148 test bank for financial accounting 3rd edition

Free Test Bank with Answers for Accounting Information Systems 1st Free Test Bank with Answers for Accounting Information Systems 1st Free Test Bank with Answers for Accounting Information Systems 1st Test Bank with Answers for Intermediate Accounting Principles and Analysis 2nd Test Bank with Answers for Intermediate Accounting Principles and Analysis 2nd Test Bank with Answers for Financial Accounting An Introduction. Free Test Bank with Answers for Auditing and Assurance Services Understandin Test Bank with Answers for Financial Accounting An Introduction to Concepts Methods and Uses Test Bank with Answers for Financial Accounting An Introduction to Concepts Methods and Uses Test Bank with Answers for Advanced Accounting 12th Edition Test Bank with Answers for Auditing A Business Risk Approach 8th Edition Free Test Bank for Management Accounting with Answers Ngân hàng câu hỏi trắc nghiệm Hệ thống thông tin kế toán, Ngân hàng câu hỏi kèm đáp án đề trắc nghiệm Tài chính kế toán, đề trắc nghiệm Quản trị kế toán, kế toán nâng cao, Đề trắc nghiệm có đáp án Tài chính kế toán, Kế toán kiểm toán, kế toán quản trji Test Bank for Managerial Accounting with Answers Đề trắc nghiệm kế toán, trắc nghiệm tài chính, Test bank for Accounting, Test bank with Answer, Test Bank Financial Accounting

148 Test Bank for Financial Accounting 3rd Edition

42 True - False Questions

Market value and historical cost (value) are the same concept

Accounting information is used to help managers and decision

makers understand risk

The Financial Accounting Standards Board (FASB) established

the standards for managerial accounting

Business owners are paid interest on the money they have

invested in the business

1 True

2 False

Generally Accepted Accounting Principles (GAAP) are the rules

and guidelines governing accounting

A business with one owner is called a sole proprietorship and it

must be a service business

1 True

2 False

Accrual accounting recognizes business transactions when cash

is received or paid

1 True

2 False

The fundamental accounting equation is Assets plus Liabilities

equals Stockholders' Equity

The Income Statement details how cash changed over an

accounting period or cycle

1 True

2 False

To manage a business effectively, an owner or manager would

benefit greatly from having some knowledge of

Business owners expect to be compensated for both time and

risk

1 True

2 False

Accounting is important because the process "keeps score" of

the financial aspects of a business

A transaction is a business event that does NOT have an impact

on the finances of a company

1 True

2 False

Financial statements are historical reports of what has taken

place financially in a business

A business may be either a for-profit business or a not-for-profit

Amounts owed to the business' owners as a result of an initial

investment are called liabilities

The Statement of Cash Flows is used to report sources and uses

of cash for a given period of time

1 True

2 False

A limited liability company (LLC) is a legal entity like a

corporation, but the income is taxed like a sole

proprietorship or partnership

1 True

2 False

The business entity concept requires that the owner's personal

assets be separated from business assets

1 True

2 False

The Statement of Retained Earnings is prepared to determine the

final amount of Retained Earnings shown on the Balance Sheet

1 True

2 False

The main role of accounting is to compile reports to determine

the profit made by a company over a period of time

1 True

2 False

The Statement of Cash Flows is used to report sources and uses

of cash for a specific date

Shareholders must pay income tax on the dividends they have

received from a corporation

1 True

Multiple Choice Questions - Page 1

Jenesse owns the Garden Inn In her accounting records, she

lists the buildings at their current market value Which

principle is Jenesse violating?

1 A) Reliability

2 B) Cost

3 C) Business entity

4 D) None of the above

A hybrid business entity with characteristics of both a

corporation and a partnership is called:

1 A) S-Corporation.

2 B) P-Corporation.

3 C) LLC.

4 D) CP.

Sasha owns a bakery In her accounting records, she includes

her car—which is solely used for personal purposes

Which principle is Sasha violating?

