(Test Bank) Financial Accounting The Impact On Decision Makers

Porter,Curtis,Norton, 10

Business

Test Bank

10th Edition

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Test Bank for Financial Accounting The Impact On Decision Makers, The downloadable file consists of 1040 pages, and the total size of the file is 9.73 MB. Purchase now only for highly discounted price.

Author(s): Porter, Curtis, Norton

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Study Note Preview

Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. True / False 1. An auto repair company is not an example of a manufacturer. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: pp. 4-5 LEARNING OBJECTIVES: FACC.PONO.13.01 -01 - LO: 01-01 KEYWORDS: Bloom's: Applying 2. A department store is an example of a manufacturer. a. True b. False ANSWER: False DIFFICULTY: Easy REFERENCES: pp. 4-5 LEARNING OBJECTIVES: FACC.PONO.13.01 -01 - LO: 01-01 KEYWORDS: Bloom's: Applying 3. The FASB is an external user that has the authority of the law to obtain certain accounting information. a. True b. False ANSWER: False DIFFICULTY: Easy REFERENCES: pp. 6-7 LEARNING OBJECTIVES: FACC.PONO.13.01 -02 - LO: 01-02 KEYWORDS: Bloom's: Remembering 4. A partnership is a business owned by two or more individuals. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: pp. 6-7 LEARNING OBJECTIVES: FACC.PONO.13.01 -02 - LO: 01-02 KEYWORDS: Bloom's: Remembering Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 5. Business entities and non-business entities are both organized to earn a profit. a. True b. False ANSWER: False DIFFICULTY: Easy REFERENCES: pp. 6-7 LEARNING OBJECTIVES: FACC.PONO.13.01 -02 - LO: 01-02 KEYWORDS: Bloom's: Remembering 6. Someone to whom a company has a debt is known as a creditor. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: pp. 8-10 LEARNING OBJECTIVES: FACC.PONO.13.01 -03 - LO: 01-03 KEYWORDS: Bloom's: Remembering 7. Assets can be tangible or intangible in nature. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: pp. 8-10 LEARNING OBJECTIVES: FACC.PONO.13.01 -03 - LO: 01-03 KEYWORDS: Bloom's: Remembering 8. An asset is a future economic benefit to a business. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: pp. 8-10 LEARNING OBJECTIVES: FACC.PONO.13.01 -03 - LO: 01-03 KEYWORDS: Bloom's: Remembering 9. An expense is an inflow of assets resulting from the sale of goods and services. a. True b. False ANSWER: False DIFFICULTY: Easy REFERENCES: pp. 8-10 LEARNING OBJECTIVES: FACC.PONO.13.01 -03 - LO: 01-03 KEYWORDS: Bloom's: Remembering Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10. Capital stock indicates the owners’ ownership to a corporation. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: pp. 8-10 LEARNING OBJECTIVES: FACC.PONO.13.01 -03 - LO: 01-03 KEYWORDS: Bloom's: Remembering 11. Management accounting is the branch of accounting concerned with communication with internal management. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: p. 12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Remembering 12. External users of accounting information include present and potential stockholders, bankers and other creditors, and management. a. True b. False ANSWER: False DIFFICULTY: Easy REFERENCES: pp. 11-12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Remembering 13. Bondholders are external users of company’s accounting information. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: pp. 11-12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Remembering Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 14. The income statement is sometimes called the statement of profit and loss. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: pp. 14-21 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Remembering 15. The income statement is a statement that summarizes revenues and expenses for a period. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: pp. 14-21 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Remembering 16. Assets may be used to satisfy business obligations and to carry on business operations. