Test Bank for Fundamental Financial Accounting Concepts
11th Edition
by
Thomas
Edmond
s, Philip
Olds,
Christop
her
Edmond
s
,Studentxzname:
1) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzmarketsxzisxztruexzorxzfalse.
a)xzFinancialxzresourcesxzcanxzbexzprovidedxztoxzaxzbusinessxzbyxzinvestors.
b)xzResourcexzownersxzarexzthexzbusinessesxzthatxztransformxzresourcesxzintoxzproduct
sxzthatxzsatisfyxzconsumerxzdesires.
c)xzLaborxzresourcesxzincludexzbothxzthexzphysicalxzandxzintellectualxzlaborxzofxzaxzbusi
ness'sxzemployees.
d)xzBusinessesxzpurchasexztheirxzresourcesxzfromxzresourcexzowners.
e)xzConsumersxzarexzthexzmainxzprovidersxzofxzresourcesxzinxzanyxzmarket.
2) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzaccountingxzinformationxzisxzt
ruexzorxzfalse.
a)xzFinancialxzaccountingxzisxzprimarilyxzintendedxztoxzsatisfyxzthexzinformationxznee
dsxzofxzinternalxzstakeholders.
b)xzManagerialxzaccountingxzinformationxzincludesxzfinancialxzandxznonfinan
cialxzinformation.
c)xzThexzaccountingxzinformationxzintendedxztoxzsatisfyxzthexzneedsxzofxzaxzcom
pany'sxzemployeesxzisxzmanagerialxzaccountingxzinformation.
d)xzGAAPxzrequiresxzthatxzcompaniesxzadherexztoxzfinancialxzaccountingxzstandards.
e)xzManagerialxzaccountingxzinformationxzisxzusuallyxzlessxzdetailedxzthanxzfina
ncialxzaccountingxzinformation.
3) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzliabilitiesxzisxztruexzorxzfalse.
a)xzAxznetxzlossxzonxzthexzincomexzstatementxzdecreasesxzliabilities.
b)xzThexzacquisitionxzofxzaxzbankxzloanxzincreasesxzbothxzassetsxzandxzliabilities.
c)xzThexzaccountingxzequationxzrequiresxzthatxzliabilitiesxzbexzequalxztoxzstockholders’xzequity.
d)xzThexzamountxzofxzaxzcompany'sxzliabilitiesxzisxzequalxztoxzthexzdifferencexzbetweenxzits
xzassetsxzandxzitsxzstockholders’xzequity.
e)xzLiabilitiesxzarexzreportedxzonxzthexzstatementxzofxzcashxzflowsxzofxzaxzbusiness.
,4) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzretainedxzearningsxzisxztruexzorxzfals
e.
a)xzAxzdividendxzpaidxztoxzstockholdersxzdecreasesxzretainedxzearnings.
b)xzIssuingxzcommonxzstockxzforxzcashxzincreasesxzretainedxzearnings.
c)xzThexzamountxzofxznetxzincomexzforxzaxzperiodxzmustxzequalxzretainedxzearnings.
d)xzThexzpurchasexzofxzaxztruckxzdecreasesxzretainedxzearnings.
e)xzNetxzincomexzincreasesxzretainedxzearnings.
5) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzthexztypesxzofxztransactionsxz
isxztruexzorxzfalse.
a)xzAnxzassetxzsourcexztransactionxzincreasesxztotalxzassetsxzandxzincreasesxzclaimsxztoxzassets.
b)xzThexzissuancexzofxzstockxztoxzownersxzforxzcashxzwouldxzbexzanxzexamplexzofxz
anxzassetxzexchangexztransaction.
c)xzPurchasingxzequipmentxzforxzcashxzisxzanxzexamplexzofxzanxzassetxzusexztransaction.
d)xzPayingxzaxzdividendxztoxzstockholdersxzisxzanxzexamplexzofxzanxzassetxzusexztransaction.
e)xzMakingxzaxzpaymentxzonxzaxzbankxzloanxzisxzanxzexamplexzofxzanxzassetxzexchangexztransactio
n.
6) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzfinancialxzstatementsxzisxzt
ruexzorxzfalse.
a)xzAxzcashxzdividendxzpaidxztoxzstockholdersxzisxzreportedxzinxzthexzinvestingxzactivitiesxz
sectionxzofxzthexzstatementxzofxzcashxzflows.
b)xzAxzcashxzdividendxzpaidxztoxzstockholdersxzisxzreportedxzonxzthexzstatementxzofxzcha
ngesxzinxzstockholders'xzequity.
c)xzAxzcashxzdividendxzpaidxztoxzstockholdersxzisxzreportedxzonxzthexzincomexzstatement.
d)xzThexzbalancexzsheetxzreportsxzthexzendingxzbalancesxzofxzpermanentxzaccountsxzasxzofxzt
hexzlastxzdayxzofxzthexzaccountingxzperiod.
e)xzChangesxzinxzretainedxzearningsxzduringxzthexzaccountingxzperiodxzarexzreportedxz
onxzthexzincomexzstatement.
, 7) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzstockholders’xzequityxzisxzt
ruexzorxzfalse.
a)xzExpensesxzdecreasexzretainedxzearnings.
b)xzStockholders'xzequityxzandxzliabilitiesxzcanxzbexzviewedxzeitherxzasxzsourcesxzofxzas
setsxzorxzclaimsxztoxzassetsxzofxzthexzbusiness.
c)xzRetainedxzearningsxzisxzincreasedxzbyxzloansxzreceivedxzfromxzaxzbank.
d)xzDividendsxzpaidxztoxzstockholdersxzdecreasexzcommonxzstock.
e)xzGenerally,xzassetsxzarexzreportedxzatxzthexzactualxzpricexzpaidxzforxzthemxzwhenxzpur
chasedxzregardlessxzofxzsubsequentxzchangesxzinxzmarketxzvalue.
8) JessupxzCompanyxzwasxzfoundedxzinxzYearxz1.xzItxzacquiredxz$45,000xzcashxzbyxzissuingxzstoc
kxztoxzinvestorsxzandxzanxzadditionalxz$15,000xzcashxzbyxzborrowingxzfromxzcreditors.xzDuringxzYearxz1
xzitxzreceived
$25,000xzcashxzrevenuesxzandxzpaidxz$32,000xzinxzcashxzexpenses.xzThexzcompanyxzthenxzwentxzo
utxzofxzbusiness.
Required:
a) Explainxzthexzterm,xz"businessxzliquidation."
b) WhatxzamountxzofxzcashxzshouldxzJessupxzCompanyxzhavexzhadxzonxzhandxzimmediatelyxzbeforex
zgoingxzoutxzofxzbusiness?
c) WhatxzamountxzofxzcashxzwillxzJessup'sxzcreditorsxzreceive?
d) WhatxzamountxzofxzcashxzwillxzJessup'sxzstockholdersxzreceive?
9) BatesxzCompanyxzenteredxzintoxzthexzfollowingxztransactionsxzduringxzitsxzfirstxzyearxzinxzbus
iness.xzAssumexzthatxzallxztransactionsxzinvolvexzthexzreceiptxzorxzpaymentxzofxzcash.
1) Issuedxzcommonxzstockxztoxzinvestorsxzforxz$25,000xzcash.
2) Borrowedxz$18,000xzfromxzthexzlocalxzbank.
3) Providedxzservicesxztoxzcustomersxzforxz$28,000.
4) Paidxzexpensesxzamountingxztoxz$21,400.
5) Purchasedxzaxzplotxzofxzlandxzcostingxz$22,000.
6) Paidxzaxzdividendxzofxz$15,000xztoxzitsxzstockholders.
7) Repaidxz$12,000xzofxzthexzloanxzlistedxzinxzitemxz2.
Required:
(a) Fillxzinxzthexzthreexzcolumnxzheadingsxzofxzthexzaccountingxzequationxzinxzthexzfirstxzrowxzofxzt
hexztablexzshownxzbelow.
(b) Showxzthexzeffectsxzofxzthexzabovexztransactionsxzonxzthexzaccountingxzequation.