2 B) sole proprietorship.

3 C) partnership.

4 D) limited liability company.

Which would NOT be an example of a for-profit business?

1 A) Toys 'R Us

2 B) Red Robin

3 C) Petsmart

4 D) Red Cross

Alicia owns a sporting goods store In her accounting records,

she included her personal computer and all of her personal sporting gear Alicia is violating what principle of

Which of the following has double taxation of earnings?

1 A) Limited liability company

2 B) Proprietorship

3 C) Corporation

4 D) Partnership

Which of the following business forms is similar to a corporation

in regard to owner liability?

1 A) All businesses are the same with regard to owner liability.

2 B) Limited liability company

Owner's Equity represents:

1 A) an initial investment of cash by the owners.

2 B) a fair distribution of wealth in the firm.

3 C) retention of profits by a firm.

4 D) all of the above.

2 B) Limited liability of owner

3 C) Ease of raising capital

4 D) Unlimited life

Go Fresh delivery recorded their delivery van at its current

replacement value, rather than the price paid for the van What principle did they violate?

1 A) Cost

2 B) Objectivity

According to the textbook, in order for an organization to be

called a business it must:

1 A) exchange a product with a customer.

2 B) make money.

3 C) be a corporation.

4 D) provide a service.

Jesse lists his building at current replacement value, rather than

the price he paid for the building What principle is Jesse violating?

4 D) Both Merchandising and Manufacturing businesses sell goods.

Liabilities are defined as:

1 A) earnings retained in the business.

2 B) amounts owed to lenders.

3 C) stockholders' claims to assets.

4 D) future economic benefits of a company.

Net income is defined as:

1 A) revenue plus expenses.

2 B) revenue less assets.

3 C) expenses less revenue.

4 D) revenue less expenses.

What do we call amounts of money borrowed from lenders?

4 D) Manufacturing business

Which of the following do NOT pay taxes on the business income

through their individual owners?

1 A) S-corporation

2 B) Sole proprietorship

3 C) Partnership

4 D) Corporation

Assets are defined as:

1 A) earnings retained in the business.

2 B) amounts owed to others.

3 C) stockholders' claims to assets.

4 D) economic resources of a company.

Which of the following is NOT part of the accounting process as

4 D) All of the above are not-for-profits.

What do we call the result obtained when revenue is less than

Caesar's Coffee sells bagged coffee to grocery stores for resale

—what type of business is this?

1 A) Service business

2 B) Wholesale business

3 C) Retail business

4 D) None of the above

Which type of organization has stockholders?

1 A) Partnerships

2 B) Sole proprietorships

3 C) Corporations

4 D) Limited liability companies

Which of the following does NOT describe Stockholders' Equity?

1 A) Profits retained in the business

2 B) Money lent to a business

3 C) The owners' claim on the assets of a company

4 D) Money invested in a business by its owners

Which of the following would NOT be considered a stakeholder

in a business?

1 A) An employee

2 B) A supplier

3 C) A regulator

4 D) All of the above are stakeholders

Which of the following impacts the value of an item to its owner?

1 A) When the owner expects to receive something in exchange for the item

2 B) How certain the owner is about what and when they will receive something in

exchange for the item

3 C) What the owner expects to receive in exchange for the item

4 D) All of the above

106 Free Test Bank for Financial Accounting 3rd Edition by

Kemp Multiple Choice Questions - Page 2

The accounting principle that best defines a business is:

Consider Accounts Receivable and Accounts Payable Which of

the following statements is TRUE?

1 A) Accounts Receivable is a liability and Accounts Payable is an asset.

2 B) Accounts Receivable is an asset and Accounts Payable is an asset.

3 C) Accounts Receivable is an asset and Accounts Payable is a liability.

4 D) Accounts Receivable is a liability and Accounts Payable is a liability.

Accountants who ignore the effect of inflation on prices may be

violating which accounting principle?

