,TESTBANK for Corporate Financial Accounting ,
16th Edition Carl Warren
Notes
1- All Chapters are step by step.
2- We have shown you 10 pages.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many
new editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
1. A corporation is a business that is legally separate and distinct from its owners.
a. True
b. False
ANSWER: True
2. The role of accounting is to provide many different users with financial information to make economic
decisions.
a. True
b. False
ANSWER: True
3. Investing activities are those activities by which the company obtains funds to start and operate the
business.
a. True
b. False
ANSWER: False
4. Managerial accounting information is used by external and internal users equally.
a. True
b. False
ANSWER: False
5. Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the
companies where they work.
a. True
b. False
ANSWER: False
6. Financial accounting provides information to all users, while the main focus for managerial accounting
is to provide information to the management.
a. True
b. False
ANSWER: True
7. Proper ethical conduct implies that you only consider what's in your best interest.
a. True
b. False
ANSWER: False
8. Some of the major fraudulent acts by senior executives started as what they considered to be small
ethical lapses that grew out of control.
a. True
b. False
ANSWER: True
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,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
9. A business is an organization in which basic resources or inputs, like materials and labor, are
assembled and processed to provide outputs in the form of goods or services to customers.
a. True
b. False
ANSWER: True
10. Operating activities are those activities by which a company generates revenues from customers.
a. True
b. False
ANSWER: True
11. An example of a general-purpose financial statement would be a report about projected price
increases related to transportation costs.
a. True
b. False
ANSWER: False
12. The Sarbanes-Oxley Act established standards for corporate responsibility and disclosure.
a. True
b. False
ANSWER: True
13. The main objective for all businesses is to maximize unrealized profits.
a. True
b. False
ANSWER: False
14. The primary role of accounting is to determine the amount of taxes a business will be required to pay
to taxing entities.
a. True
b. False
ANSWER: False
15. The basic difference between manufacturing and retail companies is the completion level of the
products they purchase for resale to customers.
a. True
b. False
ANSWER: True
16. Proprietorships are owned by one owner and provide only services to their customers.
a. True
b. False
ANSWER: False
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,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
17. About 90% of the businesses in the United States are organized as corporations.
a. True
b. False
ANSWER: False
18. An example of an external user of accounting information is the federal government.
a. True
b. False
ANSWER: True
19. The Financial Accounting Standards Board (FASB) is the authoritative body that has primary
responsibility for developing accounting principles.
a. True
b. False
ANSWER: True
20. The cost principle is the basis for entering the purchase price into the accounting records.
a. True
b. False
ANSWER: True
21. The monetary unit assumption requires that economic data be recorded in dollars for companies in the
United States.
a. True
b. False
ANSWER: True
22. If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for
it, the buyer would record the building at $85,000.
a. True
b. False
ANSWER: False
23. The financial statements of a proprietorship should include the owner's personal assets and liabilities.
a. True
b. False
ANSWER: False
24. No significant differences exist between the accounting standards issued by the FASB and the IASB.
a. True
b. False
ANSWER: False
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,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
25. Generally accepted accounting principles regulate how and what financial information is reported by
businesses.
a. True
b. False
ANSWER: True
26. The accounting equation can be expressed as Assets – Liabilities = Stockholders' Equity.
a. True
b. False
ANSWER: True
27. The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of
stockholders.
a. True
b. False
ANSWER: True
28. The stockholders' rights to the assets rank ahead of the creditors' rights to the assets.
a. True
b. False
ANSWER: False
29. If the liabilities owed by a business total $300,000 and stockholders' equity is equal to $300,000, then
the assets also total $300,000.
a. True
b. False
ANSWER: False
30. If total assets decreased by $30,000 during a specific period and stockholders' equity decreased by
$35,000 during the same period, the period's change in total liabilities was a $65,000 increase.
a. True
b. False
ANSWER: False
31. If total assets increased by $190,000 during a specific period and liabilities decreased by $10,000
during the same period, the period's change in total stockholders' equity was a $200,000 increase.
a. True
b. False
ANSWER: True
32. If net income for a company was $50,000, $20,000 in cash dividends were paid, and the shareholders
invested $10,000 in cash, the stockholders' equity increased by $40,000.
