Test Bank for Survey of Accounting 7th Edition Edmonds
Student name:_
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.1) In a market, creditors are resource providers.⊚ true ⊚ false
2) In a market, a company that manufactures cars would be referred to as a business.⊚ true ⊚ false
3) The value created by a business may be called assets.⊚ true ⊚ false
4) The stockholders of a business have a priority claim to its assets in the event of liquidation.⊚ true ⊚ false
5) The types of resources needed by a business are financial, physical, and labor resources.⊚ true ⊚ false
6) Financial accounting information is usually less detailed than managerial accounting information.⊚ true ⊚ false
7) The Financial Accounting Standards Board is a privately funded organization with authority for establishing accounting standards for businesses in the US.⊚ true ⊚ false
8) Detailed information about accounts is maintained in the various elements of the financial statements.⊚ true ⊚ false
9) Liabilities represent the future obligations of a business entity.⊚ true 1 / 4
⊚ false 10) Stockholders' equity is a source of a business's assets, but liabilities are not.⊚ true ⊚ false
11) Retained earnings reduces a company's commitment to use its assets for the benefit of its stockholders.⊚ true ⊚ false
12) The historical cost concept requires that most assets be recorded at the amount paid for them, regardless of increases in market value.⊚ true ⊚ false
13) An asset source transaction increases a business's assets and the claims to assets.⊚ true ⊚ false
14) Borrowing money from the bank is an example of an asset source transaction.⊚ true ⊚ false
15) An asset use transaction does not affect the total amount of claims to a company's assets.⊚ true ⊚ false
16) The four financial statements prepared by a business bear no relationship to each other.⊚ true ⊚ false
17) All of a business's temporary accounts appear on the income statement.⊚ true ⊚ false
18) The term "recognition" means to report an economic event in the financial statements.⊚ true ⊚ false 2 / 4
19) Companies that use accrual accounting recognize revenues and expenses at the time that cash is paid or received.⊚ true ⊚ false
20) The term "accrual" describes an earnings event that is recognized before cash is paid or received.⊚ true ⊚ false
21) A company may recognize a revenue or expense without a corresponding cash collection or payment in the same accounting period.⊚ true ⊚ false
22) A payment to an employee in settlement of salaries payable decreases an asset and decreases stockholders’ equity.⊚ true ⊚ false
23) An increase in an expense may be accompanied by a decrease in a liability.⊚ true ⊚ false
24) Revenues and expenses are temporary accounts.⊚ true ⊚ false
25) In the closing process, the amounts in temporary accounts are moved to net income, a permanent account.⊚ true ⊚ false
26) Accounts that are closed include expenses, dividends, and unearned revenues.⊚ true ⊚ false
27) After closing the accounts, all income statement accounts have non-zero balances.⊚ true ⊚ false 3 / 4
28) Two of the steps in the accounting cycle are adjusting the accounts and closing the accounts.⊚ true ⊚ false
29) Accrual-basis accounting often fails to match expenses with revenues.⊚ true ⊚ false
30) Adjusting entries never affect a business's cash account.⊚ true ⊚ false
31) Asset use transactions always involve the payment of cash.⊚ true ⊚ false
32) Providing services to customers on account is an asset exchange transaction.⊚ true ⊚ false
33) An adjusting entry that decreases unearned revenue and increases service revenue is a claims exchange transaction.⊚ true ⊚ false
34) Sometimes the recognition of revenue is accompanied by an increase in liabilities.⊚ true ⊚ false
35) The collection of an account receivable is a claims exchange transaction.⊚ true ⊚ false
36) Wholesale companies sell goods primarily to other businesses.⊚ true ⊚ false
37) Merchandising businesses include retail companies and manufacturing companies.⊚ true ⊚ false
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