Test Bank For Financial Accounting 6th Edition By Libby

Test Bank For Financial Accounting 6th Edition By Libby

True / False Questions

1. Accounting is a system that collects and processes financial information about an organization and reports that information to decision makers.

TRUE

AACSB Tag: Communications

Difficulty: Easy

L.O.: 1

1. Assets on the balance sheet are recorded at market value or replacement cost.

FALSE

AACSB Tag: Reflective Thinking

Difficulty: Easy

L.O.: 1

1. In accounting and reporting for a business entity, the accounting and reporting for the business must be kept separate from other economic affairs of its owners.

TRUE

AACSB Tag: Reflective Thinking

Difficulty: Easy

L.O.: 1

1. The accounting period in which service revenue is recognized (i.e., revenue for services rendered) is generally the period in which the cash is collected.

FALSE

AACSB Tag: Reflective Thinking

Difficulty: Medium

L.O.: 1

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©2009 McGraw-Hill Inc. Test Bank to accompany Libby Financial Accounting 6/e

Chapter 001: Financial Statements and Business Decisions

1. Total assets are $70,000, total liabilities, $40,000 and contributed capital is $20,000; therefore, retained earnings are $15,000.

FALSE

AACSB Tag: Analytic

Difficulty: Medium

L.O.: 1

1. The payment of a cash dividend to stockholders increases stockholders’ equity.

FALSE

AACSB Tag: Reflective Thinking

Difficulty: Medium

L.O.: 1