, TESTBANK For Financial Accounting in an
Economic Context, 11th Edition by Jamie Pratt
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,Financial Accounting, 11th edition
Test Bank and Video Questions
By Pratt and Peters
Chapter 1: Financial Accounting and Its
Economic Context
For Instructor Use Only
Copyright © 2021 John Wiley & Sons, Inc. or the author, all rights reserved.
Table of Contents
Multiple Choice Questions ........................................................................................................................... 2
Matching Questions....................................................................................................................................24
Short Answer Questions.............................................................................................................................28
Short Problem Questions ........................................................................................................................... 34
Short Essay Questions ................................................................................................................................ 36
Data Analytic Questions ............................................................................................................................. 41
Video Questions ......................................................................................................................................... 42
1
,Multiple Choice Questions
1) A bank that loans money to a company is called:
A) a supplier.
B) a creditor.
C) an equity investor.
D) a shareholder.
Answer: B
Diff: Easy
Learning Objective: 1.1
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 1 / None
2) The auditors are charged with responsibility:
A) to detect financial fraud committed by employees during the course of their audit.
B) to conduct a thorough and independent audit.
C) to correct all errors in the financial statements.
D) for the accuracy and completeness of the financial statements.
Answer: B
Diff: Medium
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 2 / None
3) Which of the following best describes the difference between consumption and investment?
A) Consumption is long term while investment is short term.
B) Consumption typically involves larger dollar amounts than investment.
C) Consumption addresses immediate needs while investment addresses future needs.
D) Consumption involves more uncertainty than investment.
Answer: C
Diff: Medium
Learning Objective: 1.2
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 3 / None
2
,4) How business decisions affect the financial statements:
A) is the sole responsibility of the Securities and Exchange Commission.
B) is described in the auditor's report.
C) should be considered by management when making those decisions.
D) is unimportant to financial statement users.
Answer: C
Diff: Easy
Learning Objective: 1.1; 1.2; 1.5
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 4 / None
5) A statement that "the financial statements were prepared in accordance with generally
accepted accounting principles" is normally found in the:
A) description of the business in the annual report.
B) quarterly financial statements (Form 10-Q) published by publicly-traded companies.
C) balance sheet.
D) auditor's report.
Answer: D
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 5 / None
6) A statement that financial statement information "is the responsibility of the company" issuing
the statements is normally found in the:
A) footnotes to the financial statements.
B) loan contracts entered into by the company.
C) management letter.
D) board of directors' report.
Answer: C
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 6 / None
3
,7) CPA is an abbreviation for:
A) Certified Public Accountant.
B) Certified Production Accountant.
C) Consumer Protection Agency.
D) Certified Permissible Accounting.
Answer: A
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 7 / None
8) An explanation about the assumptions, estimates, and choices of alternative accounting
methods used in the financial statements is found in the:
A) footnotes to the balance sheet.
B) auditor's report.
C) statement of shareholders' equity.
D) president's letter to the shareholders.
Answer: A
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 8 / None
9) Which of the following best describes assets paid to owners of a company based on the profits
earned by the company?
A) Payables
B) Compensation contracts
C) Dividends
D) Interest
Answer: C
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 9 / None
4
,10) All of the following would likely be part of a loan contract except:
A) maturity date.
B) a statement that equity holders have higher priority than debt holders to the company's assets
in liquidation.
C) collateral.
D) interest terms.
Answer: B
Diff: Easy
Learning Objective: 1.4
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 10 / None
11) A Certified Public Accountant:
A) reviews every transaction that a company conducts during any given year.
B) performs a company's audit.
C) is one of the investors of a company.
D) is responsible for the preparation and integrity of a company's financial statements.
Answer: B
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 11 / None
12) An internal control system:
A) is maintained to ensure that transactions of a company are properly recorded and reported and
the assets are safeguarded.
B) is included in the set of footnotes to the financial statements.
C) is an estimate of the profits a company expects to earn in the future.
D) measures how much control management has over its staff.
Answer: A
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 12 / None
5
,13) Footnotes to financial statements:
A) more fully explain certain items in the financial statements.
B) reflect financial notes personalized by the company's executive team.
C) show the detail of the company's executive officers' compensation packages.
D) are relatively unimportant compared to the actual financial statements.
Answer: A
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 13 / None
14) The balance sheet communicates:
A) a company's level of profitability.