1 A) Going concern

2 B) Business entity

3 C) Reliability

4 D) Something other than what is listed

A company has $82,000 in Liabilities and $112,000 in

Stockholders' Equity What is the value of the company's Assets?

1 A) $30,000

2 B) $112,000

3 C) $194,000

4 D) Not enough information provided

Taking an inventory of goods on hand would be representative of

what accounting concept or principle?

1 A) Going concern

2 B) Objectivity

3 C) Business entity

4 D) Cost

Which accounting concept or principle specifically states that we

should record transactions that can be verified?

1 A) Going-concern concept

2 B) Cost principle

3 C) Reliability principle

4 D) Business entity concept

The issues pronouncements that are guidelines for

When an owner combines their personal assets with the assets

of their business, what concept or principle of accounting

GAAP is the acronym for generally accepted

4 D) All of the above

5 E) None of the above

Cash and Accounts Receivable are both a part of:

James opens his business by investing $12,000 How does this

affect the accounting equation?

1 A) Increase in Assets; increase in Stockholders' Equity.

2 B) Increase in Liabilities; increase in Stockholders' Equity.

3 C) Decrease in Assets; increase in Stockholders' Equity.

4 D) Increase in Assets; decrease in Stockholders' Equity.

Revenues, expenses and dividends are all a part of:

1 A) Assets.

2 B) Retained Earnings.

3 C) Liabilities.

4 D) Common Stock.

Which of the following events would be recorded in the financial

accounting records of Acme Lawn Service, Inc.?

1 A) Acme mows 125 lawns.

2 B) Acme buys 5 new lawn mowers from Lawn Equipment, Inc.

3 C) Lawn Equipment, Inc sells 2 mowers to Acme's competitor, Best Lawns, Inc.

4 D) Events A and B should both be recorded in the financial accounting records of Acme.

Which of the following is considered an asset?

1 A) Accounts Payable

2 B) Sales

3 C) Accounts Receivable

4 D) Common Stock

A business purchases a computer for cash What effect does this

have on the accounting equation?

1 A) Stockholders' Equity and Assets go up.

2 B) There is no change in Total Assets.

3 C) Assets go up and Liabilities go down.

4 D) Stockholders' Equity and Liabilities go up.

IFRS stands for:

1 A) Internal Financial Report Standards.

2 B) International Financial Reports Study.

3 C) Internal Financial Reports Study.

4 D) International Financial Reporting Standards.

A company has $123,000 in Assets and $65,000 in Liabilities

How much does the company have in Stockholders'

The owner of Good Dog Daycare wrote a company check to pay

her personal credit card bill What accounting principle did she violate?

1 A) Cost

2 B) Reliability

3 C) Business entity

4 D) No principle is violated—the bank account belongs to her, so it's okay to write checks.

In the financial accounting records, most assets should be

reported at:

1 A) current replacement cost.

2 B) current market value.

3 C) historical cost.

4 D) inflation-adjusted cost.

A business pays off a note payable What effect does this have

on the accounting equation?

1 A) Assets go up, Liabilities go down, and Stockholders' Equity remains the same.

2 B) Assets go down, Liabilities remain the same, and Stockholders' Equity goes up.

3 C) Assets go down, Liabilities go down, and Stockholders' Equity remains the same.

4 D) Assets go up, Liabilities remain the same, and Stockholders' Equity goes up.

Most businesses use:

1 A) cash accounting.

2 B) accrual accounting.

3 C) cash and accrual accounting.

4 D) profit accounting.

A company has Liabilities of $23,500 and Stockholders' Equity of

$56,500 How much does the company have in Assets?

1 A) $56,500

2 B) $33,000

3 C) $80,000

4 D) $23,500

The method of accounting that recognizes a transaction when

cash is received or paid is:

1 A) financial accounting.

2 B) cash accounting.

3 C) cost accounting.

4 D) accrual accounting.

Sylvia borrowed money for her business from a local bank What

accounts will be affected?