11th Edition
by
Thomas
Edmond
s, Philip
Olds,
Christop
her
Edmond
s
,Studentxzname:
1) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzmarketsxzisxztruexzorxzfalse.
a)xzFinancialxzresourcesxzcanxzbexzprovidedxztoxzaxzbusinessxzbyxzinvestors.
b)xzResourcexzownersxzarexzthexzbusinessesxzthatxztransformxzresourcesxzintoxzproduct
sxzthatxzsatisfyxzconsumerxzdesires.
c)xzLaborxzresourcesxzincludexzbothxzthexzphysicalxzandxzintellectualxzlaborxzofxzaxzbusi
ness'sxzemployees.
d)xzBusinessesxzpurchasexztheirxzresourcesxzfromxzresourcexzowners.
e)xzConsumersxzarexzthexzmainxzprovidersxzofxzresourcesxzinxzanyxzmarket.
2) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzaccountingxzinformationxzisxzt
ruexzorxzfalse.
a)xzFinancialxzaccountingxzisxzprimarilyxzintendedxztoxzsatisfyxzthexzinformationxznee
dsxzofxzinternalxzstakeholders.
b)xzManagerialxzaccountingxzinformationxzincludesxzfinancialxzandxznonfinan
cialxzinformation.
c)xzThexzaccountingxzinformationxzintendedxztoxzsatisfyxzthexzneedsxzofxzaxzcom
pany'sxzemployeesxzisxzmanagerialxzaccountingxzinformation.
d)xzGAAPxzrequiresxzthatxzcompaniesxzadherexztoxzfinancialxzaccountingxzstandards.
e)xzManagerialxzaccountingxzinformationxzisxzusuallyxzlessxzdetailedxzthanxzfina
ncialxzaccountingxzinformation.
3) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzliabilitiesxzisxztruexzorxzfalse.
a)xzAxznetxzlossxzonxzthexzincomexzstatementxzdecreasesxzliabilities.
b)xzThexzacquisitionxzofxzaxzbankxzloanxzincreasesxzbothxzassetsxzandxzliabilities.
c)xzThexzaccountingxzequationxzrequiresxzthatxzliabilitiesxzbexzequalxztoxzstockholders’xzequity.
d)xzThexzamountxzofxzaxzcompany'sxzliabilitiesxzisxzequalxztoxzthexzdifferencexzbetweenxzits
xzassetsxzandxzitsxzstockholders’xzequity.
e)xzLiabilitiesxzarexzreportedxzonxzthexzstatementxzofxzcashxzflowsxzofxzaxzbusiness.
,4) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzretainedxzearningsxzisxztruexzorxzfals
e.
a)xzAxzdividendxzpaidxztoxzstockholdersxzdecreasesxzretainedxzearnings.
b)xzIssuingxzcommonxzstockxzforxzcashxzincreasesxzretainedxzearnings.
c)xzThexzamountxzofxznetxzincomexzforxzaxzperiodxzmustxzequalxzretainedxzearnings.
d)xzThexzpurchasexzofxzaxztruckxzdecreasesxzretainedxzearnings.
e)xzNetxzincomexzincreasesxzretainedxzearnings.
5) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzthexztypesxzofxztransactionsxz
isxztruexzorxzfalse.
a)xzAnxzassetxzsourcexztransactionxzincreasesxztotalxzassetsxzandxzincreasesxzclaimsxztoxzassets.
b)xzThexzissuancexzofxzstockxztoxzownersxzforxzcashxzwouldxzbexzanxzexamplexzofxz
anxzassetxzexchangexztransaction.
c)xzPurchasingxzequipmentxzforxzcashxzisxzanxzexamplexzofxzanxzassetxzusexztransaction.
d)xzPayingxzaxzdividendxztoxzstockholdersxzisxzanxzexamplexzofxzanxzassetxzusexztransaction.
e)xzMakingxzaxzpaymentxzonxzaxzbankxzloanxzisxzanxzexamplexzofxzanxzassetxzexchangexztransactio
n.
6) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzfinancialxzstatementsxzisxzt
ruexzorxzfalse.
a)xzAxzcashxzdividendxzpaidxztoxzstockholdersxzisxzreportedxzinxzthexzinvestingxzactivitiesxz
sectionxzofxzthexzstatementxzofxzcashxzflows.
b)xzAxzcashxzdividendxzpaidxztoxzstockholdersxzisxzreportedxzonxzthexzstatementxzofxzcha
ngesxzinxzstockholders'xzequity.
c)xzAxzcashxzdividendxzpaidxztoxzstockholdersxzisxzreportedxzonxzthexzincomexzstatement.
d)xzThexzbalancexzsheetxzreportsxzthexzendingxzbalancesxzofxzpermanentxzaccountsxzasxzofxzt
hexzlastxzdayxzofxzthexzaccountingxzperiod.
e)xzChangesxzinxzretainedxzearningsxzduringxzthexzaccountingxzperiodxzarexzreportedxz
onxzthexzincomexzstatement.
, 7) Indicatexzwhetherxzeachxzofxzthexzfollowingxzstatementsxzaboutxzstockholders’xzequityxzisxzt
ruexzorxzfalse.
a)xzExpensesxzdecreasexzretainedxzearnings.
b)xzStockholders'xzequityxzandxzliabilitiesxzcanxzbexzviewedxzeitherxzasxzsourcesxzofxzas
setsxzorxzclaimsxztoxzassetsxzofxzthexzbusiness.
c)xzRetainedxzearningsxzisxzincreasedxzbyxzloansxzreceivedxzfromxzaxzbank.
d)xzDividendsxzpaidxztoxzstockholdersxzdecreasexzcommonxzstock.
e)xzGenerally,xzassetsxzarexzreportedxzatxzthexzactualxzpricexzpaidxzforxzthemxzwhenxzpur
chasedxzregardlessxzofxzsubsequentxzchangesxzinxzmarketxzvalue.
8) JessupxzCompanyxzwasxzfoundedxzinxzYearxz1.xzItxzacquiredxz$45,000xzcashxzbyxzissuingxzstoc
kxztoxzinvestorsxzandxzanxzadditionalxz$15,000xzcashxzbyxzborrowingxzfromxzcreditors.xzDuringxzYearxz1
xzitxzreceived
$25,000xzcashxzrevenuesxzandxzpaidxz$32,000xzinxzcashxzexpenses.xzThexzcompanyxzthenxzwentxzo
utxzofxzbusiness.
Required:
a) Explainxzthexzterm,xz"businessxzliquidation."
b) WhatxzamountxzofxzcashxzshouldxzJessupxzCompanyxzhavexzhadxzonxzhandxzimmediatelyxzbeforex
zgoingxzoutxzofxzbusiness?
c) WhatxzamountxzofxzcashxzwillxzJessup'sxzcreditorsxzreceive?
d) WhatxzamountxzofxzcashxzwillxzJessup'sxzstockholdersxzreceive?
9) BatesxzCompanyxzenteredxzintoxzthexzfollowingxztransactionsxzduringxzitsxzfirstxzyearxzinxzbus
iness.xzAssumexzthatxzallxztransactionsxzinvolvexzthexzreceiptxzorxzpaymentxzofxzcash.
1) Issuedxzcommonxzstockxztoxzinvestorsxzforxz$25,000xzcash.
2) Borrowedxz$18,000xzfromxzthexzlocalxzbank.
3) Providedxzservicesxztoxzcustomersxzforxz$28,000.
4) Paidxzexpensesxzamountingxztoxz$21,400.
5) Purchasedxzaxzplotxzofxzlandxzcostingxz$22,000.
6) Paidxzaxzdividendxzofxz$15,000xztoxzitsxzstockholders.
7) Repaidxz$12,000xzofxzthexzloanxzlistedxzinxzitemxz2.
Required:
(a) Fillxzinxzthexzthreexzcolumnxzheadingsxzofxzthexzaccountingxzequationxzinxzthexzfirstxzrowxzofxzt
hexztablexzshownxzbelow.
(b) Showxzthexzeffectsxzofxzthexzabovexztransactionsxzonxzthexzaccountingxzequation.
