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Test Bank Financial Accounting for Managers 1st Edition By Wayne Thomas and David
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FULL TEST BANK FORFinancial Accounting for Managers 1st Edition By Wayne Thomas and David
Spiceland and Mark Nelson
Answers are at the end of each chapter
Chapter 1 Version 1
Student name:__________
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Accounting is a system of maintaining records of a company's operations and
communicating that information to decision makers.
⊚ true
⊚ false
2) Accounting information is used by investors to decide whether to invest in a company's
stock.
⊚ true
⊚ false
3) Accounting information is used by creditors to decide whether to invest in a company's
stock.
⊚ true
⊚ false
4) The primary functions of financial accounting are to measure business activities of a
company and to communicate those measurements to internal parties for decision-making
purposes.
⊚ true
⊚ false
Version 1 1
,5) Financing activities include transactions the company has with investors and creditors.
⊚ true
⊚ false
6) Investing activities include transactions involving the purchase and sale of resources that
are expected to benefit the company for several years.
⊚ true
⊚ false
7) Operating activities include transactions that relate to the primary operations of the
company, such as providing products and services to customers and the associated costs.
⊚ true
⊚ false
8) A corporation is an entity that is legally separate from its owners.
⊚ true
⊚ false
9) Cash, inventory for sale to customers, supplies, and buildings are examples of liabilities.
⊚ true
⊚ false
10) Amounts owed to suppliers, employees, the government in the form of taxes, and utility
companies are examples of liabilities.
⊚ true
⊚ false
11) If total assets of a company equal $12,000 and total stockholders' equity equals $4,000,
then total liabilities equal $8,000.
⊚ true
⊚ false
Version 1 2
,12) If total liabilities of a company equal $16,000 and total stockholders' equity equals
$9,000, then total assets equal $7,000.
⊚ true
⊚ false
13) The accounting equation shows that a company's total resources equal creditors' and
owners' claims to those resources.
⊚ true
⊚ false
14) The costs related to rent, utilities, and salaries in the current reporting period are
examples of liabilities.
⊚ true
⊚ false
15) The difference between revenues and expenses is referred to as net income or net loss.
⊚ true
⊚ false
16) If a company reports revenues of $17,000 and expenses of $12,000, then net income
equals $5,000.
⊚ true
⊚ false
17) Expenses include a company’s costs of providing products and services to customers, as
well as cash payments to its stockholders.
⊚ true
⊚ false
18) Dividends represent a return of the company's profits to its owners, the stockholders.
⊚ true
⊚ false
Version 1 3
, 19) One of the differences between a partnership and a corporation is that owners of a
partnership have limited liability.
⊚ true
⊚ false
20) Limited liability means the stockholders are not held personally responsible for the
financial obligations of the corporation.
⊚ true
⊚ false
21) A company's total resources include assets and stockholders' equity.
⊚ true
⊚ false
22) Double taxation refers to a corporation's income being taxed twice—first when the
company pays corporate income taxes on income it earns, and then again when stockholders pay
personal income taxes when the company distributes that income as dividends to them.
⊚ true
⊚ false
23) Financial statements are periodic reports published by the company for the purpose of
providing information to managers.
⊚ true
⊚ false
24) The balance sheet is a financial statement that reports the company's revenues and
expenses over an interval of time.
⊚ true
⊚ false
25) The statement of stockholders' equity is a financial statement that summarizes the
changes in stockholders' equity over an interval of time.
Version 1 4
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