B) a measure of the company's financial performance over a period of time.
C) assets, liabilities, and shareholders' equity as of a certain date.
D) the cash effects of the company's operating, investing, and financing activities.
Answer: C
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 14 / None
15) The income statement communicates:
A) assets, liabilities, and shareholders' equity as of a certain date.
B) how much cash the owner received during a period of time.
C) information about dividends the company paid to its owners.
D) revenues less expenses during a period of time.
Answer: D
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 15 / None
6
,16) Where would you find information on the amount of net income for the year?
A) Factory production reports on units produced
B) Auditor's report
C) Income statement
D) Balance sheet
Answer: C
Diff: Easy
Learning Objective: 1.3
Bloom's: Comprehension
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 16 / None
17) The statement of cash flows communicates:
A) assets, liabilities, and owners' equity at a point of time.
B) the cash effects of a company's operating, investing, and financing activities.
C) the beginning cash balance plus income less dividends.
D) how much cash the company owes its employees as a given date.
Answer: B
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 17 / None
18) The retained earnings section of the statement of shareholders' equity communicates:
A) the dollar amount of a period's earnings not paid out in the form of dividends.
B) the change in assets less liabilities during a period of time.
C) how much cash that management has paid for bonuses.
D) the cash effects of the company's operating, investing, and financing activities.
Answer: A
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 18 / None
7
, 19) If an investor wants to find the amount of cash and land that a company has at a given point
in time, where will the investor look?
A) Statement of shareholders' equity
B) Income statement
C) Balance sheet
D) Statement of cash flows
Answer: C
Diff: Easy
Learning Objective: 1.3
Bloom's: Comprehension
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 19 / None
20) Dividends declared for the owners are found in the:
A) management letter.
B) income statement.
C) dividends statement.
D) statement of shareholders' equity.
Answer: D
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 20 / None
21) Cash received by a company from its normal operating activities during the year is found in
its:
A) balance sheet.
B) statement of cash flows.
C) statement of shareholders' equity.
D) auditor's report.
Answer: B
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 21 / None
8
Economic Context, 11th Edition by Jamie Pratt
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
,Financial Accounting, 11th edition
Test Bank and Video Questions
By Pratt and Peters
Chapter 1: Financial Accounting and Its
Economic Context
For Instructor Use Only
Copyright © 2021 John Wiley & Sons, Inc. or the author, all rights reserved.
Table of Contents
Multiple Choice Questions ........................................................................................................................... 2
Matching Questions....................................................................................................................................24
Short Answer Questions.............................................................................................................................28
Short Problem Questions ........................................................................................................................... 34
Short Essay Questions ................................................................................................................................ 36
Data Analytic Questions ............................................................................................................................. 41
Video Questions ......................................................................................................................................... 42
1
,Multiple Choice Questions
1) A bank that loans money to a company is called:
A) a supplier.
B) a creditor.
C) an equity investor.
D) a shareholder.
Answer: B
Diff: Easy
Learning Objective: 1.1
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 1 / None
2) The auditors are charged with responsibility:
A) to detect financial fraud committed by employees during the course of their audit.
B) to conduct a thorough and independent audit.
C) to correct all errors in the financial statements.
D) for the accuracy and completeness of the financial statements.
Answer: B
Diff: Medium
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 2 / None
3) Which of the following best describes the difference between consumption and investment?
A) Consumption is long term while investment is short term.
B) Consumption typically involves larger dollar amounts than investment.
C) Consumption addresses immediate needs while investment addresses future needs.
D) Consumption involves more uncertainty than investment.
Answer: C
Diff: Medium
Learning Objective: 1.2
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 3 / None
2
,4) How business decisions affect the financial statements:
A) is the sole responsibility of the Securities and Exchange Commission.
B) is described in the auditor's report.
C) should be considered by management when making those decisions.
D) is unimportant to financial statement users.
Answer: C
Diff: Easy
Learning Objective: 1.1; 1.2; 1.5
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 4 / None
5) A statement that "the financial statements were prepared in accordance with generally
accepted accounting principles" is normally found in the:
A) description of the business in the annual report.
B) quarterly financial statements (Form 10-Q) published by publicly-traded companies.
C) balance sheet.
D) auditor's report.
Answer: D
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 5 / None
6) A statement that financial statement information "is the responsibility of the company" issuing
the statements is normally found in the:
A) footnotes to the financial statements.
