Financial Accounting 9th Edition by Miller-Nobles Test bank

A-Head: How do you analyse transactions?

49. The total assets and the total liabilities of Samantha Financial Services are shown below. There were no capital contributions and withdrawals during the year.

Beginning of year
End of year

What was the amount of profit for the year?

1. $30,000
2. $10,000
3. $40,000
4. $70,000

Answer: B
Difficulty: Complex
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 3 Use the accounting equation to analyse transactions
A-Head: How do you analyse transactions?

True/False: Write 'T' if the statement is true and 'F' if the statement is false.

50. A business owner starts a new business and invests $6 000 of capital. This transaction results in an increase in the business's liabilities.

1. True
2. False

Answer: False
Difficulty: Basic
AACSB: Analytical Thinking
Learning Objective: 3 Use the accounting equation to analyse transactions
A-Head: How do you analyse transactions?

Short answer: Write the word or phrase that best completes each statement or answers the question.

51. Frances contributes capital into his business. Which two accounts are affected?

Answer: An asset and an owners' equity are affected.
Difficulty: Basic
AACSB: Analytical Thinking
Learning Objective: 3 Use the accounting equation to analyse transactions
A-Head: How do you analyse transactions?

Multiple choice: Choose the alternative(s) that best completes the statement or answers the question.

52. Which of the following statements BEST defines financial statements?

1. Financial statements are documents that report on a business in monetary terms, providing information to help people make informed business decisions.
2. Financial statements are plans and forecasts for future time periods.
3. Financial statements are the verbal statements made to business news organisations by chief financial officers.
4. Financial statements are the information systems that record and measure business transactions.

Answer: A
Difficulty: Moderate
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 4 Prepare financial statements
A-Head: How do you prepare financial statements?

53. The statement of changes in equity shows the changes in Owners' equity. Which one of these statements is TRUE?

1. Decreases in Owners' equity result from owner investments.
2. Decreases in Owners' equity result from profit.
3. Decreases in Owners' equity result from revenues earned.
4. Decreases in Owners' equity result from losses.

Answer: D
Difficulty: Moderate
AACSB: Analytical Thinking, Reflective Thinking
Learning Objective: 4 Prepare financial statements
A-Head: How do you prepare financial statements?

54. The income statement presents a summary of an entity's revenues and expenses for a period of time. Which of the following statements is TRUE?

1. There is profit when total revenues are greater than total expenses.
2. There is a loss when total expenses are greater than total revenue.
3. There is a loss when withdrawals are made.