Test Bank for Fundamentals Of Financial Accounting 6th Canadian Edition Fred Phillips, Robert Libby, Patricia Libby

,FundamentalshofhFinancialhAccounting,h6eh(Phillips)hCha
pterh1h BusinesshDecisionshandhFinancialhAccounting

1) Stockholdersharehownershofhahcorporation.

Answer:h TRUE
Explanation:hStockholdersharehthehownershofhahcorporation.hD
ifficulty:h1hEasy
Topic:h AccountinghforhBusinesshDecisions
LearninghObjective:h01-
01hDescribehvarioushorganizationalhformshandhbusinesshdecisionhmakers.hBloom's:hUnderstand
AACSB:hAnalyticalhThinkinghAcces
sibility:h KeyboardhNavigation

2) Allhcorporationshacquirehfinancinghbyhissuinghstockhforhsalehonhpublichstockhexchanges.

Answer:h FALSE
Explanation:hMosthcorporationshstarthouthashprivatehcompanieshandhwillhapplyhtohbecomehpublichco
mpaniesh("gohpublic")hifhtheyhneedhahlothofhfinancing.hFinancinghcanhalsohbehacquiredhbyhborrowing
hfromhbanks.

Difficulty:h2hMedium
Topic:h OrganizationalhForms
LearninghObjective:h01-
01hDescribehvarioushorganizationalhformshandhbusinesshdecisionhmakers.hBloom's:hUnderstand
AACSB:hAnalyticalhThinkinghAcces
sibility:h KeyboardhNavigation

3) Youhpaidh$10,000htohbuyh1%hofhthehstockhinhahcorporationhthathishnowhbankrupt.hThehcompanyho
wesh$10hmillionhdollarshtohitshcreditors.hAshahresulthofhthehbankruptcy,hyouharehresponsiblehforhpayi
ngh$100,000h(orh$10hmillionh×h1%)hofhthehamounthowedhtohthehcreditors.

Answer:h FALSE
Explanation:hUnlikehsolehproprietorshipshandhpartnerships,hahcorporationhishahseparatehentityhfromhb
othhlegalhandhaccountinghperspectives.hThishmeanshthathahcorporation,hnothitshowners,hishlegallyhres
ponsiblehforhitshownhtaxeshandhdebts.
Difficulty:h2hMedium
Topic:h OrganizationalhForms
LearninghObjective:h01-
01hDescribehvarioushorganizationalhformshandhbusinesshdecisionhmakers.hBloom's:hApply
AACSB:hAnalyticalhThinkinghAcces
sibility:h KeyboardhNavigation




1
Copyrighth2019h©hMcGraw-
HillhEducation.hAllhrightshreserved.hNohreproductionhorhdistributionhwithouththehpriorhwrittenhconsenthofhMcGraw-
HillhEducation.

,4) Cashhpaidhforhwageshishanhexamplehofhanhoperatinghactivityhonhthehstatementhofhcashhflows.

Answer:h TRUE
Explanation:h Cashhflowshfromhrunninghthehbusiness,hincludinghcashhpaidhforhwages,harehoperatinghactivit
ieshonhthehstatementhofhcashhflows.
Difficulty:h1hEasy
Topic:h FinancialhStatements
LearninghObjective:h01-
02hDescribehthehpurpose,hstructure,handhcontenthofhthehfourhbasichfinancialhstatements.
Bloom's:h UnderstandhAACSB
:h AnalyticalhThinking
Accessibility:h KeyboardhNavigation

5) Borrowinghmoneyhfromhahbankhishahfinancinghactivityhonhthehstatementhofhcashhflows.

Answer:h TRUE
Explanation:h Onhthehstatementhofhcashhflows,hborrowinghandhrepayinghbankhloansharehfinancinghactivitie
s.
Difficulty:h1hEasy
Topic:h FinancialhStatements
LearninghObjective:h01-
02hDescribehthehpurpose,hstructure,handhcontenthofhthehfourhbasichfinancialhstatements.
Bloom's:h UnderstandhAACSB
:h AnalyticalhThinking
Accessibility:h KeyboardhNavigation

6) Thehdailyhactivitieshinvolvedhinhrunninghahbusiness,hsuchhashbuyinghsupplieshandhpayinghs
alarieshandhwages,harehclassifiedhashoperatinghactivitieshonhthehstatementhofhcashhflows.

Answer:h TRUE
Explanation:h Buyinghsupplieshandhpayinghsalarieshandhwagesharehnormalhoperatinghcostshonhthehstateme
nthofhcashhflows.
Difficulty:h1hEasy
Topic:h FinancialhStatements
LearninghObjective:h01-
02hDescribehthehpurpose,hstructure,handhcontenthofhthehfourhbasichfinancialhstatements.
Bloom's:h UnderstandhAACSB
:h AnalyticalhThinking
Accessibility:h KeyboardhNavigation




2
Copyrighth2019h©hMcGraw-
HillhEducation.hAllhrightshreserved.hNohreproductionhorhdistributionhwithouththehpriorhwrittenhconsenthofhMcGraw-
HillhEducation.

, 7) Stockholders'hequityhishthehdifferencehbetweenhahcompany'shassetshandhitshliabilities.

Answer:h TRUE
Explanation:h Assetsh=hLiabilitiesh+hStockholders'hEquity;htherefore,hAssetsh–
hLiabilitiesh=h
Stockholders'hEquity
Difficulty:h2hMedium
Topic:h ThehBasichAccountinghEquation
LearninghObjective:h01-
02hDescribehthehpurpose,hstructure,handhcontenthofhthehfourhbasichfinancialhstatements.
Bloom's:h UnderstandhAACSB
:h AnalyticalhThinking
Accessibility:h KeyboardhNavigation

8) Ahcompanyhowesh$200,000honhahbankhloan.hIthwillhbehreportedhbyhthehcompanyhashAccountshP
ayable.

Answer:h FALSE
Explanation:hFormalhdebt,hevidencedhbyhahwrittenhcontracthorhnote,hishreportedhashNoteshPayable.hDi
fficulty:h1hEasy
Topic:h FinancialhStatements
LearninghObjective:h01-
02hDescribehthehpurpose,hstructure,handhcontenthofhthehfourhbasichfinancialhstatements.
Bloom's:h UnderstandhAACSB
:h AnalyticalhThinking
Accessibility:h KeyboardhNavigation

9) Amountshreportedhonhfinancialhstatementsharehsometimeshroundedhtohthehnearesthmillion.

Answer:h TRUE
Explanation:hLargehbusinesseshoftenhroundhthehnumbershonhtheirhfinancialhstatementshtohthehnearesth
thousandhorhmillion.
Difficulty:h1hEasy
Topic:h FinancialhStatements
LearninghObjective:h01-
02hDescribehthehpurpose,hstructure,handhcontenthofhthehfourhbasichfinancialhstatements.
Bloom's:hhhRememberhAACSB
:h AnalyticalhThinking
Accessibility:h KeyboardhNavigation




3
Copyrighth2019h©hMcGraw-
HillhEducation.hAllhrightshreserved.hNohreproductionhorhdistributionhwithouththehpriorhwrittenhconsenthofhMcGraw-
HillhEducation.