,TESTBANK FOR Corporate Financial Accounting
17th Edition Warren
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
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
True / False
1. The role of accounting is to provide many different users with financial information to assess the
economic performance of a business.
a. True
b. False
ANSWER: True
2. Investing activities are those activities by which the company obtains funds to start and operate the
business.
a. True
b. False
ANSWER: False
3. Managerial accounting information is used by external and internal users equally.
a. True
b. False
ANSWER: False
4. 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
5. Financial accounting provides information to all users, while the main focus for managerial accounting
is to provide information to management.
a. True
b. False
ANSWER: True
6. Proper ethical conduct implies that you only consider what's in your best interest.
a. True
b. False
ANSWER: False
7. 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
8. 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
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,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
b. False
ANSWER: True
9. Operating activities are those activities by which a company generates revenues from customers.
a. True
b. False
ANSWER: True
10. An example of a general-purpose financial statement would be a report about projected price
increases related to transportation costs used only by internal managers of the organization and not by
external users.
a. True
b. False
ANSWER: False
11. The Sarbanes-Oxley Act established standards for corporate responsibility and disclosure.
a. True
b. False
ANSWER: True
12. The main objective for all businesses is to maximize unrealized profits.
a. True
b. False
ANSWER: False
13. 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
14. 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
15. An example of an external user of accounting information is the federal government.
a. True
b. False
ANSWER: True
16. A corporation is a business that is legally separate and distinct from its owners.
a. True
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,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
b. False
ANSWER: True
17. Proprietorships are owned by one owner and provide only services to their customers.
a. True
b. False
ANSWER: False
18. About 90% of the businesses in the United States are organized as corporations.
a. True
b. False
ANSWER: False
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 differences exist between the accounting standards issued by the FASB (U.S. GAAP) and the
IASB (IFRS).
a. True
Copyright Cengage Learning. Powered by Cognero. Page 3
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
b. False
ANSWER: False
25. Generally accepted accounting principles regulate how and what financial information is reported by
businesses.
a. True
b. False
ANSWER: True
26. Any 12-month accounting period adopted by a company is known as its fiscal year.
a. True
b. False
ANSWER: True
27. A fiscal year that ends when business activities have reached their lowest point is called the natural
business year.
a. True
b. False
ANSWER: True
28. All companies must use a calendar year as their fiscal year.
a. True
b. False
ANSWER: False
29. The majority of businesses end their fiscal year on December 31.
a. True
b. False
ANSWER: True
30. The accounting equation can be expressed as Assets – Liabilities = Stockholders' Equity.
a. True
b. False
ANSWER: True
31. 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
32. The stockholders' rights to the assets rank ahead of the creditors' rights to the assets.
a. True
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,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
b. False
ANSWER: False
33. 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
34. 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
35. 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
36. 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
ANSWER: True
37. An account receivable is typically classified as a revenue.
a. True
b. False
ANSWER: False
38. An account receivable is a claim against a customer resulting from a sale on account.
a. True
b. False
ANSWER: True
39. Paying an account payable increases liabilities and decreases assets.
a. True
b. False
ANSWER: False
40. Receiving payments on an account receivable increases both equity and assets.
a. True
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,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
b. False
ANSWER: False
41. Cash dividends paid to stockholders decrease assets and increase equity.
a. True
b. False
ANSWER: False
42. Purchasing supplies on account increases liabilities and decreases equity.
a. True
b. False
ANSWER: False
43. 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
44. Revenue is earned only when money is received.
a. True
b. False
ANSWER: False
45. Assets that are used up during the process of earning revenue are called expenses.
a. True
b. False
ANSWER: True
46. The excess of revenue over the expenses incurred in earning the revenue is called capital.
a. True
b. False
ANSWER: False
47. 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
48. An income statement is a summary of the revenues and expenses of a business as of a specific date.
a. True
b. False
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,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
ANSWER: False
49. A statement of stockholders’ equity reports the changes in stockholders’ equity for a period of time.
a. True
b. False
ANSWER: True
50. 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
51. The balance sheet represents the accounting equation.
a. True
b. False
ANSWER: True
52. Net income and net profit do not mean the same thing.
a. True
b. False
ANSWER: False
Multiple Choice
53. Profit can be described as the difference between
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 a business receives from customers for goods sold or services provided and the
amounts the business paid for the various inputs or expenses used to provide the goods or
services .
ANSWER: d
54. Two common areas of accounting that provide information to internal users and to external users are
(respectively)
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
55. Which of the following best describes accounting?
a. Accounting is a system that records economic data but does not communicate the data to users
Copyright Cengage Learning. Powered by Cognero. Page 7
, Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
according to any specific rules.
b. Accounting is an information system that provides reports to users regarding economic
activities and the condition of a business.
c. Accounting is of no use to individuals outside of the business.
d. Accounting is used only for filling out tax returns and for financial statements for
governmental reporting requirements.
ANSWER: b
56. 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
57. Financial reports are used by
a. management.
b. creditors.
c. investors.
d. all of these choices.
