TestmBankmformFundamentalmFinancialmAccountingmConcept
m
s
11thmEdition
bymTho
masmEd
monds,m
PhilipmO
lds,mChri
stopherm
Edmond
s
,Studentmname:
1) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmmarketsmismtruemormfalse.
a)mFinancialmresourcesmcanmbemprovidedmtomambusinessmbyminvestors.
b)mResourcemownersmaremthembusinessesmthatmtransformmresourcesmintomprodu
ctsmthatmsatisfymconsumermdesires.
c)mLabormresourcesmincludembothmthemphysicalmandmintellectualmlabormofmamb
usiness'smemployees.
d)mBusinessesmpurchasemtheirmresourcesmfrommresourcemowners.
e)mConsumersmaremthemmainmprovidersmofmresourcesminmanymmarket.
2) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmaccountingminformationmis
mtruemormfalse.
a)mFinancialmaccountingmismprimarilymintendedmtomsatisfymtheminformationmn
eedsmofminternalmstakeholders.
b)mManagerialmaccountingminformationmincludesmfinancialmandmnonfina
ncialminformation.
c)mThemaccountingminformationmintendedmtomsatisfymthemneedsmofmamco
mpany'smemployeesmismmanagerialmaccountingminformation.
d)mGAAPmrequiresmthatmcompaniesmadheremtomfinancialmaccountingmstandards.
e)mManagerialmaccountingminformationmismusuallymlessmdetailedmthanmfin
ancialmaccountingminformation.
3) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmliabilitiesmismtruemormfalse.
a)mAmnetmlossmonmthemincomemstatementmdecreasesmliabilities.
b)mThemacquisitionmofmambankmloanmincreasesmbothmassetsmandmliabilities.
c)mThemaccountingmequationmrequiresmthatmliabilitiesmbemequalmtomstockholders’mequity.
d)mThemamountmofmamcompany'smliabilitiesmismequalmtomthemdifferencembetweenm
itsmassetsmandmitsmstockholders’mequity.
e)mLiabilitiesmaremreportedmonmthemstatementmofmcashmflowsmofmambusiness.
,4) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmretainedmearningsmismtruemormfa
lse.
a)mAmdividendmpaidmtomstockholdersmdecreasesmretainedmearnings.
b)mIssuingmcommonmstockmformcashmincreasesmretainedmearnings.
c)mThemamountmofmnetmincomemformamperiodmmustmequalmretainedmearnings.
d)mThempurchasemofmamtruckmdecreasesmretainedmearnings.
e)mNetmincomemincreasesmretainedmearnings.
5) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmthemtypesmofmtransaction
smismtruemormfalse.
a)mAnmassetmsourcemtransactionmincreasesmtotalmassetsmandmincreasesmclaimsmtomassets.
b)mThemissuancemofmstockmtomownersmformcashmwouldmbemanmexamplemof
manmassetmexchangemtransaction.
c)mPurchasingmequipmentmformcashmismanmexamplemofmanmassetmusemtransaction.
d)mPayingmamdividendmtomstockholdersmismanmexamplemofmanmassetmusemtransaction.
e)mMakingmampaymentmonmambankmloanmismanmexamplemofmanmassetmexchangemtransact
ion.
6) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmfinancialmstatementsmis
mtruemormfalse.
a)mAmcashmdividendmpaidmtomstockholdersmismreportedminmtheminvestingmactivities
msectionmofmthemstatementmofmcashmflows.
b)mAmcashmdividendmpaidmtomstockholdersmismreportedmonmthemstatementmofmch
angesminmstockholders'mequity.
c)mAmcashmdividendmpaidmtomstockholdersmismreportedmonmthemincomemstatement.
d)mThembalancemsheetmreportsmthemendingmbalancesmofmpermanentmaccountsmasmof
mthemlastmdaymofmthemaccountingmperiod.
e)mChangesminmretainedmearningsmduringmthemaccountingmperiodmaremreported
monmthemincomemstatement.