a. True
b. False
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,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
ANSWER: True
33. An account receivable is typically classified as a revenue.
a. True
b. False
ANSWER: False
34. An account receivable is a claim against a customer resulting from a sale on account.
a. True
b. False
ANSWER: True
35. Paying an account payable increases liabilities and decreases assets.
a. True
b. False
ANSWER: False
36. Receiving payments on an account receivable increases both equity and assets.
a. True
b. False
ANSWER: False
37. Dividends paid to stockholders decrease assets and increase equity.
a. True
b. False
ANSWER: False
38. Purchasing supplies on account increases liabilities and decreases equity.
a. True
b. False
ANSWER: False
39. Receiving a bill or otherwise being notified that an amount is owed is not recorded until the amount is
paid.
a. True
b. False
ANSWER: False
40. Revenue is earned only when money is received.
a. True
b. False
ANSWER: False
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,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
41. Assets that are used up during the process of earning revenue are called expenses.
a. True
b. False
ANSWER: True
42. The excess of revenue over the expenses incurred in earning the revenue is called capital.
a. True
b. False
ANSWER: False
43. The primary financial statements of a corporation are the income statement, the statement of
stockholders’ equity, and the balance sheet.
a. True
b. False
ANSWER: False
44. An income statement is a summary of the revenues and expenses of a business as of a specific date.
a. True
b. False
ANSWER: False
45. A statement of stockholders’ equity reports the changes in stockholders’ equity for a period of time.
a. True
b. False
ANSWER: True
46. The statement of cash flows consists of three sections: cash flows from operating activities, cash
flows from income activities, and cash flows from equity activities.
a. True
b. False
ANSWER: False
47. The balance sheet represents the accounting equation.
a. True
b. False
ANSWER: True
48. Net income and net profit do not mean the same thing.
a. True
b. False
ANSWER: False
49. Profit is the difference between
Copyright Cengage Learning. Powered by Cognero. Page 6
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
a. assets and liabilities
b. the incoming cash and outgoing cash
c. the assets purchased with cash contributed by the owner and the cash spent to operate the
business
d. the amounts received from customers for goods or services and the amounts paid for
the inputs used to provide the goods or services
ANSWER: d
50. Two common areas of accounting that respectively provide information to internal and external users
are
a. forensic accounting and financial accounting
b. managerial accounting and financial accounting
c. managerial accounting and environmental accounting
d. financial accounting and tax accounting systems
ANSWER: b
51. Which of the following best describes accounting?
a. records economic data but does not communicate the data to users according to any specific
rules
b. is an information system that provides reports to users regarding economic activities and
condition of a business
c. is of no use by individuals outside of the business
d. is used only for filling out tax returns and for financial statements for various types of
governmental reporting requirements
ANSWER: b
52. Which type of accountant typically practices as an individual or as a member of a public accounting
firm?
a. Certified Public Accountant
b. Certified Payroll Professional
c. Certified Internal Auditor
d. Certified Management Accountant
ANSWER: a
53. Financial reports are used by
a. management
b. creditors
c. investors
d. all of these choices
ANSWER: d
54. All of the following are general-purpose financial statements except a(n)
a. balance sheet
b. income statement
c. statement of stockholders’ equity
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, Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
d. cash budget
ANSWER: d
55. Which of the following is a manufacturing business?
a. General Motors
b. Facebook
c. American Airlines
d. Target
ANSWER: a
56. Which of the following is a service business?
a. Microsoft
b. Dell Computers
c. Facebook
d. Walmart
ANSWER: c
57. Which of the following groups of companies are all examples of a retail business?
a. Delta Air Lines, Marriott, Gap
b. Gap, Amazon.com, Delta Air Lines
c. GameStop, Sony, Dell
d. GameStop, Best Buy, Gap
ANSWER: d
58. Which of the following groups are considered to be internal users of accounting information?
a. employees and customers
b. customers and vendors
c. employees and managers
d. government entities and banks
ANSWER: c
59. All of the following are examples of external users of accounting information except
a. government entities
b. customers
c. creditors
d. managers
ANSWER: d
60. Which of the following is the best description of accounting’s role in business?
a. Accounting provides stockholders with information regarding the market value of the
company’s stocks.
b. Accounting provides information to managers to operate the business and to other users to
make decisions regarding the economic condition of the company.
c. Accounting helps in decreasing the credit risk of the company.
Copyright Cengage Learning. Powered by Cognero. Page 8
16th Edition Carl Warren
Notes
1- All Chapters are step by step.
