Test Bank: Financial Accounting Information for Decisions 6th Edition by Wild Test Bank

For This And Any Other test Bnaks, slotion Manuals, Quizess, Exams And Assignments Contact us At whiperhills@gmail.com

[Question]

37. The debt ratio reflects the risk of a company to both its owners and creditors.
Answer: TRUE

Bloom’s Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-A2

[Question]

38. The higher the debt ratio, the higher risk of a company not being able to meet its obligations.
Answer: TRUE

Bloom’s Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A2

[Question]

39. The debt ratio is calculated by dividing total assets by total liabilities.
Answer: FALSE

Bloom’s Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A2

[Question]

40. A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.
Answer: TRUE

[Question]

41. If a company is highly leveraged, this means that it has relatively low risk of not being able to repay its debt.
Answer: FALSE

Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-A2

[Question]

42. Hamilton Industries has liabilities of $105 million and total assets of $350 million. Its debt ratio is 33.3%.
Answer: FALSE

Bloom’s Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-A2

[Question]

43. High financial leverage is always bad for a company's owners.
Answer: FALSE

Bloom’s Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-A2

[Question]

44. A compound journal entry affects no more than two accounts.
Answer: FALSE

Bloom’s Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P1

[Question]

45. Posting is the transfer of the information from each journal entry to the ledger.
Answer: TRUE

Bloom’s Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P1

[Question]

46. Transactions are first recorded in the ledger.
Answer: FALSE

Bloom’s Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P1

[Question]

47. The journal is known as a book of original entry.
Answer: TRUE

Bloom’s Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P1

[Question]

48. A journal gives a complete record of each transaction in one place and shows the debits and credits for each transaction.
Answer: TRUE

[Question]

49. The journal is known as the book of final entry because financial statements are prepared from it.
Answer: FALSE

Bloom’s Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-P1

[Question]

50. A trial balance that balances is not proof of complete accuracy in recording transactions.
Answer: TRUE

[Question]

51. IFRS requires that companies report four financial statements with explanatory notes: Balance Sheet; Income Statement; Statement of Changes in Equity and Statement of Cash Flows.
Answer: TRUE

Bloom’s Taxonomy: Understand
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Global
AICPA BB: Industry
AICPA BB: Legal
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-P2

[Question]

52. Generally, the ordering of accounts in a trial balance typically follows their identification number from the chart of accounts: assets, liabilities, equity, revenues and expenses.
Answer: TRUE

[Question]

53. The trial balance can serve as a replacement for the balance sheet, since debits must balance with credits.
Answer: FALSE

[Question]

54. A trial balance that is in balance is proof that no errors were made in journalizing the transactions, posting to the ledger and preparing the trial balance.
Answer: FALSE

[Question]

55. If cash was incorrectly debited for $100 instead of correctly credited for $100, the cash account is out of balance by $100.
Answer: FALSE

Bloom’s Taxonomy: Analyze
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Medium
Learning Objective: 02-P2

[Question]

56. The balance sheet provides a link between beginning and ending income statements.
Answer: FALSE

[Question]

57. The heading on each financial statement lists the three W's - Who (the name of the organization), What (the name of the statement) and Where (the organization's address)
Answer: FALSE

[Question]

58. Other names for the income statement are the earnings statement, statement of operations or a profit and loss statement.
Answer: TRUE

[Question]

59. Another name for the balance sheet is the statement of financial position.
Answer: TRUE

Multiple Choice Questions

[Question]

60. The accounting process begins with:
A. Analysis of business transactions and events
B. Preparation of financial statements and other reports
C. Summarizing the recorded effects of business transactions
D. Presentation of financial information to decision-makers
E. Preparation of the trial balance

Answer: A

[Question]

61. Which of the following list of events properly reflects the early steps taken in the accounting process?
A. Record relevant transactions, Post journal information to ledger accounts Analyze each transaction, Prepare and analyze the trial balance
B. Post journal information to ledger accounts, Analyze each transaction, Post journal information to ledger accounts, Prepare and analyze the trial balance
C. Prepare and analyze the trial balance, Analyze each transaction, Post journal information to ledger accounts, Record relevant transactions
D. Analyze each transaction, Post journal information to ledger accounts, Record relevant transactions, Prepare and analyze the trial balance
E. Analyze each transaction, Record relevant transactions, Post journal information to ledger accounts, Prepare and analyze the trial balance

Answer: E

Bloom’s Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-C1

[Question]

62. A sales invoice:
A. Is a type of use document
B. Is used by sellers for recording purposes
C. Is not needed by buyers
D. Gives rise to an entry in the accounting process
E. Is not necessary in accounting

Answer: B

Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-C2

[Question]

63. Source documents include all of the following except:
A. Sales tickets
B. Ledgers
C. Checks
D. Purchase orders
E. Bank statements

Answer: B

[Question]

64. Source documents:
A. Include the ledger
B. Are the sources of accounting information
C. Must be in electronic form
D. Are based on accounting entries
E. Include the chart of accounts

Answer: B

[Question]

65. Various types of documents and other papers that companies use when they conduct their business:
A. Are called source documents
B. Can include sales tickets
C. Are the source of information for recording accounting entries
D. Can be in electronic form
E. All of the above

Answer: E

[Question]

66. For what reason do most sellers require customers to have their receipts in order to exchange or return purchased items?
A. The receipt contains coded information which the seller needs to prepare and analyze the trial balance
B. Sellers wish to ensure that the sale in question was rung up on the register in the first place
C. This is a legal requirement mandated by a federal law
D. The receipt is serving as a promissory note
E. To create an environment in which customer’s do not want to return items.

Answer: B

Bloom’s Taxonomy: Apply
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Hard
Learning Objective: 02-C2

[Question]

67. A record of the increases and decreases in a specific asset, liability, equity, revenue or expense is a(n):
A. Journal
B. Posting
C. Trial balance
D. Account
E. Chart of accounts

Answer: D

Bloom’s Taxonomy: Remember
AACSB: Analytic
AACSB: Communication
AICPA BB: Critical Thinking
AICPA BB: Industry
AICPA FN: Measurement
AICPA FN: Reporting
Difficulty: Easy
Learning Objective: 02-C2

[Question]

68. An account used to record the owner's investments in the business is called:
A. Dividends
B. Common Stock
C. Revenue
D. Expense
E. Liability

Answer: B

[Question]

69. The account used to record the transfers of assets from a business to its stockholders is:
A. A revenue account
B. The retained earnings account
C. Common stock account
D. An expense account
E. A liability account

Answer: B

Test Bank

Tuesday, 1 November 2016

Financial Accounting Information for Decisions 6th Edition by Wild Test Bank

For This And Any Other test Bnaks, slotion Manuals, Quizess, Exams And Assignments Contact us At whiperhills@gmail.com

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