TESTBANKFOR f f
Fundamentals Of Financial Accounting 7CE Fred Phillips, Robert Libby, Patricia Libby, Brandy
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Mackintosh
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Chapter 1-12 Answers are at the End of Each Chapter
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f Chapter 1 f
Student name: f
1) Building a new warehouse is an investing activity.
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2) The payment of dividends is a financing activity.
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3) Daily activities involved in running a business such as buying supplies and paying wages are
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f operating activities. f
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4) Financing activities include borrowing and obtaining money by issuing shares of ownership
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f (called share certificates).
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5) Shareholders are creditors of a company. f f f f f
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,6) All corporations acquire financing by issuing shares of ownership (called share certificates)
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f for sale on public stock exchanges.
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7) You paid $10,000 to buy 1% of the shares in a corporation that has now gone bankrupt. The
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company owes $10 million dollars to creditors. As a result of the bankruptcy, you will lose
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$100,000.
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8) The shareholders' equity in a company is the difference between assets and liabilities.
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9) A company owes $200,000 on a bank loan. If this loan is documented using a formal written
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f debt contract, it will be reported as a liability called Notes Payable.
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10) The accounting decisions that were made when preparing a company's financial statements
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f are explained in the auditor's report.
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11) Under both ASPE and IFRS, a Canadian company would report the data on the financial
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f statements in Canadian dollars. f f f
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,12) SUNFLOWER COMPANY f
f BALANCE SHEET f
f SEPTEMBER 30, 2020 f f
Assets
Cash $1,568,000
Accounts Receivable f 310,500
Inventories 208,200
Property, Plant, and Equipment
f f f 391,600
Other Assets f 869,400
Total Assets f $3,347,700
Liabilities
Accounts Payable f $1,439,200
Notes Payable f ?
Total Liabilities
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Shareholders ’ Equity f f
Contributed Capital f 1,263,600
Retained Earnings f 207,100
Total Shareholders ’ Equity
f f f 1,470,700
Total Liabilities and shareholders ’ Equity
f f f f f $3,347,700
Notes Payable would equal $437,800 and Total Liabilities would equal $1,877,000 on the
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f Balance Sheet. f
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, 13) CACTUS COMPANY f
f BALANCE SHEET f
f SEPTEMBER 30, 2020 f f
Assets
Cash $1,568,000
Accounts Receivable f 310,500
Inventories 208,200
Property, Plant, and Equipment
f f f 391,600
Other Assets f 869,400
Total Assets f $3,347,700
Liabilities
Accounts Payable f $1,439,200
Notes Payable f ?
Total Liabilities
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Shareholders ’ Equity f f
Contributed Capital f 1,263,600
Retained Earnings f 207,100
Total Shareholders ’ Equity
f f f 1,470,700
Total Liabilities and shareholders ’ Equity
f f f f f $3,347,700
The $207,100 shown on the Balance Sheet has been distributed to shareholders as dividends.
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