, 7) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmstockholders’mequitymis
mtruemormfalse.
a)mExpensesmdecreasemretainedmearnings.
b)mStockholders'mequitymandmliabilitiesmcanmbemviewedmeithermasmsourcesmofm
assetsmormclaimsmtomassetsmofmthembusiness.
c)mRetainedmearningsmismincreasedmbymloansmreceivedmfrommambank.
d)mDividendsmpaidmtomstockholdersmdecreasemcommonmstock.
e)mGenerally,massetsmaremreportedmatmthemactualmpricempaidmformthemmwhenmp
urchasedmregardlessmofmsubsequentmchangesminmmarketmvalue.
8) JessupmCompanymwasmfoundedminmYearm1.mItmacquiredm$45,000mcashmbymissuingmst
ockmtominvestorsmandmanmadditionalm$15,000mcashmbymborrowingmfrommcreditors.mDuringmY
earm1mitmreceived
$25,000mcashmrevenuesmandmpaidm$32,000minmcashmexpenses.mThemcompanymthenmwentm
outmofmbusiness.
Required:
a) Explainmthemterm,m"businessmliquidation."
b) WhatmamountmofmcashmshouldmJessupmCompanymhavemhadmonmhandmimmediatelymbefo
remgoingmoutmofmbusiness?
c) WhatmamountmofmcashmwillmJessup'smcreditorsmreceive?
d) WhatmamountmofmcashmwillmJessup'smstockholdersmreceive?
9) BatesmCompanymenteredmintomthemfollowingmtransactionsmduringmitsmfirstmyearminmb
usiness.mAssumemthatmallmtransactionsminvolvemthemreceiptmormpaymentmofmcash.
1) Issuedmcommonmstockmtominvestorsmform$25,000mcash.
2) Borrowedm$18,000mfrommthemlocalmbank.
3) Providedmservicesmtomcustomersmform$28,000.
4) Paidmexpensesmamountingmtom$21,400.
5) Purchasedmamplotmofmlandmcostingm$22,000.
6) Paidmamdividendmofm$15,000mtomitsmstockholders.
7) Repaidm$12,000mofmthemloanmlistedminmitemm2.
Required:
(a) Fillminmthemthreemcolumnmheadingsmofmthemaccountingmequationminmthemfirstmrowmof
mthemtablemshownmbelow.
(b) Showmthemeffectsmofmthemabovemtransactionsmonmthemaccountingmequation.
m
s
11thmEdition
bymTho
masmEd
monds,m
PhilipmO
lds,mChri
stopherm
Edmond
s
,Studentmname:
1) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmmarketsmismtruemormfalse.
a)mFinancialmresourcesmcanmbemprovidedmtomambusinessmbyminvestors.
b)mResourcemownersmaremthembusinessesmthatmtransformmresourcesmintomprodu
ctsmthatmsatisfymconsumermdesires.
c)mLabormresourcesmincludembothmthemphysicalmandmintellectualmlabormofmamb
usiness'smemployees.
d)mBusinessesmpurchasemtheirmresourcesmfrommresourcemowners.
e)mConsumersmaremthemmainmprovidersmofmresourcesminmanymmarket.
2) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmaccountingminformationmis
mtruemormfalse.
a)mFinancialmaccountingmismprimarilymintendedmtomsatisfymtheminformationmn
eedsmofminternalmstakeholders.
b)mManagerialmaccountingminformationmincludesmfinancialmandmnonfina
ncialminformation.
c)mThemaccountingminformationmintendedmtomsatisfymthemneedsmofmamco
mpany'smemployeesmismmanagerialmaccountingminformation.
d)mGAAPmrequiresmthatmcompaniesmadheremtomfinancialmaccountingmstandards.
e)mManagerialmaccountingminformationmismusuallymlessmdetailedmthanmfin
ancialmaccountingminformation.
3) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmliabilitiesmismtruemormfalse.
a)mAmnetmlossmonmthemincomemstatementmdecreasesmliabilities.
b)mThemacquisitionmofmambankmloanmincreasesmbothmassetsmandmliabilities.
c)mThemaccountingmequationmrequiresmthatmliabilitiesmbemequalmtomstockholders’mequity.
d)mThemamountmofmamcompany'smliabilitiesmismequalmtomthemdifferencembetweenm
itsmassetsmandmitsmstockholders’mequity.
e)mLiabilitiesmaremreportedmonmthemstatementmofmcashmflowsmofmambusiness.
