FOR INSTRUCTOR USE ONLY

FOR INSTRUCTOR USE ONLY

CHAPTER 1

INTRODUCTION TO FINANCIAL STAT EMENTS

SUMMARY OF QUESTIONS BY LEARNING OBJECTIVE AND BLOOM’S TAXONOMY

Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT True-False Statements

1. 1 K 9. 2 K 17. 3 K 25. 4 K 33. 5 K

2. 1 K 10. 2 K 18. 3 C 26. 4 K 34. 5 K

3. 1 K 11. 2 K 19. 3 K 27. 5 K 35. 6 K

4. 1 K 12. 3 K 20. 4 K 28. 5 C 36. 6 K

5. 1 K 13. 3 K 21. 4 K 29. 5 C 37. 6 K

6. 2 K 14. 3 K 22. 4 K 30. 5 C 38. 6 K

7. 2 K 15. 3 K 23. 4 K 31. 5 C 39. 6 K

8. 2 K 16. 3 K 24. 4 K 32. 5 C 40. 6 C

Multiple Choice Questions

41. 1 K 68. 2 K 95. 4 AP 122. 4 AP 149. 5 K

42. 1 K 69. 2 K 96. 4 K 123. 4 AN 150. 5 C

43. 1 K 70. 2 K 97. 3 C 124. 4 AN 151. 5 C

44. 1 K 71. 2 K 98. 3 C 125. 5 K 152. 5 C

45. 1 K 72. 2 C 99. 4 K 126. 5 K 153. 5 AP

46. 1 K 73. 2 K 100. 4 K 127. 5 K 154. 5 AP

47. 1 K 74. 2 K 101. 4 K 128. 5 AP 155. 5 AP

48. 1 K 75. 2 C 102. 4 C 129. 5 AP 156. 5 AP

49. 1 K 76. 3 C 103. 4 K 130. 5 AP 157. 5 AP

50. 1 K 77. 3 C 104. 4 C 131. 5 AP 158. 5 AP

51. 1 C 78. 3 K 105. 4 K 132. 5 AN 159. 4 K

52. 1 C 79. 3 K 106. 4 K 133. 5 AN 160. 5 K

53. 1 K 80. 3 K 107. 4 K 134. 5 AN 161. 5 AN

54. 1 K 81. 3 K 108. 4 K 135. 5 AN 162. 5 AN

55. 2 C 82. 3 K 109. 4 C 136 5 AN 163. 5 AN

56. 2 K 83. 3 K 110. 5 K 137. 5 K 164. 5 AN

57. 2 K 84. 3 K 111. 4 K 138. 4 K 165. 5 AN

58. 2 K 85. 3 K 112. 4 K 139. 5 K 166. 6 K

59. 2 K 86. 3 K 113. 4 C 140. 5 K 167. 6 K

60. 2 K 87. 3 K 114. 4 K 141. 5 K 168. 6 K

61. 2 K 88. 3 K 115. 4 C 142. 3 K 169. 6 K

62. 2 K 89. 3 K 116. 4 K 143. 5 K 170. 6 K

63. 2 K 90. 3 K 117. 4 K 144. 5 K 171. 6 K

64. 2 K 91. 3 K 118. 4 C 145. 5 K 172. 6 K

65. 2 K 92. 3 K 119. 4 AP 146. 4 K 173. 6 C

66. 2 K 93. 3 K 120. 4 AP 147. 4 C 174. 6 K

67. 2 K 94. 4 AP 121. 4 AP 148. 4 K

Brief Exercises

175. 1 C 179. 5 AP 183. 5 AP 187. 5 C 191. 5 AN

176. 3 C 180. 4,5 C 184. 5 AP 188. 5 AN

177. 4,5 AP 181. 4 AP 185. 5 K 189. 5 C

178.

154.

4,5 AP 182. 5 K 186. 5 C 190. 5 AN

Exercises

192. 4,5 AP 194. 5 AP 196. 4,5 AN 198. 5 AP 200. 5 AP

193. 4,5 AP 195. 4 AP 197. 4,5 AP 199. 5 AN 201. 5 AN

Accounting Tools for Business Decision Making 5th Edition Kimmel Test Bank Visit TestBankDeal.com to get complete for all chapters

Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition

FOR INSTRUCTOR USE ONLY

1-2

Completion Statements

202. 1 K 204. 3 K 206. 5 K 208. 5 K

203. 2 K 205. 5 K 207. 5 K 209. 6 K

Matching

210. 1-6 K

Short Answer Essay

211. 1 K 214. 2 K 217. 5 AN 220. 6 C

212. 1 C 215. 5 C 218. 5 K 221. 6 E

213. 2 C 216. 5 C 219. 5 C 222. 4 C

*This topic is dealt with in an Appendix to the chapter.