2- We have shown you 10 pages.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many
new editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
1. A corporation is a business that is legally separate and distinct from its owners.
a. True
b. False
ANSWER: True
2. The role of accounting is to provide many different users with financial information to make economic
decisions.
a. True
b. False
ANSWER: True
3. Investing activities are those activities by which the company obtains funds to start and operate the
business.
a. True
b. False
ANSWER: False
4. Managerial accounting information is used by external and internal users equally.
a. True
b. False
ANSWER: False
5. Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the
companies where they work.
a. True
b. False
ANSWER: False
6. Financial accounting provides information to all users, while the main focus for managerial accounting
is to provide information to the management.
a. True
b. False
ANSWER: True
7. Proper ethical conduct implies that you only consider what's in your best interest.
a. True
b. False
ANSWER: False
8. Some of the major fraudulent acts by senior executives started as what they considered to be small
ethical lapses that grew out of control.
a. True
b. False
ANSWER: True
Copyright Cengage Learning. Powered by Cognero. Page 1
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
9. A business is an organization in which basic resources or inputs, like materials and labor, are
assembled and processed to provide outputs in the form of goods or services to customers.
a. True
b. False
ANSWER: True
10. Operating activities are those activities by which a company generates revenues from customers.
a. True
b. False
ANSWER: True
11. An example of a general-purpose financial statement would be a report about projected price
increases related to transportation costs.
a. True
b. False
ANSWER: False
12. The Sarbanes-Oxley Act established standards for corporate responsibility and disclosure.
a. True
b. False
ANSWER: True
13. The main objective for all businesses is to maximize unrealized profits.
a. True
b. False
ANSWER: False
14. The primary role of accounting is to determine the amount of taxes a business will be required to pay
to taxing entities.
a. True
b. False
ANSWER: False
15. The basic difference between manufacturing and retail companies is the completion level of the
products they purchase for resale to customers.
a. True
b. False
ANSWER: True
16. Proprietorships are owned by one owner and provide only services to their customers.
a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 2
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
17. About 90% of the businesses in the United States are organized as corporations.
a. True
b. False
ANSWER: False
18. An example of an external user of accounting information is the federal government.
a. True
b. False
ANSWER: True
19. The Financial Accounting Standards Board (FASB) is the authoritative body that has primary
responsibility for developing accounting principles.
a. True
b. False
ANSWER: True
20. The cost principle is the basis for entering the purchase price into the accounting records.
a. True
b. False
ANSWER: True
21. The monetary unit assumption requires that economic data be recorded in dollars for companies in the
United States.
a. True
b. False
ANSWER: True
22. If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for
it, the buyer would record the building at $85,000.
a. True
b. False
ANSWER: False
23. The financial statements of a proprietorship should include the owner's personal assets and liabilities.
a. True
b. False
ANSWER: False
24. No significant differences exist between the accounting standards issued by the FASB and the IASB.
a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 3
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
25. Generally accepted accounting principles regulate how and what financial information is reported by
businesses.
a. True
b. False
ANSWER: True
26. The accounting equation can be expressed as Assets – Liabilities = Stockholders' Equity.
a. True
b. False
ANSWER: True
27. The rights or claims to the assets of a business may be subdivided into rights of creditors and rights of
stockholders.
a. True
b. False
ANSWER: True
28. The stockholders' rights to the assets rank ahead of the creditors' rights to the assets.
a. True
b. False
ANSWER: False
29. If the liabilities owed by a business total $300,000 and stockholders' equity is equal to $300,000, then
the assets also total $300,000.
a. True
b. False
ANSWER: False
30. If total assets decreased by $30,000 during a specific period and stockholders' equity decreased by
$35,000 during the same period, the period's change in total liabilities was a $65,000 increase.
a. True
b. False
ANSWER: False
31. If total assets increased by $190,000 during a specific period and liabilities decreased by $10,000
during the same period, the period's change in total stockholders' equity was a $200,000 increase.
a. True
b. False
ANSWER: True
32. If net income for a company was $50,000, $20,000 in cash dividends were paid, and the shareholders
invested $10,000 in cash, the stockholders' equity increased by $40,000.