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: pp. 14-21-17 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Remembering 17. The amount of earnings distributed to stockholders can be found in the income statement. a. True b. False ANSWER: False DIFFICULTY: Moderate REFERENCES: pp. 14-21 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Remembering 18. Profits from operating activities distributed to business owners are called bonuses. a. True b. False ANSWER: False DIFFICULTY: Easy REFERENCES: pp. 14-21 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Remembering Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 19. An entity's liabilities come from three primary sources: creditors, investors, and profits retained in the business. a. True b. False ANSWER: False DIFFICULTY: Moderate REFERENCES: pp. 14-21-18 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Remembering 20. The balance sheet is linked to the retained earnings statement by the ending retained earnings balance. a. True b. False ANSWER: True DIFFICULTY: Moderate REFERENCES: pp. 14-21-19 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Remembering 21. A balance sheet provides information during a period of time, while the other basic financial statements provide information on activities that occur over a point in time. a. True b. False ANSWER: False DIFFICULTY: Moderate REFERENCES: pp. 14-21-18 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Remembering 22. When an entity's revenues exceed its expenses for a period of time, the entity will report net income. a. True b. False ANSWER: True DIFFICULTY: Moderate REFERENCES: pp. 14-21 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Remembering Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23. Owners' equity is the residual interest that remains after deducting liabilities from assets. a. True b. False ANSWER: True DIFFICULTY: Moderate REFERENCES: pp. 14-21 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Remembering 24. If a company prepares a statement of stockholders' equity, net income is deducted to retained earnings on this statement. a. True b. False ANSWER: False DIFFICULTY: Moderate REFERENCES: pp. 14-21 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Remembering 25. Stockholders’ equity is owners’ equity in a corporation. a. True b. False ANSWER: True DIFFICULTY: Moderate REFERENCES: pp. 14-21 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Remembering 26. The time period assumption assumes a company prepares financial statements every month. a. True b. False ANSWER: False DIFFICULTY: Moderate REFERENCES: p. 25 LEARNING OBJECTIVES: FACC.PONO.13.01 -06 - LO: 01-06 KEYWORDS: Bloom's: Remembering Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27. GAAP stands for Generally Accepted Accounting Procedures. a. True b. False ANSWER: False DIFFICULTY: Easy REFERENCES: p. 25 LEARNING OBJECTIVES: FACC.PONO.13.01 -06 - LO: 01-06 KEYWORDS: Bloom's: Remembering 28. Because market values are subjective, many assets are carried on the balance sheet at their acquisition cost. a. True b. False ANSWER: True DIFFICULTY: Moderate REFERENCES: p. 24 LEARNING OBJECTIVES: FACC.PONO.13.01 -06 - LO: 01-06 KEYWORDS: Bloom's: Remembering 29. The term used to refer to an asset’s original cost is “fair market value.” a. True b. False ANSWER: False DIFFICULTY: Moderate REFERENCES: p. 24 LEARNING OBJECTIVES: FACC.PONO.13.01 -06 - LO: 01-06 KEYWORDS: Bloom's: Remembering 30. The going concern assumption infers that a company will continue to operate until a known date. a. True b. False ANSWER: False DIFFICULTY: Moderate REFERENCES: pp. 24-25 LEARNING OBJECTIVES: FACC.PONO.13.01 -06 - LO: 01-06 KEYWORDS: Bloom's: Remembering 31. A company in the process of liquidation meets the requirements under the going concern assumption. a. True b. False ANSWER: False DIFFICULTY: Moderate REFERENCES: pp. 24-25 LEARNING OBJECTIVES: FACC.PONO.13.01 -06 - LO: 01-06 KEYWORDS: Bloom's: Remembering Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 32. The International Accounting Standards Board (IASB) was created in order to develop worldwide accounting standards that must be used for all financial statements prepared regardless of country. a. True b. False ANSWER: False DIFFICULTY: Easy REFERENCES: pp. 25-26 LEARNING OBJECTIVES: FACC.PONO.13.01 -07 - LO: 01-07 KEYWORDS: Bloom's: Remembering 33. The primary objective of external auditors is to provide assurance to stockholders and other users that the statements are fairly presented. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: pp. 25-26 LEARNING OBJECTIVES: FACC.PONO.13.01 -07 - LO: 01-07 KEYWORDS: Bloom's: Remembering 34. The independent auditor's report conveys whether or not the business followed GAAP. a. True b. False ANSWER: True DIFFICULTY: Moderate REFERENCES: pp. 25-26 LEARNING OBJECTIVES: FACC.PONO.13.01 -07 - LO: 01-07 KEYWORDS: Bloom's: Remembering 35. The IASB is a branch of the FASB. a. True b. False ANSWER: False DIFFICULTY: Easy REFERENCES: pp. 25-26 LEARNING OBJECTIVES: FACC.PONO.13.01 -07 - LO: 01-07 KEYWORDS: Bloom's: Remembering Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 36. Information must be timely to be relevant. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: pp. 26-30 LEARNING OBJECTIVES: FACC.PONO.13.01 -08 - LO: 01-08 KEYWORDS: Bloom's: Remembering 37. According to the accounting profession, the purpose of financial reporting is to provide information about a company that investors, lenders, and other creditors can use when deciding whether to provide resources to the entity. a. True b. False ANSWER: True DIFFICULTY: Easy REFERENCES: pp. 26-30 LEARNING OBJECTIVES: FACC.PONO.13.01 -08 - LO: 01-08 KEYWORDS: Bloom's: Remembering Multiple Choice 38. Cross Country Busline is an example of a a. producer b. supplier c. retailer d. service provider ANSWER: d DIFFICULTY: Easy REFERENCES: pp. 4-5 LEARNING OBJECTIVES: FACC.PONO.13.01 -01 - LO: 01-01 KEYWORDS: Bloom's: Applying 39. All of the following are examples of manufacturers except : a. Whirlpool b. Boeing c. Amazon.com d. Ford ANSWER: c DIFFICULTY: Easy REFERENCES: pp. 4-5 LEARNING OBJECTIVES: FACC.PONO.13.01 -01 - LO: 01-01 KEYWORDS: Bloom's: Applying Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 40. The three forms of business entities are: a. Government, cooperatives, and philanthropic organizations b. Financing, investing, and operating c. Sole proprietorships, partnerships, and corporations d. Wholesaler, manufacturer, and retailer ANSWER: c DIFFICULTY: Easy REFERENCES: pp. 6-7 LEARNING OBJECTIVES: FACC.PONO.13.01 -02 - LO: 01-02 KEYWORDS: Bloom's: Remembering 41. Which of the following statements would be true if you own stock in a company? a. You are an owner of the retained earnings and capital stock of the company. b. You have a claim to the assets of the business c. You have the right to receive interest on an annual basis. d. You have the right to a portion of the company’s revenues each accounting period. ANSWER: b DIFFICULTY: Moderate REFERENCES: pp. 6-7 LEARNING OBJECTIVES: FACC.PONO.13.01 -02 - LO: 01-02 KEYWORDS: Bloom's: Understanding 42. Which of the following statements best describes the term “revenues”? a. Revenues represent an outflow of assets resulting from the sale of goods or services. b. Revenues represent the dollar amount of bonds sold to the public. c. Revenues represent assets used or consumed in the sale of products or services. d. Revenues represent assets received from the sale of products or services. ANSWER: d DIFFICULTY: Moderate REFERENCES: pp. 8-10 LEARNING OBJECTIVES: FACC.PONO.13.01 -03 - LO: 01-03 KEYWORDS: Bloom's: Understanding 43. Which one of the following events involves a liability for a business? a. Loans to be repaid to banks b. Inventories purchased for cash c. Amounts invested by the owners d. Stock sold to the general public ANSWER: a DIFFICULTY: Moderate REFERENCES: pp. 8-10 LEARNING OBJECTIVES: FACC.PONO.13.01 -03 - LO: 01-03 KEYWORDS: Bloom's: Understanding Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 44. Which of the following best describes the term “expenses”? a. The amount of total profits earned by a business since it began operations. b. The amount of interest or claim that the owners have in the business. c. The future economic resources of a business entity. d. The outflow of assets resulting from the sale of goods and services. ANSWER: d DIFFICULTY: Easy REFERENCES: pp. 8-10 LEARNING OBJECTIVES: FACC.PONO.13.01 -03 - LO: 01-03 KEYWORDS: Bloom's: Understanding 45. The outflow of assets resulting from the sale of products and services is called a(n) a. asset b. liability c. revenue d. expense ANSWER: d DIFFICULTY: Easy REFERENCES: p. 10 LEARNING OBJECTIVES: FACC.PONO.13.01 -03 - LO: 01-03 KEYWORDS: Bloom's: Remembering 46. The costs of doing business through the sale of goods and services are called a. Net income b. Expenses c. Revenues d. Dividends ANSWER: b DIFFICULTY: Easy REFERENCES: pp. 8-10 LEARNING OBJECTIVES: FACC.PONO.13.01 -03 - LO: 01-03 KEYWORDS: Bloom's: Remembering 47. Which of the following best describes the term “equity”? a. The amount of total profits earned by a business since it began operations. b. The amount of interest or claim that the owners have in the business. c. The economic resources of a business entity. d. The cumulative profits earned by a business less any dividends distributed. ANSWER: b DIFFICULTY: Easy REFERENCES: pp. 8-10 LEARNING OBJECTIVES: FACC.PONO.13.01 -03 - LO: 01-03 KEYWORDS: Bloom's: Understanding Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 48. Which one of the following business decisions will most likely require financial information? a. The National Bank is reviewing the loan application from Petra’s Restaurant. b. Petra’s Restaurant is attempting to sell its stock to the public. c. The labor union representing Winn’s Fitness Spa employees is negotiating a pay raise as part of a new labor agreement. d. All of these choices. ANSWER: d DIFFICULTY: Moderate REFERENCES: pp. 11-12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Applying 49. Which of the following would be internal users of accounting information? a. Customers and vendors b. Employees and managers c. Government and banks d. Employees and