1 A) Cash and Accounts Payable

2 B) Cash and Notes Payable

3 C) Accounts Payable and Revenue

4 D) Accounts Receivable and Revenue

An increase in revenues would have which of the following

effects on the accounting equation?

1 A) Decrease Stockholders' Equity

2 B) Increase Common Stock

3 C) Increase Liabilities

4 D) Increase Stockholders' Equity

Liabilities represent:

1 A) items owned by the company.

2 B) economic resources of the company.

3 C) earnings kept in the business.

4 D) amounts owed to third parties.

A company has $74,000 in Assets and $23,000 in Liabilities How

much does the company have in Stockholders' Equity?

A company has $63,000 in Assets and $14,000 of Stockholders'

Equity How much does the company have in Liabilities?

1 A) $14,000

2 B) $49,000

3 C) $77,000

4 D) Cannot be determined from the given information

106 Free Test Bank for Financial Accounting 3rd Edition by

Kemp Multiple Choice Questions - Page 3

How would the purchase of a computer on account affect the

accounting equation?

1 A) Assets increase; Liabilities decrease.

2 B) Assets increase; Stockholder Equity increases.

3 C) Assets increase; Liabilities increase.

4 D) Assets decrease; Liabilities increase.

Dividends are shown on the:

1 A) Income Statement.

2 B) Statement of Retained Earnings.

3 C) Balance Sheet.

4 D) Statement of Cash Flows.

Renuud, Inc provided $34,000 worth of services for cash Which

of the following best describes the effect on the expanded accounting equation?

1 A) Total Assets and total Liabilities will increase.

2 B) Total Assets and total Revenue will increase.

3 C) Total Liabilities will increase and total Revenue will decrease.

4 D) Total Assets will decrease and total Liabilities will increase.

The Income Statement is used to report:

1 A) results of operations for a specific date.

2 B) the financial position on a specific date.

3 C) results of operations for a specific period.

4 D) the financial position for a specific period.

Beginning Retained Earnings are $31,000; sales are $46,800;

expenses are $43,500 and dividends paid are $2,800 How much is the net income or loss for the company?

1 A) $3,300

2 B) $500

3 C) $34,300

4 D) some other report.

Amounts owed to a company by its customers are classified as:

1 A) payables.

2 B) dividends.

3 C) cash.

4 D) receivables.

Net income or loss is originally shown on the:

1 A) Statement of Cash Flows.

2 B) Balance Sheet.

3 C) Statement of Retained Earnings.

4 D) Income Statement.

Beginning Retained Earnings are $31,000; sales are $46,800;

expenses are $43,500; and dividends paid are $2,800 How much is the amount in ending Retained Earnings?

Which of the following is a TRUE statement?

1 A) Purchasing office equipment for cash is a shift of Assets.

2 B) Buying something on account decreases total Liabilities.

3 C) Retained Earnings do not include payments of dividends.

4 D) Paying off an account increases the total of Assets.

A company purchases supplies for cash What is the net result

on the accounting equation?

1 A) Total Assets will go up and total Liabilities will go down.

2 B) Total Assets will go up and Stockholders' Equity will go up.

3 C) Total Assets will not change.

4 D) Total Liabilities will go up.

The first financial statement that is prepared is the:

1 A) Statement of Cash Flows.

The payment of cash dividends would have which of the

following effects on the accounting equation?

A Statement of Cash Flows is usually prepared:

Which of the financial statements includes a listing of assets

owned by the company?

1 A) Statement of Cash Flows

2 B) Income Statement

3 C) Balance Sheet

4 D) Statement of Retained Earnings

Which of the following is TRUE regarding revenue and profit?

1 A) The terms revenue and profit mean the same thing.

2 B) Both revenue and profit are found on the Income Statement.

3 C) Profit equals liabilities plus Stockholders' Equity.

4 D) Revenue is found on the Balance Sheet and profit is found on the Income Statement.

Items such as revenue, expenses and dividends are classified