ANSWER: d
58. Which of the following is a manufacturing business?
a. General Motors
b. Facebook
c. American Airlines
d. Target
ANSWER: a
59. Which of the following is a service business?
a. Microsoft
b. Dell Computers
c. Facebook
d. Walmart
ANSWER: c
60. Which of the following groups of companies includes examples of retail businesses?
a. Delta Air Lines, Marriott, Gap
b. Gap, Amazon.com, Delta Air Lines
c. GameStop, Sony, Dell
d. GameStop, Best Buy, Gap
ANSWER: d
Copyright Cengage Learning. Powered by Cognero. Page 8
17th Edition Warren
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
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
True / False
1. The role of accounting is to provide many different users with financial information to assess the
economic performance of a business.
a. True
b. False
ANSWER: True
2. Investing activities are those activities by which the company obtains funds to start and operate the
business.
a. True
b. False
ANSWER: False
3. Managerial accounting information is used by external and internal users equally.
a. True
b. False
ANSWER: False
4. 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
5. Financial accounting provides information to all users, while the main focus for managerial accounting
is to provide information to management.
a. True
b. False
ANSWER: True
6. Proper ethical conduct implies that you only consider what's in your best interest.
a. True
b. False
ANSWER: False
7. 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
8. 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
Copyright Cengage Learning. Powered by Cognero. Page 1
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
b. False
ANSWER: True
9. Operating activities are those activities by which a company generates revenues from customers.
a. True
b. False
ANSWER: True
10. An example of a general-purpose financial statement would be a report about projected price
increases related to transportation costs used only by internal managers of the organization and not by
external users.
a. True
b. False
ANSWER: False
11. The Sarbanes-Oxley Act established standards for corporate responsibility and disclosure.
a. True
b. False
ANSWER: True
12. The main objective for all businesses is to maximize unrealized profits.
a. True
b. False
ANSWER: False
13. 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
14. 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
15. An example of an external user of accounting information is the federal government.
a. True
b. False
ANSWER: True
16. A corporation is a business that is legally separate and distinct from its owners.
a. True
Copyright Cengage Learning. Powered by Cognero. Page 2
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
b. False
ANSWER: True
17. Proprietorships are owned by one owner and provide only services to their customers.
a. True
b. False
ANSWER: False
18. About 90% of the businesses in the United States are organized as corporations.
a. True
b. False
ANSWER: False
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 differences exist between the accounting standards issued by the FASB (U.S. GAAP) and the
IASB (IFRS).
a. True
Copyright Cengage Learning. Powered by Cognero. Page 3
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
b. False
ANSWER: False
25. Generally accepted accounting principles regulate how and what financial information is reported by
businesses.
a. True
b. False
ANSWER: True
26. Any 12-month accounting period adopted by a company is known as its fiscal year.
a. True
b. False
ANSWER: True
27. A fiscal year that ends when business activities have reached their lowest point is called the natural
business year.
a. True
b. False
ANSWER: True
28. All companies must use a calendar year as their fiscal year.
a. True
b. False
ANSWER: False
29. The majority of businesses end their fiscal year on December 31.
a. True
b. False
ANSWER: True
30. The accounting equation can be expressed as Assets – Liabilities = Stockholders' Equity.
a. True
b. False
ANSWER: True
31. 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
32. The stockholders' rights to the assets rank ahead of the creditors' rights to the assets.
a. True
Copyright Cengage Learning. Powered by Cognero. Page 4
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
b. False
ANSWER: False
33. 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
34. 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
35. 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
36. 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
ANSWER: True
37. An account receivable is typically classified as a revenue.
a. True
b. False
ANSWER: False
38. An account receivable is a claim against a customer resulting from a sale on account.
a. True
b. False
ANSWER: True
39. Paying an account payable increases liabilities and decreases assets.
a. True
b. False
ANSWER: False
40. Receiving payments on an account receivable increases both equity and assets.
a. True
Copyright Cengage Learning. Powered by Cognero. Page 5
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
b. False
ANSWER: False
41. Cash dividends paid to stockholders decrease assets and increase equity.
a. True
b. False
ANSWER: False
42. Purchasing supplies on account increases liabilities and decreases equity.
a. True
b. False
ANSWER: False
43. 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
44. Revenue is earned only when money is received.
a. True
b. False
ANSWER: False
45. Assets that are used up during the process of earning revenue are called expenses.
a. True
b. False
ANSWER: True
46. The excess of revenue over the expenses incurred in earning the revenue is called capital.
a. True
b. False
ANSWER: False
47. 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
48. An income statement is a summary of the revenues and expenses of a business as of a specific date.
a. True
b. False
Copyright Cengage Learning. Powered by Cognero. Page 6
,Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
ANSWER: False
49. A statement of stockholders’ equity reports the changes in stockholders’ equity for a period of time.
a. True
b. False
ANSWER: True
50. 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
51. The balance sheet represents the accounting equation.
a. True
b. False
ANSWER: True
52. Net income and net profit do not mean the same thing.
a. True
b. False
ANSWER: False
Multiple Choice
53. Profit can be described as the difference between
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 a business receives from customers for goods sold or services provided and the
amounts the business paid for the various inputs or expenses used to provide the goods or
services .
ANSWER: d
54. Two common areas of accounting that provide information to internal users and to external users are
(respectively)
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
55. Which of the following best describes accounting?
a. Accounting is a system that records economic data but does not communicate the data to users
Copyright Cengage Learning. Powered by Cognero. Page 7
, Name: Class: Date:
Chapter 01: Introduction to Accounting and Business
according to any specific rules.
b. Accounting is an information system that provides reports to users regarding economic
activities and the condition of a business.
c. Accounting is of no use to individuals outside of the business.
d. Accounting is used only for filling out tax returns and for financial statements for
governmental reporting requirements.
ANSWER: b
56. 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
57. Financial reports are used by
a. management.
b. creditors.
c. investors.
d. all of these choices.
ANSWER: d
58. Which of the following is a manufacturing business?
a. General Motors
b. Facebook
c. American Airlines
d. Target
ANSWER: a
59. Which of the following is a service business?
a. Microsoft
b. Dell Computers
c. Facebook
d. Walmart
ANSWER: c
60. Which of the following groups of companies includes examples of retail businesses?
a. Delta Air Lines, Marriott, Gap
b. Gap, Amazon.com, Delta Air Lines
c. GameStop, Sony, Dell
d. GameStop, Best Buy, Gap
ANSWER: d
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