SUMMARY OF LEARNING OBJECTIVES BY QUE STION TYPE

Learning Objective 1 Item Type Item Type Item Type Item Type Item Type Item Type

1. TF 5. TF 44. MC 48. MC 52. MC 202. CS

• TF 41. MC 45. MC 49. MC 53. MC 210. Ma

3. TF 42. MC 46. MC 50. MC 54. MC 211. SA

4. TF 43. MC 47. MC 51. MC 175. BE 212. SA

Learning Objective 2 Item Type Item Type Item Type Item Type Item Type Item Type

6. TF 55. MC 61. MC 67. MC 73. MC 214. SA

7. TF 56. MC 62. MC 68. MC 74. MC

8. TF 57. MC 63. MC 69. MC 75. MC

9. TF 58. MC 64. MC 70. MC 203. CS

• TF 59. MC 65. MC 71. MC 210. Ma

11. TF 60. MC 66. MC 72. MC 213. SA

Learning Objective 3 Item Type Item Type Item Type Item Type Item Type Item Type

12. TF 18. TF 80. MC 86. MC 92. MC 204. CS

• TF 19. TF 81. MC 87. MC 93. MC 210. Ma

14. TF 76. MC 82. MC 88. MC 97. MC

15. TF 77. MC 83. MC 89. MC 98. MC

16. TF 78. MC 84. MC 90. MC 142. MC

17. TF 79. MC 85. MC 91. MC 176. BE

Introduction to Financial Statements

FOR INSTRUCTOR USE ONLY

1-3

Learning Objective 4 Item Type Item Type Item Type Item Type Item Type Item Type

• TF 96. MC 107. MC 117. MC 146. MC 193. Ex
• TF 99. MC 108. MC 118. MC 147. MC 194. Ex
• TF 100. MC 109. MC 119. MC 148. MC 195. Ex
• TF 101. MC 111. MC 120. MC 159. MC 196. Ex
• TF 102. MC 112. MC 121. MC 177. BE 197. Ex
• TF 103. MC 113. MC 122. MC 178. BE 210. Ma

26. TF 104. MC 114. MC 123. MC 180. BE 222. SA

94. MC 105. MC 115. MC 124. MC 181. BE

• MC 106. MC 116. MC 138. MC 192. Ex

Learning Objective 5 Item Type Item Type Item Type Item Type Item Type Item Type

27. TF 130. MC 144. MC 161. MC 187. BE 215. SA

28. TF 131. MC 145. MC 162. MC 188. BE 216. SA

29. TF 132. MC 146. MC 163. MC 189. BE 217. SA

30. TF 133. MC 149. MC 164. MC 190. BE 218. SA

31. TF 134. MC 150. MC 165. MC 191. BE 219. SA

• TF 135. MC 151. MC 177. BE 196. Ex 210. Ma
• TF 136. MC 152. MC 178. BE 198. Ex
• TF 137. MC 153. MC 179. BE 199. Ex
• MC 138. MC 154. MC 180. BE 200. Ex
• MC 139 MC 155. MC 182. BE 201. Ex

126. MC 140 MC 156. MC 183. BE 205. CS

127. MC 141. MC 157. MC 184. BE 206. CS

128. MC 142. MC 158. MC 185. BE 207. CS

129. MC 143. MC 160. MC 186. BE 208. CS

Learning Objective 6 Item Type Item Type Item Type Item Type Item Type Item Type

• TF 39. TF 168. MC 172. MC 210. Ma

36. TF 40. TF 169. MC 173. MC 220. SA

37. TF 166. MC 170. MC 174. MC 221. SA

38. TF 167. MC 171. MC 209. CS

Note: TF = True-False C = Completion

MC = Multiple Choice Ex = Exercise Ma = Matching SA = Short Answer Essay

Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition

FOR INSTRUCTOR USE ONLY

1-4

CHAPTER LEARNING OBJE CTIVES

• Describe the primary forms of business organization. A sole proprietorship is a business

owned by one person. A partnership is a business owned by two or more people associated as partners. A corporation is a separate legal entity for which evidence of ownership is provided by shares of stock.

• Identify the users and uses of accounting information. Internal users are managers who

need accounting information to plan, organize, and run business operations. The primary external users are investors and creditors. Investors (stockholders) use accounting information to help them decide whether to buy, hold, or sell shares of a company’s stock.Creditors (suppliers and bankers) use accounting information to assess the risk of granting credit or loaning money to a business. Other groups who have an indirect interest in a business are taxing authorities, customers, labor unions, and regulatory agencies.

• Explain the three principal types of business activity. Financing activities involve

collecting the necessary funds to support the business. Investing activities involve acquiring the resources necessary to run the business. Operating activities involve putting the resources of the business into action to generate a profit.

• Describe the content and purpose of each of the financial statements. An income

statement presents the revenues and expenses of a company for a specific period of time. A retained earnings statement summarizes the changes in retained earnings that have occurred for a specific period of time. A balance sheet reports the assets, liabilities, and stockholders’ equity of a business at a specific date. A statement of cash flows summarizes information concerning the cash inflows (receipts) and outflows (payments) for a specific period of time.

• Explain the meaning of assets, liabilities, and stockholders’ equity, and state the basic

accounting equation. Assets are resources owned by a business. Liabilities are the debts and obligations of the business. Liabilities represent claims of creditors on the assets of the business. Stockholders’ equity represents the claims of owners on the assets of the business.Stockholders’ equity is subdivided into two parts: common stock and retained earnings. The

basic accounting equation is:

Assets = Liabilities + Stockholders’ Equity

• Describe the components that supplement the financial statements in an annual

report. The management discussion and analysis provides management’s interpretation of the company’s results and financial position as well as a discussion of plans for the future.Notes to the financial statements provide additional explanation or detail to make the financial statements more informative. The auditor’s report expresses an opinion as to whether the financial statements present fairly the company’s results of operations and financial position.