Test Bank for Fundamental Financial Accounting Concepts
11th Edition
by Thomas Edmonds, Philip Olds, Christopher Edmonds
,Studentgbname:
1) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbmarketsgbisgbtruegborgbfalse.
a)gbFinancialgbresourcesgbcangbbegbprovidedgbtogbagbbusinessgbbygbinvestors.
b)gbResourcegbownersgbaregbthegbbusinessesgbthatgbtransformgbresourcesgbintogbproduc
tsgbthatgbsatisfygbconsumergbdesires.
c)gbLaborgbresourcesgbincludegbbothgbthegbphysicalgbandgbintellectualgblaborgbofgbagbbu
siness'sgbemployees.
d)gbBusinessesgbpurchasegbtheirgbresourcesgbfromgbresourcegbowners.
e)gbConsumersgbaregbthegbmaingbprovidersgbofgbresourcesgbingbanygbmarket.
2) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbaccountinggbinformationgbisgb
truegborgbfalse.
a)gbFinancialgbaccountinggbisgbprimarilygbintendedgbtogbsatisfygbthegbinformationgbne
edsgbofgbinternalgbstakeholders.
b)gbManagerialgbaccountinggbinformationgbincludesgbfinancialgbandgbnonfinan
cialgbinformation.
c)gbThegbaccountinggbinformationgbintendedgbtogbsatisfygbthegbneedsgbofgbagbcom
pany'sgbemployeesgbisgbmanagerialgbaccountinggbinformation.
d)gbGAAPgbrequiresgbthatgbcompaniesgbadheregbtogbfinancialgbaccountinggbstandards.
e)gbManagerialgbaccountinggbinformationgbisgbusuallygblessgbdetailedgbthangbfina
ncialgbaccountinggbinformation.
3) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbliabilitiesgbisgbtruegborgbfalse.
a)gbAgbnetgblossgbongbthegbincomegbstatementgbdecreasesgbliabilities.
b)gbThegbacquisitiongbofgbagbbankgbloangbincreasesgbbothgbassetsgbandgbliabilities.
c)gbThegbaccountinggbequationgbrequiresgbthatgbliabilitiesgbbegbequalgbtogbstockholders’gbequity.
d)gbThegbamountgbofgbagbcompany'sgbliabilitiesgbisgbequalgbtogbthegbdifferencegbbetweengbit
sgbassetsgbandgbitsgbstockholders’gbequity.
e)gbLiabilitiesgbaregbreportedgbongbthegbstatementgbofgbcashgbflowsgbofgbagbbusiness.
,4) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbretainedgbearningsgbisgbtruegborgbfal
se.
a)gbAgbdividendgbpaidgbtogbstockholdersgbdecreasesgbretainedgbearnings.
b)gbIssuinggbcommongbstockgbforgbcashgbincreasesgbretainedgbearnings.
c)gbThegbamountgbofgbnetgbincomegbforgbagbperiodgbmustgbequalgbretainedgbearnings.
d)gbThegbpurchasegbofgbagbtruckgbdecreasesgbretainedgbearnings.
e)gbNetgbincomegbincreasesgbretainedgbearnings.
5) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbthegbtypesgbofgbtransactionsg
bisgbtruegborgbfalse.
a)gbAngbassetgbsourcegbtransactiongbincreasesgbtotalgbassetsgbandgbincreasesgbclaimsgbtogbassets.
b)gbThegbissuancegbofgbstockgbtogbownersgbforgbcashgbwouldgbbegbangbexamplegbofgb
angbassetgbexchangegbtransaction.
c)gbPurchasinggbequipmentgbforgbcashgbisgbangbexamplegbofgbangbassetgbusegbtransaction.
d)gbPayinggbagbdividendgbtogbstockholdersgbisgbangbexamplegbofgbangbassetgbusegbtransaction.
e)gbMakinggbagbpaymentgbongbagbbankgbloangbisgbangbexamplegbofgbangbassetgbexchangegbtransacti
on.
6) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbfinancialgbstatementsgbisgb
truegborgbfalse.
a)gbAgbcashgbdividendgbpaidgbtogbstockholdersgbisgbreportedgbingbthegbinvestinggbactivitiesgb
sectiongbofgbthegbstatementgbofgbcashgbflows.
b)gbAgbcashgbdividendgbpaidgbtogbstockholdersgbisgbreportedgbongbthegbstatementgbofgbcha
ngesgbingbstockholders'gbequity.
c)gbAgbcashgbdividendgbpaidgbtogbstockholdersgbisgbreportedgbongbthegbincomegbstatement.
d)gbThegbbalancegbsheetgbreportsgbthegbendinggbbalancesgbofgbpermanentgbaccountsgbasgbofgb
thegblastgbdaygbofgbthegbaccountinggbperiod.
e)gbChangesgbingbretainedgbearningsgbduringgbthegbaccountinggbperiodgbaregbreportedgb
ongbthegbincomegbstatement.
, 7) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbstockholders’gbequitygbisgb
truegborgbfalse.
a)gbExpensesgbdecreasegbretainedgbearnings.
b)gbStockholders'gbequitygbandgbliabilitiesgbcangbbegbviewedgbeithergbasgbsourcesgbofgba
ssetsgborgbclaimsgbtogbassetsgbofgbthegbbusiness.
c)gbRetainedgbearningsgbisgbincreasedgbbygbloansgbreceivedgbfromgbagbbank.
d)gbDividendsgbpaidgbtogbstockholdersgbdecreasegbcommongbstock.
e)gbGenerally,gbassetsgbaregbreportedgbatgbthegbactualgbpricegbpaidgbforgbthemgbwhengbpu
rchasedgbregardlessgbofgbsubsequentgbchangesgbingbmarketgbvalue.
8) JessupgbCompanygbwasgbfoundedgbingbYeargb1.gbItgbacquiredgb$45,000gbcashgbbygbissuinggbsto
ckgbtogbinvestorsgbandgbangbadditionalgb$15,000gbcashgbbygbborrowinggbfromgbcreditors.gbDuringgbYear
gb1gbitgbreceived
$25,000gbcashgbrevenuesgbandgbpaidgb$32,000gbingbcashgbexpenses.gbThegbcompanygbthengbwentgbo
utgbofgbbusiness.
Required:
a) Explaingbthegbterm,gb"businessgbliquidation."
b) WhatgbamountgbofgbcashgbshouldgbJessupgbCompanygbhavegbhadgbongbhandgbimmediatelygbbefor
egbgoinggboutgbofgbbusiness?
c) WhatgbamountgbofgbcashgbwillgbJessup'sgbcreditorsgbreceive?
d) WhatgbamountgbofgbcashgbwillgbJessup'sgbstockholdersgbreceive?
9) BatesgbCompanygbenteredgbintogbthegbfollowinggbtransactionsgbduringgbitsgbfirstgbyeargbingbbu
siness.gbAssumegbthatgballgbtransactionsgbinvolvegbthegbreceiptgborgbpaymentgbofgbcash.
1) Issuedgbcommongbstockgbtogbinvestorsgbforgb$25,000gbcash.
2) Borrowedgb$18,000gbfromgbthegblocalgbbank.
3) Providedgbservicesgbtogbcustomersgbforgb$28,000.
4) Paidgbexpensesgbamountinggbtogb$21,400.
5) Purchasedgbagbplotgbofgblandgbcostinggb$22,000.
6) Paidgbagbdividendgbofgb$15,000gbtogbitsgbstockholders.
7) Repaidgb$12,000gbofgbthegbloangblistedgbingbitemgb2.
Required:
(a) Fillgbingbthegbthreegbcolumngbheadingsgbofgbthegbaccountinggbequationgbingbthegbfirstgbrowgbofgb
thegbtablegbshowngbbelow.
(b) Showgbthegbeffectsgbofgbthegbabovegbtransactionsgbongbthegbaccountinggbequation.
