Grade Answers At The End Of

Test Bank For Financial Accounting, 15 th Edition By Carl Warren James Reeve Jonathan Duchac (All Chapters, 100% Original Verified, A+ Grade) Answers At The End Of Each Chapter 1 / 4

Name:

Class:

Date:

chapter 1

Powered by Cognero Page 1

Indicate whether the statement is true or false.

• Receiving a bill or otherwise being notified that an amount is owed is not recorded until the amount is paid.
• True
• False

• 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.

• True
• False

• An example of an external user of accounting information is the federal government.
• True
• False

• The monetary unit assumption requires that economic data be recorded in dollars for companies in the United States.
• True
• False

• About 90% of the businesses in the United States are organized as corporations.
• True
• False

• 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.

• True
• False

• An account receivable is a claim against a customer resulting from a sale on account.
• True
• False

• Revenue is earned only when money is received.
• True
• False

• 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.

• True
• False

• An income statement is a summary of the revenues and expenses of a business as of a specific date.
• True
• False

• The stockholders' rights to the assets rank ahead of the creditors' rights to the assets. 2 / 4

Name:

Class:

Date:

chapter 1

Powered by Cognero Page 2

• True
• False

• Dividends paid to stockholders decrease assets and increase equity.
• True
• False

• Net income and net profit do not mean the same thing.
• True
• False

• A business is an organization in which basic resources or inputs, like materials and labor, are assembled and processed

to provide outputs in the form of goods or services to customers.

• True
• False

• Purchasing supplies on account increases liabilities and decreases equity.
• True
• False

• The balance sheet represents the accounting equation.
• True
• False

• Paying an account payable increases liabilities and decreases assets.
• True
• False

• A statement of stockholders’ equity reports the changes in stockholder's equity for a period of time.
• True
• False

• Senior executives cannot be criminally prosecuted for the wrong doings they commit on behalf of the companies

where they work.

• True
• False

• Managerial accounting information is used by external and internal users equally.
• True
• False

• Proper ethical conduct implies that you only consider what's in your best interest.
• True
• False

• The financial statements of a proprietorship should include the owner's personal assets and liabilities. 3 / 4

Name:

Class:

Date:

chapter 1

Powered by Cognero Page 3

• True
• False

• 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.

• True
• False

• The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for

developing accounting principles.

• True
• False

• The basic difference between manufacturing and retail companies is the completion level of the products they

purchase for resale to customers.

• True
• False

• All companies must use a calendar year as their fiscal year.
• True
• False

• Some of the major fraudulent acts by senior executives started as what they considered to be small ethical lapses

which grew out of control.

• True
• False

• Receiving payments on an account receivable increases both equity and assets.
• True
• False

• An account receivable is typically classified as a revenue.
• True
• False

• No significant differences exist between the accounting standards issued by the FASB and the IASB.
• True
• False

• Assets that are used up during the process of earning revenue are called expenses.
• True
• False

• The accounting equation can be expressed as Assets – Liabilities = Stockholder's Equity.
• True
• False
• / 4