmwasmreceived mat mthempoint mof msale.
⊚m true
⊚m false



14) GenerallymAccepted mAccountingmPrinciplesm(GAAP)mrequiremprofitablemcompaniesmt
omdistributemsomemof mtheirmearningsmtomtheirmstockholders.
⊚m true
⊚m false




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,15) CommonmStockmismreported masmanmasset monmthembalancemsheet.
⊚m true
⊚m false



16) Investorsmaremmainlyminterested minmthemprofitabilitymof mamcompany.
⊚m true
⊚m false



17) A mstockmthat mdoesmnot mpaymamdividend mismanmundesirableminvestment.
⊚m true
⊚m false



18) Tomensuremthat mcompaniesmproducemusefulminformation,mit mmust mhavemtwomfundament
almcharacteristics:mreliabilitymand munderstandability.
⊚m true
⊚m false



19) ThemSecuritiesmand mExchangemCommissionm(SEC)mismthemgovernment magencymthat mhasmprima
rymresponsibilitymformsettingmaccountingmstandardsminmthemU.S.
⊚m true
⊚m false



20) ThemSarbanes-
OxleymAct m(SOX)mrequiresmtopmmanagement mof mcompaniesmtomsignmamreport mcertifyingmt
hat mthemfinancialmstatementsmaremfreemof merror.
⊚m true
⊚m false



21) Companiesmmust musemamDecemberm31stmyear-end mformallmfinancialmstatements.
⊚m true
⊚m false




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, 22) Publicmcorporationsmarembusinesses:
A) owned mbymtwomormmorempeople,meachmof mwhommismpersonallymliablemformthemdebtsmof m
thembusiness.
B) whosemstockmismbought mand msold monmamstockmexchange.
C) whosemstockmismbought mand msold mprivately.
D) wheremstockmismnot mused masmevidencemof mownership.



23) Themowner(s)mof mambusinessmaremnot mtaxed monmthemprofitsmof mthembusinessmif mthembusinessmisma:
A) solemproprietorship.
B) partnership.
C) corporation.
D) publicmpartnership.



24) Whichmof mthemfollowingmismtypicallymconsidered mamdisadvantagemof msolemproprietorships?
A) Incomemtaxesmarempaid mbymbothmthembusinessmand mitsmowner.
B) Thembusinessmismconsidered mamseparatemlegalmentitymfrommitsmowner.
C) Establishingmthembusinessmusuallymrequiresmlegalmassistance.
D) Ownermismpersonallymliablemformallmdebtsmof mthembusiness.



25) Consideringmthemtargeted maudiencemformfinancialmaccountingmreports,mwhichmof mthemfollowi
ngmpartiesmismnot manmexternalmuser?
A) Directorsmof mthemcompanymissuingmthemreports
B) Creditorsmof mthemcompanymissuingmthemreports
C) Managersmof mthemcompanymissuingmthemreports
D) Stockholdersmof mthemcompanymissuingmthemreports



26) Accountingmsystems:
A) aremsummarized minmpubliclympublished mreports.
B) analyze,mrecord,mand msummarizemthemactivitiesmaffectingmitsmfinancialmconditionma
nd mperformance.
C) monitormbusinessmactivitiesmonlyminmfinancialmterms.
D) capturemonlymtheminformationmthat mismneeded mbymthemownersmof mthemcompany.




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