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1-1 Chapter 01 Financial Statements and Business Decisions True / False Questions 1.Accounting is a system that collects and processes financial information about an organization and reports that information to decision makers.
TRUE
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Easy
Learning Objective: 01-01 Recognize both the information conveyed in each of the four basic financial statements and describe how the information is used by different decision makers (investors, creditors, and managers).Topic: 01-01 The Four Basic Financial Statements: An Overview 2.External users of accounting information include the managers who plan, organize, and run a business.
FALSE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Recognize both the information conveyed in each of the four basic financial statements and describe how the information is used by different decision makers (investors, creditors, and managers).Topic: 01-01 The Four Basic Financial Statements: An Overview 3.In accounting and reporting for a business entity, the accounting and reporting for the business must be kept separate from other economic affairs of its owners.
TRUE
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Easy
Learning Objective: 01-01 Recognize both the information conveyed in each of the four basic financial statements and describe how the information is used by different decision makers (investors, creditors, and managers).Topic: 01-01 The Four Basic Financial Statements: An Overview Financial Accounting, 7th Canadian Edition, 7e Libby, Libby, Hodge, Kanaan, Sterling (Test Bank All Chapters, 100% Original Verified, A+ Grade) 1 / 4
Chapter 01 - Financial Statements and Business Decisions 1-2 4.Accounting communicates financial information about a business to both internal and external users.
TRUE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Easy
Learning Objective: 01-01 Recognize both the information conveyed in each of the four basic financial statements and describe how the information is used by different decision makers (investors, creditors, and managers).Topic: 01-01 The Four Basic Financial Statements: An Overview 5.A statement of financial position should be dated for a period (such as "For the year ended December 31, 20X1"), whereas a statement of earnings should be dated at a point in time (such as "At December 31, 20X1").
FALSE
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: Medium
Learning Objective: 01-01 Recognize both the information conveyed in each of the four basic financial statements and describe how the information is used by different decision makers (investors, creditors, and managers).Topic: 01-01 The Four Basic Financial Statements: An Overview 6.Expenses are the cost of assets consumed or services used in the process of generating revenue.
TRUE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 Recognize both the information conveyed in each of the four basic financial statements and describe how the information is used by different decision makers (investors, creditors, and managers).
Topic: 01-06 The Statement of Earnings 2 / 4
Chapter 01 - Financial Statements and Business Decisions 1-3
- Generally speaking, a financially success business will have positive cash flows from
operating activities.
TRUE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Hard
Learning Objective: 01-01 Recognize both the information conveyed in each of the four basic financial statements and describe how the information is used by different decision makers (investors, creditors, and managers).
Topic: 01-12 The Statement of Cash Flows
- The issuance of additional common shares is a financing activity that generates positive
cash flow to the firm.
TRUE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Hard
Learning Objective: 01-01 Recognize both the information conveyed in each of the four basic financial statements and describe how the information is used by different decision makers (investors, creditors, and managers).
Topic: 01-12 The Statement of Cash Flows
- Borrowing money and issuing shares are examples of financing activities
TRUE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Hard
Learning Objective: 01-01 Recognize both the information conveyed in each of the four basic financial statements and describe how the information is used by different decision makers (investors, creditors, and managers).
Topic: 01-12 The Statement of Cash Flows
- / 4
Chapter 01 - Financial Statements and Business Decisions 1-4
- Total assets are $60,000, total liabilities, $30,000, and share capital is $20,000; therefore,
retained earnings is $5,000.
FALSE
Calculation: $60,000 - $30,000 - $20,000 = $10,000.
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: Medium
Learning Objective: 01-01 Recognize both the information conveyed in each of the four basic financial statements and describe how the information is used by different decision makers (investors, creditors, and managers).
Topic: 01-02 The Statement of Financial Position
- Investing activities involve collecting the necessary funds to operate the business.
FALSE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 Recognize both the information conveyed in each of the four basic financial statements and describe how the information is used by different decision makers (investors, creditors, and managers).
Topic: 01-12 The Statement of Cash Flows
- The purchase of equipment is an example of a financing activity.
FALSE
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: Medium
Learning Objective: 01-01 Recognize both the information conveyed in each of the four basic financial statements and describe how the information is used by different decision makers (investors, creditors, and managers).
Topic: 01-12 The Statement of Cash Flows
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