Survey of Accounting, 7th Edition by Edmonds, Olds Test Bank
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Answers Included ✅ i;
Chap 01 7e Edmonds
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1) Which of the following groups has the primary responsibility for establishing
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i; generallyaccepted accounting principles for business entities in the United States?
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A) Securities and Exchange Commission i; i; i;
B) U.S. Congress i;
C) International Accounting Standards Board i; i; i;
D) Financial Accounting Standards Board i; i; i;
2) The Heritage Company is a manufacturer of office furniture. Which term best
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i; describesHeritage's role in society?
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A) Business
B) Regulatory agency i;
C) Consumer
D) Resource owner i;
3) Which resource providers lend financial resources to a business with the expectation
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i; ofrepayment with interest?
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A) Consumers
B) Creditors
C) Investors
D) Owners
4) Which type of accounting information is intended to satisfy the needs of external users
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i; ofaccounting information?
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A) Cost accounting i;
B) Managerial accounting i;
C) Tax accounting i;
D) Financial accounting i;
5) Which of the following is false regarding managerial accounting information?
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A) It is often used by investors.
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B) It is more detailed than financial accounting information.
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C) It can include nonfinancial information.
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D) It focuses on divisional rather than overall profitability.
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,6) Financial accounting standards are known collectively as GAAP. What does that
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i; acronymstand for? i; i;
A) Generally Accepted Accounting Principles i; i; i;
B) Generally Applied Accounting Procedures i; i; i;
C) Governmentally Approved Accounting Practices i; i; i;
D) Generally Authorized Auditing Principles i; i; i;
7) International accounting standards are formulated by the IASB. What does that
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i; acronymstand for? i; i;
A) Internationally Accepted Standards Board i; i; i;
B) International Accounting Standards Board i; i; i;
C) International Accountability Standards Bureau i; i; i;
D) International Accounting and Sustainability Board i; i; i; i;
8) Jack Henry borrowed $800,000 from Walt Bank to open a new bike store called Wooden
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i; Wheels. Jack transferred $650,000 of the cash that he borrowed to the store on the first
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i; dayof the year. How many reporting entities exist in this scenario?
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A) One reporting entity i; i;
B) Two reporting entities i; i;
C) Three reporting entities i; i;
D) Four reporting entities i; i;
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,9) Jack Henry borrowed $800,000 from Walt Bank to open a new bike store called Wooden
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i; Wheels. Jack transferred $650,000 of the cash he borrowed to Wooden Wheels on the first
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i; day of the year. Which of the following appropriately reflects the cash transactions
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i; betweenthese reporting entities?
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Option Jack Henry i; Wooden Wheels i; Walt Bank i;
A. $ 150,000increase ;
i $ 650,000 i; $ 800,000
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increase decrease
B. $ 800,000increase ;
i $ 650,000 i; $ 150,000
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increase decrease
C. $ 800,000decrease ;
i $ 800,000 i; $ 650,000
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increase decrease
D. $ 650,000increase ;
i $ 150,000 i; $ 800,000
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increase decrease
A) Option A i;
B) Option B i;
C) Option C i;
D) Option D i;
10) Ellen Gatsby and her siblings, Ben and Sarah, started Gatsby Company when they
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i; eachinvested $100,000 in the company. After the investments there will be
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A) one reporting entity. i; i;
B) two reporting entities. i; i;
C) three reporting entities. i; i;
D) four reporting entities. i; i;
11) John Hamilton borrowed $528,000 from Stone Creek Bank to open a new restaurant called
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i; Sauce-It-Up. John transferred $475,200 of the cash he borrowed to the restaurant on the
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i; firstday of the year. How many reporting entities exist in this scenario?
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A) Two reporting entities i; i;
B) Three reporting entities i; i;
C) One reporting entity i; i;
D) Four reporting entities i; i;
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, 12) John Hamilton borrowed $540,000 from Stone Creek Bank to open a new restaurant called
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i; Sauce-It-Up. John transferred $486,000 of the cash he borrowed to the Company on the
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i; firstday of the year. Which of the following appropriately reflects the cash transactions
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i; betweenthese reporting entities?
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John Hamilton i; Sauce-It-Up Stone Creek Bank i; i;
A. $ 54,000 increase i; i ; $ 486,000 i; i ; increase $ 540,000
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B. $ 540,000 increasei; i ; $ 486,000 i; i ; increase $ 540,000
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C. $ 540,000 decreasei; i ; $ 540,000 i; i ; increase $ 540,000
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D. $ 486,000 increasei; i ; $ 54,000 i; i ; increase $ 540,000
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A) Option A i;
B) Option B i;
C) Option C i;
D) Option D i;
13) Which of the following is an accurate definition of the term “asset?”
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A) An obligation to creditors i; i; i;
B) A resource that will be used to produce revenue
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C) A transfer of wealth from the business to its stockholders
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D) A sacrifice incurred from operating the business
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14) Which of the following is (are) source(s) of assets to a business?
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A) Creditors
B) Investors
C) Operations
D) All the answers represent sources of assets.
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15) If total assets decrease, then which of the following statements is true?
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A) Liabilities must increase and retained earnings must decrease. i; i; i; i; i; i; i;
B) Common stock must decrease and retained earnings must increase. i; i; i; i; i; i; i; i;
C) Liabilities, common stock, or retained earnings must decrease. i; i; i; i; i; i; i;
D) Liabilities, common stock, or retained earnings must increase. i; i; i; i; i; i; i;
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