11th Edition
by Thomas Edmonds, Philip Olds, Christopher Edmonds
,Studentgbname:
1) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbmarketsgbisgbtruegborgbfalse.
a)gbFinancialgbresourcesgbcangbbegbprovidedgbtogbagbbusinessgbbygbinvestors.
b)gbResourcegbownersgbaregbthegbbusinessesgbthatgbtransformgbresourcesgbintogbproduc
tsgbthatgbsatisfygbconsumergbdesires.
c)gbLaborgbresourcesgbincludegbbothgbthegbphysicalgbandgbintellectualgblaborgbofgbagbbu
siness'sgbemployees.
d)gbBusinessesgbpurchasegbtheirgbresourcesgbfromgbresourcegbowners.
e)gbConsumersgbaregbthegbmaingbprovidersgbofgbresourcesgbingbanygbmarket.
2) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbaccountinggbinformationgbisgb
truegborgbfalse.
a)gbFinancialgbaccountinggbisgbprimarilygbintendedgbtogbsatisfygbthegbinformationgbne
edsgbofgbinternalgbstakeholders.
b)gbManagerialgbaccountinggbinformationgbincludesgbfinancialgbandgbnonfinan
cialgbinformation.
c)gbThegbaccountinggbinformationgbintendedgbtogbsatisfygbthegbneedsgbofgbagbcom
pany'sgbemployeesgbisgbmanagerialgbaccountinggbinformation.
d)gbGAAPgbrequiresgbthatgbcompaniesgbadheregbtogbfinancialgbaccountinggbstandards.
e)gbManagerialgbaccountinggbinformationgbisgbusuallygblessgbdetailedgbthangbfina
ncialgbaccountinggbinformation.
3) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbliabilitiesgbisgbtruegborgbfalse.
a)gbAgbnetgblossgbongbthegbincomegbstatementgbdecreasesgbliabilities.
b)gbThegbacquisitiongbofgbagbbankgbloangbincreasesgbbothgbassetsgbandgbliabilities.
c)gbThegbaccountinggbequationgbrequiresgbthatgbliabilitiesgbbegbequalgbtogbstockholders’gbequity.
d)gbThegbamountgbofgbagbcompany'sgbliabilitiesgbisgbequalgbtogbthegbdifferencegbbetweengbit
sgbassetsgbandgbitsgbstockholders’gbequity.
e)gbLiabilitiesgbaregbreportedgbongbthegbstatementgbofgbcashgbflowsgbofgbagbbusiness.
,4) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbretainedgbearningsgbisgbtruegborgbfal
se.
a)gbAgbdividendgbpaidgbtogbstockholdersgbdecreasesgbretainedgbearnings.
b)gbIssuinggbcommongbstockgbforgbcashgbincreasesgbretainedgbearnings.
c)gbThegbamountgbofgbnetgbincomegbforgbagbperiodgbmustgbequalgbretainedgbearnings.
d)gbThegbpurchasegbofgbagbtruckgbdecreasesgbretainedgbearnings.
e)gbNetgbincomegbincreasesgbretainedgbearnings.
5) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbthegbtypesgbofgbtransactionsg
bisgbtruegborgbfalse.
a)gbAngbassetgbsourcegbtransactiongbincreasesgbtotalgbassetsgbandgbincreasesgbclaimsgbtogbassets.
b)gbThegbissuancegbofgbstockgbtogbownersgbforgbcashgbwouldgbbegbangbexamplegbofgb
angbassetgbexchangegbtransaction.
c)gbPurchasinggbequipmentgbforgbcashgbisgbangbexamplegbofgbangbassetgbusegbtransaction.
d)gbPayinggbagbdividendgbtogbstockholdersgbisgbangbexamplegbofgbangbassetgbusegbtransaction.
e)gbMakinggbagbpaymentgbongbagbbankgbloangbisgbangbexamplegbofgbangbassetgbexchangegbtransacti
on.
6) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbfinancialgbstatementsgbisgb
truegborgbfalse.
a)gbAgbcashgbdividendgbpaidgbtogbstockholdersgbisgbreportedgbingbthegbinvestinggbactivitiesgb
sectiongbofgbthegbstatementgbofgbcashgbflows.
b)gbAgbcashgbdividendgbpaidgbtogbstockholdersgbisgbreportedgbongbthegbstatementgbofgbcha
ngesgbingbstockholders'gbequity.
c)gbAgbcashgbdividendgbpaidgbtogbstockholdersgbisgbreportedgbongbthegbincomegbstatement.
d)gbThegbbalancegbsheetgbreportsgbthegbendinggbbalancesgbofgbpermanentgbaccountsgbasgbofgb
thegblastgbdaygbofgbthegbaccountinggbperiod.
e)gbChangesgbingbretainedgbearningsgbduringgbthegbaccountinggbperiodgbaregbreportedgb
ongbthegbincomegbstatement.
, 7) Indicategbwhethergbeachgbofgbthegbfollowinggbstatementsgbaboutgbstockholders’gbequitygbisgb
truegborgbfalse.
a)gbExpensesgbdecreasegbretainedgbearnings.
b)gbStockholders'gbequitygbandgbliabilitiesgbcangbbegbviewedgbeithergbasgbsourcesgbofgba
ssetsgborgbclaimsgbtogbassetsgbofgbthegbbusiness.
c)gbRetainedgbearningsgbisgbincreasedgbbygbloansgbreceivedgbfromgbagbbank.
d)gbDividendsgbpaidgbtogbstockholdersgbdecreasegbcommongbstock.
e)gbGenerally,gbassetsgbaregbreportedgbatgbthegbactualgbpricegbpaidgbforgbthemgbwhengbpu
rchasedgbregardlessgbofgbsubsequentgbchangesgbingbmarketgbvalue.
8) JessupgbCompanygbwasgbfoundedgbingbYeargb1.gbItgbacquiredgb$45,000gbcashgbbygbissuinggbsto
ckgbtogbinvestorsgbandgbangbadditionalgb$15,000gbcashgbbygbborrowinggbfromgbcreditors.gbDuringgbYear
gb1gbitgbreceived
$25,000gbcashgbrevenuesgbandgbpaidgb$32,000gbingbcashgbexpenses.gbThegbcompanygbthengbwentgbo
utgbofgbbusiness.
Required:
a) Explaingbthegbterm,gb"businessgbliquidation."
b) WhatgbamountgbofgbcashgbshouldgbJessupgbCompanygbhavegbhadgbongbhandgbimmediatelygbbefor
egbgoinggboutgbofgbbusiness?
c) WhatgbamountgbofgbcashgbwillgbJessup'sgbcreditorsgbreceive?
d) WhatgbamountgbofgbcashgbwillgbJessup'sgbstockholdersgbreceive?
9) BatesgbCompanygbenteredgbintogbthegbfollowinggbtransactionsgbduringgbitsgbfirstgbyeargbingbbu
siness.gbAssumegbthatgballgbtransactionsgbinvolvegbthegbreceiptgborgbpaymentgbofgbcash.
1) Issuedgbcommongbstockgbtogbinvestorsgbforgb$25,000gbcash.
2) Borrowedgb$18,000gbfromgbthegblocalgbbank.
3) Providedgbservicesgbtogbcustomersgbforgb$28,000.
4) Paidgbexpensesgbamountinggbtogb$21,400.
5) Purchasedgbagbplotgbofgblandgbcostinggb$22,000.
6) Paidgbagbdividendgbofgb$15,000gbtogbitsgbstockholders.
7) Repaidgb$12,000gbofgbthegbloangblistedgbingbitemgb2.
Required:
(a) Fillgbingbthegbthreegbcolumngbheadingsgbofgbthegbaccountinggbequationgbingbthegbfirstgbrowgbofgb
thegbtablegbshowngbbelow.
(b) Showgbthegbeffectsgbofgbthegbabovegbtransactionsgbongbthegbaccountinggbequation.
