Test Bank For Financial & Managerial Accounting 16th Edition by Carl Warren, Jefferson Jones, William Tayler. Isbn. 9780357714041
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Course
Budgeting & Accounting
Institution
Budgeting & Accounting
Test Bank Financial & Managerial Accounting 16th Edition by Carl Warren, Jefferson Jones, William Tayler. Isbn. 9780357714041. 9798214343747.
Financial and Managerial Accounting 16e test bank. Warreb 16e test bank for Financial & Managerial Accounting.
Contents:-=•Introduction to Accounting and...
TEST BANK Financial & Managerial Accounting 16th Edition Carl Warren
Chapter 1. Introduction to Accounting and Business.
Indicate whether the statement is true or false.
1. 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
2. The role of accounting is to provide many different users with financial information to make economic decisions.
a. True
b. False
3. The primary financial statements of a corporation are the income statement, the statement of stockholders’
equity, and the balance sheet.
a. True
b. False
4. 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
5. 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
6. Receiving a bill or otherwise being notified that an amount is owed is not recorded until the amount is paid.
a. True
b. False
7. Proper ethical conduct implies that you only consider what's in your best interest.
a. True
b. False
8. The accounting equation can be expressed as Assets – Liabilities = Stockholders' Equity.
a. True
b. False
9. The main objective for all businesses is to maximize unrealized profits.
a. True
b. False
10. Revenue is earned only when money is received.
a. True
b. False
Page 1
,11. No significant differences exist between the accounting standards issued by the FASB and the IASB.
a. True
b. False
12. The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for
developing accounting principles.
a. True
b. False
13. 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
14. Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies
where they work.
a. True
b. False
15. Generally accepted accounting principles regulate how and what financial information is reported by businesses.
a. True
b. False
16. An income statement is a summary of the revenues and expenses of a business as of a specific date.
a. True
b. False
17. An example of an external user of accounting information is the federal government.
a. True
b. False
18. Purchasing supplies on account increases liabilities and decreases equity.
a. True
b. False
19. The Sarbanes-Oxley Act established standards for corporate responsibility and disclosure.
a. True
b. False
20. Receiving payments on an account receivable increases both equity and assets.
a. True
b. False
21. An account receivable is typically classified as a revenue.
a. True
b. False
Page 2
,22. Any 12-month accounting period adopted by a company is known as its fiscal year.
a. True
b. False
23. Net income and net profit do not mean the same thing.
a. True
b. False
24. 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
25. The majority of businesses end their fiscal year on December 31.
a. True
b. False
26. Financial accounting provides information to all users, while the main focus for managerial accounting is to
provide information to the management.
a. True
b. False
27. Assets that are used up during the process of earning revenue are called expenses.
a. True
b. False
28. 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
29. A fiscal year that ends when business activities have reached their lowest point is called the natural business
year.
a. True
b. False
30. The stockholders' rights to the assets rank ahead of the creditors' rights to the assets.
a. True
b. False
31. An account receivable is a claim against a customer resulting from a sale on account.
a. True
b. False
Page 3
, 32. The cost principle is the basis for entering the purchase price into the accounting records.
a. True
b. False
33. An example of a general-purpose financial statement would be a report about projected price increases related
to transportation costs.
a. True
b. False
34. The monetary unit assumption requires that economic data be recorded in dollars for companies in the United
States.
a. True
b. False
35. A corporation is a business that is legally separate and distinct from its owners.
a. True
b. False
36. The excess of revenue over the expenses incurred in earning the revenue is called capital.
a. True
b. False
37. Paying an account payable increases liabilities and decreases assets.
a. True
b. False
38. Managerial accounting information is used by external and internal users equally.
a. True
b. False
39. All companies must use a calendar year as their fiscal year.
a. True
b. False
40. A statement of stockholders’ equity reports the changes in stockholders’ equity for a period of time.
a. True
b. False
41. Operating activities are those activities by which a company generates revenues from customers.
a. True
b. False
42. Proprietorships are owned by one owner and provide only services to their customers.
a. True
b. False
Page 4
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