B) loan contracts entered into by the company.
C) management letter.
D) board of directors' report.
Answer: C
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 6 / None
3
,7) CPA is an abbreviation for:
A) Certified Public Accountant.
B) Certified Production Accountant.
C) Consumer Protection Agency.
D) Certified Permissible Accounting.
Answer: A
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 7 / None
8) An explanation about the assumptions, estimates, and choices of alternative accounting
methods used in the financial statements is found in the:
A) footnotes to the balance sheet.
B) auditor's report.
C) statement of shareholders' equity.
D) president's letter to the shareholders.
Answer: A
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 8 / None
9) Which of the following best describes assets paid to owners of a company based on the profits
earned by the company?
A) Payables
B) Compensation contracts
C) Dividends
D) Interest
Answer: C
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 9 / None
4
,10) All of the following would likely be part of a loan contract except:
A) maturity date.
B) a statement that equity holders have higher priority than debt holders to the company's assets
in liquidation.
C) collateral.
D) interest terms.
Answer: B
Diff: Easy
Learning Objective: 1.4
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 10 / None
11) A Certified Public Accountant:
A) reviews every transaction that a company conducts during any given year.
B) performs a company's audit.
C) is one of the investors of a company.
D) is responsible for the preparation and integrity of a company's financial statements.
Answer: B
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 11 / None
12) An internal control system:
A) is maintained to ensure that transactions of a company are properly recorded and reported and
the assets are safeguarded.
B) is included in the set of footnotes to the financial statements.
C) is an estimate of the profits a company expects to earn in the future.
D) measures how much control management has over its staff.
Answer: A
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 12 / None
5
,13) Footnotes to financial statements:
A) more fully explain certain items in the financial statements.
B) reflect financial notes personalized by the company's executive team.
C) show the detail of the company's executive officers' compensation packages.
D) are relatively unimportant compared to the actual financial statements.
Answer: A
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 13 / None
14) The balance sheet communicates:
A) a company's level of profitability.
B) a measure of the company's financial performance over a period of time.
C) assets, liabilities, and shareholders' equity as of a certain date.
D) the cash effects of the company's operating, investing, and financing activities.
Answer: C
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 14 / None
15) The income statement communicates:
A) assets, liabilities, and shareholders' equity as of a certain date.
B) how much cash the owner received during a period of time.
C) information about dividends the company paid to its owners.
D) revenues less expenses during a period of time.
Answer: D
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 15 / None
6
,16) Where would you find information on the amount of net income for the year?
A) Factory production reports on units produced
B) Auditor's report
C) Income statement
D) Balance sheet
Answer: C
Diff: Easy
Learning Objective: 1.3
Bloom's: Comprehension
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 16 / None
17) The statement of cash flows communicates:
A) assets, liabilities, and owners' equity at a point of time.
B) the cash effects of a company's operating, investing, and financing activities.
C) the beginning cash balance plus income less dividends.
D) how much cash the company owes its employees as a given date.
Answer: B
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 17 / None
18) The retained earnings section of the statement of shareholders' equity communicates:
A) the dollar amount of a period's earnings not paid out in the form of dividends.
B) the change in assets less liabilities during a period of time.
C) how much cash that management has paid for bonuses.
D) the cash effects of the company's operating, investing, and financing activities.
Answer: A
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 18 / None
7
, 19) If an investor wants to find the amount of cash and land that a company has at a given point
in time, where will the investor look?
A) Statement of shareholders' equity
B) Income statement
C) Balance sheet
D) Statement of cash flows
Answer: C
Diff: Easy
Learning Objective: 1.3
Bloom's: Comprehension
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 19 / None
20) Dividends declared for the owners are found in the:
A) management letter.
B) income statement.
C) dividends statement.
D) statement of shareholders' equity.
Answer: D
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 20 / None
21) Cash received by a company from its normal operating activities during the year is found in
its:
A) balance sheet.
B) statement of cash flows.
C) statement of shareholders' equity.
D) auditor's report.
Answer: B
Diff: Easy
Learning Objective: 1.3
Bloom's: Knowledge
AACSB/AICPA: Analytic / BB: Critical Thinking; FN: Reporting
TOT: 1 min.
Title/Media Ref.: Multiple Choice Question 21 / None
8
