Test Bank for Fundamentals of Financial Accounting 7th Edition by Fred Phillips
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Course
ACCT
Institution
ACCT
Test Bank, Practice Exam Quizzes for Fundamentals of Financial Accounting 7th Edition 7e by Fred Phillips . ISBN-10: 5 ISBN-13: 1381
Chapter 1: Business Decisions and Financial Accounting
Chapter 2: The Balance Sheet
Chapter 3: The Income Statement
Chapter 4: Adjustments, Financial Statemen...
Student name:__________
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Creditors are owners of a corporation.
⊚ true
⊚ false
2) All corporations acquire financing by issuing stock for sale on public stock exchanges.
⊚ true
⊚ false
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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 $100,000 (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.
Version 1 1
, ⊚ 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
paying 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 Payable.
Version 1 2
, ⊚ true
⊚ false
9) The amounts reported on financial statements are sometimes rounded to the nearest
million.
⊚ true
⊚ false
10) Accounts Payable, Notes Payable, and Salaries and Wages Payable are examples of
liabilities.
⊚ true
⊚ false
11) Dividends are subtracted from revenues on the income statement.
⊚ true
⊚ false
Version 1 3
, 12) If a company reports net income on the income statement, then the statement of cash
flows will report 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
distribute some of their earnings to their stockholders.
⊚ true
⊚ false
15) Common Stock is reported as an asset on the balance sheet.
⊚ true
⊚ false
Version 1 4
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