customers ANSWER: b DIFFICULTY: Easy REFERENCES: p. 13 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Understanding 50. Which of the following would be classified as external users of financial statements? a. Stockholders and management of the company b. The controller of the company and a company's stockholders c. The company's marketing managers d. The creditors and stockholders of the company ANSWER: d DIFFICULTY: Easy REFERENCES: pp. 11-12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Understanding 51. Which one of the following is not an external user of financial information? a. IRS b. Company management c. Creditors d. Stockholders ANSWER: b DIFFICULTY: Easy REFERENCES: pp. 11-12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Understanding Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 52. Tavella Company is ready to sell its bonds. Which one of the following financial questions is most relevant to the issue of the bonds and that investors will most likely want answered before they purchase the bonds? a. How many product lines did Clip Joint Com pany have last year? b. What will be Clip Joint Company’s cost to start operations in another city? c. How much debt does Clip Joint Company already have? d. Will Clip Joint Company pay dividends? ANSWER: c DIFFICULTY: Moderate REFERENCES: pp. 11-12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Applying 53. What is the name of the branch of accounting concerned with providing managers and administrators with information to facilitate the planning and control of business operations? a. Financial Accounting b. Auditing c. Management Accounting d. Bookkeeping ANSWER: c DIFFICULTY: Easy REFERENCES: pp. 11-12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Remembering 54. Which of the following invests funds into a business and is considered an owner? a. Bankers b. Creditors c. Stockholders d. Lenders ANSWER: c DIFFICULTY: Easy REFERENCES: pp. 11-12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Remembering Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 55. Which one of the following is not one of the three activities included in the definition of accounting? a. Communicating b. Identifying c. Measuring d. Operating ANSWER: d DIFFICULTY: Easy REFERENCES: pp. 11-12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Remembering 56. Which one of the following is not an external user of financial statements? a. Suppliers b. Creditors c. The company's controller d. None of these choices. ANSWER: c DIFFICULTY: Easy REFERENCES: pp. 11-12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Remembering 57. Which one of the following is least likely to be a user of financial information of a grocery store? a. The manager of the grocery store. b. The supplier of milk to the grocery store. c. A stockbroker looking for a possible investment. d. A customer at the grocery store. ANSWER: d DIFFICULTY: Easy REFERENCES: pp. 11-12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Understanding 58. Which one of the following groups is considered an internal user of financial statements? a. A bank reviewing a loan application from a corporation. b. The labor union representing employees of a company that is involved in labor negotiations c. The financial analysts for a brokerage firm who are preparing recommendations for the firm’s brokers on companies in a certain industry, d. Factory managers that supervise production line workers. ANSWER: d DIFFICULTY: Easy REFERENCES: pp. 11-12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Understanding Chapter 1: Accounting as a Form of Communication © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 59. Which of the following is an organization that lends funds to a business entity and expects repayment of the funds? a. A creditor b. A stockholder c. An owner d. A partner ANSWER: a DIFFICULTY: Easy REFERENCES: pp. 11-12 LEARNING OBJECTIVES: FACC.PONO.13.01 -04 - LO: 01-04 KEYWORDS: Bloom's: Remembering 60. You are a potential stockholder and are concerned that a particular company you are ready to invest in might have too much debt. Which financial statement would provide you information needed in order to evaluate your concern? a. Income statement b. Balance sheet c. Statement of retained earnings d. Statement of public accounting ANSWER: b DIFFICULTY: Easy REFERENCES: pp. 14-21 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Understanding 61. Which financial statement would you analyze to determine if a company distributed any of its profits to its shareholders? a. Balance Sheet b. Statement of Retained Earnings c. Income Statement d. Statement of Public Accounting ANSWER: b DIFFICULTY: Moderate REFERENCES: pp. 14-21 LEARNING OBJECTIVES: FACC.PONO.13.01 -05 - LO: 01-05 KEYWORDS: Bloom's: Understanding