,4) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmretainedmearningsmismtruemormfa
lse.
a)mAmdividendmpaidmtomstockholdersmdecreasesmretainedmearnings.
b)mIssuingmcommonmstockmformcashmincreasesmretainedmearnings.
c)mThemamountmofmnetmincomemformamperiodmmustmequalmretainedmearnings.
d)mThempurchasemofmamtruckmdecreasesmretainedmearnings.
e)mNetmincomemincreasesmretainedmearnings.
5) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmthemtypesmofmtransaction
smismtruemormfalse.
a)mAnmassetmsourcemtransactionmincreasesmtotalmassetsmandmincreasesmclaimsmtomassets.
b)mThemissuancemofmstockmtomownersmformcashmwouldmbemanmexamplemof
manmassetmexchangemtransaction.
c)mPurchasingmequipmentmformcashmismanmexamplemofmanmassetmusemtransaction.
d)mPayingmamdividendmtomstockholdersmismanmexamplemofmanmassetmusemtransaction.
e)mMakingmampaymentmonmambankmloanmismanmexamplemofmanmassetmexchangemtransact
ion.
6) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmfinancialmstatementsmis
mtruemormfalse.
a)mAmcashmdividendmpaidmtomstockholdersmismreportedminmtheminvestingmactivities
msectionmofmthemstatementmofmcashmflows.
b)mAmcashmdividendmpaidmtomstockholdersmismreportedmonmthemstatementmofmch
angesminmstockholders'mequity.
c)mAmcashmdividendmpaidmtomstockholdersmismreportedmonmthemincomemstatement.
d)mThembalancemsheetmreportsmthemendingmbalancesmofmpermanentmaccountsmasmof
mthemlastmdaymofmthemaccountingmperiod.
e)mChangesminmretainedmearningsmduringmthemaccountingmperiodmaremreported
monmthemincomemstatement.
, 7) Indicatemwhethermeachmofmthemfollowingmstatementsmaboutmstockholders’mequitymis
mtruemormfalse.
a)mExpensesmdecreasemretainedmearnings.
b)mStockholders'mequitymandmliabilitiesmcanmbemviewedmeithermasmsourcesmofm
assetsmormclaimsmtomassetsmofmthembusiness.
c)mRetainedmearningsmismincreasedmbymloansmreceivedmfrommambank.
d)mDividendsmpaidmtomstockholdersmdecreasemcommonmstock.
e)mGenerally,massetsmaremreportedmatmthemactualmpricempaidmformthemmwhenmp
urchasedmregardlessmofmsubsequentmchangesminmmarketmvalue.
8) JessupmCompanymwasmfoundedminmYearm1.mItmacquiredm$45,000mcashmbymissuingmst
ockmtominvestorsmandmanmadditionalm$15,000mcashmbymborrowingmfrommcreditors.mDuringmY
earm1mitmreceived
$25,000mcashmrevenuesmandmpaidm$32,000minmcashmexpenses.mThemcompanymthenmwentm
outmofmbusiness.
Required:
a) Explainmthemterm,m"businessmliquidation."
b) WhatmamountmofmcashmshouldmJessupmCompanymhavemhadmonmhandmimmediatelymbefo
remgoingmoutmofmbusiness?
c) WhatmamountmofmcashmwillmJessup'smcreditorsmreceive?
d) WhatmamountmofmcashmwillmJessup'smstockholdersmreceive?
9) BatesmCompanymenteredmintomthemfollowingmtransactionsmduringmitsmfirstmyearminmb
usiness.mAssumemthatmallmtransactionsminvolvemthemreceiptmormpaymentmofmcash.
1) Issuedmcommonmstockmtominvestorsmform$25,000mcash.
2) Borrowedm$18,000mfrommthemlocalmbank.
3) Providedmservicesmtomcustomersmform$28,000.
4) Paidmexpensesmamountingmtom$21,400.
5) Purchasedmamplotmofmlandmcostingm$22,000.
6) Paidmamdividendmofm$15,000mtomitsmstockholders.
7) Repaidm$12,000mofmthemloanmlistedminmitemm2.
Required:
(a) Fillminmthemthreemcolumnmheadingsmofmthemaccountingmequationminmthemfirstmrowmof
mthemtablemshownmbelow.
(b) Showmthemeffectsmofmthemabovemtransactionsmonmthemaccountingmequation.
