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Financial Accounting, 12e (Thomas/Tietz/Harrison)
Financial Accounting, 12e (Thomas/Tietz/Harrison)
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,DOWNLOAD THE Test Bank for Financial Accounting 12th Edition ThomasFinancial Accounting, 12e (Thomas/Tietz/Harrison)
Chapter 2 Transaction Analysis
Learning Objective 2-1
1) A transaction is any event that has a financial impact on the business and that can be measured
reliably.
Answer: TRUE
Diff: 1
LO: 2-1
AACSB: Reflective Thinking
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
2) Business events are recorded even if the financial impact cannot be measured.
Answer: FALSE
Diff: 1
LO: 2-1
AACSB: Reflective Thinking
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
3) Transactions provide objective information about the financial impact of an exchange on an
entity.
Answer: TRUE
Diff: 1
LO: 2-1
AACSB: Reflective Thinking
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
4) The account is the basic summary device of accounting.
Answer: TRUE
Diff: 1
LO: 2-1
AACSB: Reflective Thinking
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
5) An account receivable represents the promise of the business to pay a debt.
Answer: FALSE
Diff: 2
LO: 2-1
AACSB: Reflective Thinking
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
1
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,DOWNLOAD THE Test Bank for Financial Accounting 12th Edition Thomas
6) Prepaid rent is an expense because the payment provides a future benefit of the company.
Answer: FALSE
Diff: 2
LO: 2-1
AACSB: Reflective Thinking
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
7) Assets include cash, land, and accounts payable.
Answer: FALSE
Diff: 2
LO: 2-1
AACSB: Reflective Thinking
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement, Reporting
8) Cost of goods sold is an example of a revenue account.
Answer: FALSE
Diff: 2
LO: 2-1
AACSB: Reflective Thinking
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement, Reporting
9) An accrued liability is a liability for an expense that has not yet been paid.
Answer: TRUE
Diff: 2
LO: 2-1
AACSB: Reflective Thinking
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement, Reporting
10) A prepaid expense is an asset.
Answer: TRUE
Diff: 2
LO: 2-1
AACSB: Reflective Thinking
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement, Reporting
2
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, DOWNLOAD THE Test Bank for Financial Accounting 12th Edition Thomas
11) Which of the following is NOT a business transaction?
A) A company buys goods on account.
B) A company sells land for cash.
C) A company fired 10 percent of the employees due to lackluster sales.
D) A company borrows money from the bank.
Answer: C
Diff: 2
LO: 2-1
AACSB: Analytical Thinking
AICPA Bus Persp: Strategic/Critical Thinking
AICPA Functional: Measurement
12) Which of the following is a business transaction?
A) A company signs a contract for services to be provided during the first quarter of the next
fiscal year.
B) A company pays its employees a year-end bonus.
C) A company hires a new marketing manager.
D) A company applies for a mortgage that will be used to purchase a new office building.
Answer: B
Diff: 2
LO: 2-1
AACSB: Analytical Thinking
AICPA Bus Persp: Strategic/Critical Thinking
AICPA Functional: Measurement
13) A record of all the changes in a particular asset during a period of time is found in a(n):
A) transaction.
B) trial balance.
C) prior period's balance sheet.
D) account.
Answer: D
Diff: 1
LO: 2-1
AACSB: Reflective Thinking
AICPA Bus Persp: Legal/Regulatory
AICPA Functional: Measurement
3
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