Test Bank for Corporate Financial Accounting, 17th Edition by Carl Warren
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Course
Advanced Accounting
Institution
Advanced Accounting
Test Bank for Corporate Financial Accounting, 17e 17th Edition by Carl Warren, Jeff Jones, William B. Tayler. Complete Chapters (Chapter 1 to 14) are included with answers.
1. Introduction to Accounting and Business.
2. Analyzing Transactions.
3. The Adjusting Process.
4. Completing the Accou...
Indicate whether the statement is true or false.
1. Revenue is earned only when money is received.
a. True
b. False
ANSWER: False
2. An account receivable is a claim against a customer resulting from a sale on account.
a. True
b. False
ANSWER: True
3. The financial statements of a proprietorship should include the owner's personal assets and liabilities.
a. True
b. False
ANSWER: False
4. Operating activities are those activities by which a company generates revenues from customers.
a. True
b. False
ANSWER: True
5. The Sarbanes-Oxley Act established standards for corporate responsibility and disclosure.
a. True
b. False
ANSWER: True
6. Proper ethical conduct implies that you only consider what's in your best interest.
a. True
b. False
ANSWER: False
7. The main objective for all businesses is to maximize unrealized profits.
a. True
b. False
ANSWER: False
Page 1
,Name: Class: Date:
Chap 01 17e
8. Investing activities are those activities by which the company obtains funds to start and operate the business.
a. True
b. False
ANSWER: False
9. Proprietorships are owned by one owner and provide only services to their customers.
a. True
b. False
ANSWER: False
10. An account receivable is typically classified as a revenue.
a. True
b. False
ANSWER: False
11. Generally accepted accounting principles regulate how and what financial information is reported by businesses.
a. True
b. False
ANSWER: True
12. If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for it, the
buyer would record the building at $85,000.
a. True
b. False
ANSWER: False
13. An example of a general-purpose financial statement would be a report about projected price increases related
to transportation costs used only by internal managers of the organization and not by external users.
a. True
b. False
ANSWER: False
14. The monetary unit assumption requires that economic data be recorded in dollars for companies in the United
States.
a. True
b. False
ANSWER: True
Page 2
,Name: Class: Date:
Chap 01 17e
15. The majority of businesses end their fiscal year on December 31.
a. True
b. False
ANSWER: True
16. 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.
a. True
b. False
ANSWER: False
17. The cost principle is the basis for entering the purchase price into the accounting records.
a. True
b. False
ANSWER: True
18. An income statement is a summary of the revenues and expenses of a business as of a specific date.
a. True
b. False
ANSWER: False
19. Some of the major fraudulent acts by senior executives started as what they considered to be small ethical
lapses that grew out of control.
a. True
b. False
ANSWER: True
20. About 90% of the businesses in the United States are organized as corporations.
a. True
b. False
ANSWER: False
21. 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.
a. True
b. False
ANSWER: True
Page 3
, Name: Class: Date:
Chap 01 17e
22. 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.
a. True
b. False
ANSWER: True
23. A fiscal year that ends when business activities have reached their lowest point is called the natural business
year.
a. True
b. False
ANSWER: True
24. The Financial Accounting Standards Board (FASB) is the authoritative body that has primary responsibility for
developing accounting principles.
a. True
b. False
ANSWER: True
25. Purchasing supplies on account increases liabilities and decreases equity.
a. True
b. False
ANSWER: False
26. All companies must use a calendar year as their fiscal year.
a. True
b. False
ANSWER: False
27. Paying an account payable increases liabilities and decreases assets.
a. True
b. False
ANSWER: False
28. 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.
a. True
b. False
ANSWER: False
Page 4
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