TEST BANK FOR
. .
Fundamentals of Financial Accounting, 8th Edition by Fred Phillips
. . . . . . . .
Chapter 01 8e Phillips
. . . Answers Included
.
1) Creditors.are.owners.of.a.corporation.
⊚. true
⊚. false
2) All.corporations.acquire.financing.by.issuing.stock.on.public.stock.exchanges.
⊚. true
⊚. false
3) You.paid.$10,000.to.buy.1%.of.the.stock.in.a.corporation.that.is.now.bankrupt..The.company.owes.
$10.million.dollars.to.its.creditors..As.a.result.of.the.bankruptcy,.you.are.responsible.for.paying.$1
00,000.(or.$10.million.×.1%).of.the.amount.owed.to.the.creditors.
⊚. true
⊚. false
4) Cash.paid.for.wages.is.an.example.of.an.operating.activity.on.the.statement.of.cash.flows.
⊚. true
⊚. false
5) Borrowing.money.from.a.bank.is.a.financing.activity.on.the.statement.of.cash.flows.
⊚. true
⊚. false
6) The.daily.business.activities.involved.in.running.a.business,.such.as.buying.supplies.and.payi
ng.salaries.and.wages,.are.classified.as.operating.activities.on.the.statement.of.cash.flows.
⊚. true
⊚. false
7) Stockholders'.equity.is.the.difference.between.a.company's.assets.and.its.liabilities.
⊚. true
⊚. false
,8) A.company.owes.$200,000.on.a.bank.loan..It.will.be.reported.by.the.company.as.Accounts.Payab
le.
⊚. true
⊚. false
9) The.amounts.reported.on.financial.statements.are.sometimes.rounded.to.the.nearest.thousand.or.m
illion.
⊚. true
⊚. false
10) Accounts.Payable,.Notes.Payable,.and.Salaries.and.Wages.Payable.are.examples.of.liab
ilities.
⊚. true
⊚. false
11) Dividends.are.subtracted.from.revenues.on.the.income.statement.
⊚. true
⊚. false
12) If.a.company.reports.net.income.on.the.income.statement,.then.the.statement.of.cash.flows.will.r
eport.the.same.amount.as.cash.flows.from.operating.activities.for.the.period.
⊚. true
⊚. false
13) Revenue.is.reported.on.the.income.statement.only.if.cash.was.received.at.the.point.of.sale.
⊚. true
⊚. false
14) Generally.Accepted.Accounting.Principles.(GAAP).require.profitable.companies.to.dis
tribute.some.of.their.earnings.to.their.stockholders.
⊚. true
⊚. false
,15) Common.Stock.is.reported.as.an.asset.on.the.balance.sheet.
⊚. true
⊚. false
16) Investors.are.mainly.interested.in.the.profitability.of.a.company.
⊚. true
⊚. false
17) A.stock.that.does.not.pay.a.dividend.is.an.undesirable.investment.
⊚. true
⊚. false
18) To.ensure.that.companies.produce.useful.information,.it.must.have.two.fundamental.cha
racteristics:.reliability.and.understandability.
⊚. true
⊚. false
19) The.Securities.and.Exchange.Commission.(SEC).is.the.government.agency.that.has.primary.resp
onsibility.for.setting.accounting.standards.in.the.U.S.
⊚. true
⊚. false
20) The.Sarbanes-
Oxley.Act.(SOX).requires.top.management.of.companies.to.sign.a.report.certifying.that.the.f
inancial.statements.are.free.of.error.
⊚. true
⊚. false
21) Companies.must.use.a.December.31st.year-end.for.all.financial.statements.
⊚. false
, ⊚. true
⊚. false
. .
Fundamentals of Financial Accounting, 8th Edition by Fred Phillips
. . . . . . . .
Chapter 01 8e Phillips
. . . Answers Included
.
1) Creditors.are.owners.of.a.corporation.
⊚. true
⊚. false
2) All.corporations.acquire.financing.by.issuing.stock.on.public.stock.exchanges.
⊚. true
⊚. false
3) You.paid.$10,000.to.buy.1%.of.the.stock.in.a.corporation.that.is.now.bankrupt..The.company.owes.
$10.million.dollars.to.its.creditors..As.a.result.of.the.bankruptcy,.you.are.responsible.for.paying.$1
00,000.(or.$10.million.×.1%).of.the.amount.owed.to.the.creditors.
⊚. true
⊚. false
4) Cash.paid.for.wages.is.an.example.of.an.operating.activity.on.the.statement.of.cash.flows.
⊚. true
⊚. false
5) Borrowing.money.from.a.bank.is.a.financing.activity.on.the.statement.of.cash.flows.
⊚. true
⊚. false
6) The.daily.business.activities.involved.in.running.a.business,.such.as.buying.supplies.and.payi
ng.salaries.and.wages,.are.classified.as.operating.activities.on.the.statement.of.cash.flows.
⊚. true
⊚. false
7) Stockholders'.equity.is.the.difference.between.a.company's.assets.and.its.liabilities.
⊚. true
⊚. false
,8) A.company.owes.$200,000.on.a.bank.loan..It.will.be.reported.by.the.company.as.Accounts.Payab
le.
⊚. true
⊚. false
9) The.amounts.reported.on.financial.statements.are.sometimes.rounded.to.the.nearest.thousand.or.m
illion.
⊚. true
⊚. false
10) Accounts.Payable,.Notes.Payable,.and.Salaries.and.Wages.Payable.are.examples.of.liab
ilities.
⊚. true
⊚. false
11) Dividends.are.subtracted.from.revenues.on.the.income.statement.
⊚. true
⊚. false
12) If.a.company.reports.net.income.on.the.income.statement,.then.the.statement.of.cash.flows.will.r
eport.the.same.amount.as.cash.flows.from.operating.activities.for.the.period.
⊚. true
⊚. false
13) Revenue.is.reported.on.the.income.statement.only.if.cash.was.received.at.the.point.of.sale.
⊚. true
⊚. false
14) Generally.Accepted.Accounting.Principles.(GAAP).require.profitable.companies.to.dis
tribute.some.of.their.earnings.to.their.stockholders.
⊚. true
⊚. false
,15) Common.Stock.is.reported.as.an.asset.on.the.balance.sheet.
⊚. true
⊚. false
16) Investors.are.mainly.interested.in.the.profitability.of.a.company.
⊚. true
⊚. false
17) A.stock.that.does.not.pay.a.dividend.is.an.undesirable.investment.
⊚. true
⊚. false
18) To.ensure.that.companies.produce.useful.information,.it.must.have.two.fundamental.cha
racteristics:.reliability.and.understandability.
⊚. true
⊚. false
19) The.Securities.and.Exchange.Commission.(SEC).is.the.government.agency.that.has.primary.resp
onsibility.for.setting.accounting.standards.in.the.U.S.
⊚. true
⊚. false
20) The.Sarbanes-
Oxley.Act.(SOX).requires.top.management.of.companies.to.sign.a.report.certifying.that.the.f
inancial.statements.are.free.of.error.
⊚. true
⊚. false
21) Companies.must.use.a.December.31st.year-end.for.all.financial.statements.
⊚. false
, ⊚. true
⊚. false