a. True
b. False
Copyright Cengage Learning. Powered by Cognero. Page 4
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
ANSWER: True
33. An account receivable is typically classified as a revenue.
a. True
b. False
ANSWER: False
34. An account receivable is a claim against a customer resulting from a sale on account.
a. True
b. False
ANSWER: True
35. Paying an account payable increases liabilities and decreases assets.
a. True
b. False
ANSWER: False
36. Receiving payments on an account receivable increases both equity and assets.
a. True
b. False
ANSWER: False
37. Dividends paid to stockholders decrease assets and increase equity.
a. True
b. False
ANSWER: False
38. Purchasing supplies on account increases liabilities and decreases equity.
a. True
b. False
ANSWER: False
39. Receiving a bill or otherwise being notified that an amount is owed is not recorded until the amount is
paid.
a. True
b. False
ANSWER: False
40. Revenue is earned only when money is received.
a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 5
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
41. Assets that are used up during the process of earning revenue are called expenses.
a. True
b. False
ANSWER: True
42. The excess of revenue over the expenses incurred in earning the revenue is called capital.
a. True
b. False
ANSWER: False
43. The primary financial statements of a corporation are the income statement, the statement of
stockholders’ equity, and the balance sheet.
a. True
b. False
ANSWER: False
44. An income statement is a summary of the revenues and expenses of a business as of a specific date.
a. True
b. False
ANSWER: False
45. A statement of stockholders’ equity reports the changes in stockholders’ equity for a period of time.
a. True
b. False
ANSWER: True
46. The statement of cash flows consists of three sections: cash flows from operating activities, cash
flows from income activities, and cash flows from equity activities.
a. True
b. False
ANSWER: False
47. The balance sheet represents the accounting equation.
a. True
b. False
ANSWER: True
48. Net income and net profit do not mean the same thing.
a. True
b. False
ANSWER: False
49. Profit is the difference between
Copyright Cengage Learning. Powered by Cognero. Page 6
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
a. assets and liabilities
b. the incoming cash and outgoing cash
c. the assets purchased with cash contributed by the owner and the cash spent to operate the
business
d. the amounts received from customers for goods or services and the amounts paid for
the inputs used to provide the goods or services
ANSWER: d
50. Two common areas of accounting that respectively provide information to internal and external users
are
a. forensic accounting and financial accounting
b. managerial accounting and financial accounting
c. managerial accounting and environmental accounting
d. financial accounting and tax accounting systems
ANSWER: b
51. Which of the following best describes accounting?
a. records economic data but does not communicate the data to users according to any specific
rules
b. is an information system that provides reports to users regarding economic activities and
condition of a business
c. is of no use by individuals outside of the business
d. is used only for filling out tax returns and for financial statements for various types of
governmental reporting requirements
ANSWER: b
52. Which type of accountant typically practices as an individual or as a member of a public accounting
firm?
a. Certified Public Accountant
b. Certified Payroll Professional
c. Certified Internal Auditor
d. Certified Management Accountant
ANSWER: a
53. Financial reports are used by
a. management
b. creditors
c. investors
d. all of these choices
ANSWER: d
54. All of the following are general-purpose financial statements except a(n)
a. balance sheet
b. income statement
c. statement of stockholders’ equity
Copyright Cengage Learning. Powered by Cognero. Page 7
, Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
d. cash budget
ANSWER: d
55. Which of the following is a manufacturing business?
a. General Motors
b. Facebook
c. American Airlines
d. Target
ANSWER: a
56. Which of the following is a service business?
a. Microsoft
b. Dell Computers
c. Facebook
d. Walmart
ANSWER: c
57. Which of the following groups of companies are all examples of a retail business?
a. Delta Air Lines, Marriott, Gap
b. Gap, Amazon.com, Delta Air Lines
c. GameStop, Sony, Dell
d. GameStop, Best Buy, Gap
ANSWER: d
58. Which of the following groups are considered to be internal users of accounting information?
a. employees and customers
b. customers and vendors
c. employees and managers
d. government entities and banks
ANSWER: c
59. All of the following are examples of external users of accounting information except
a. government entities
b. customers
c. creditors
d. managers
ANSWER: d
60. Which of the following is the best description of accounting’s role in business?
a. Accounting provides stockholders with information regarding the market value of the
company’s stocks.
b. Accounting provides information to managers to operate the business and to other users to
make decisions regarding the economic condition of the company.
c. Accounting helps in decreasing the credit risk of the company.
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