Test 1 Ch 1 t/f a

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A cash dividend paid to stockholders is reported in the investing activities section of the statement of cash flows.

F

A cash dividend paid to stockholders is reported on the income statement.

F

Changes in retained earnings during the accounting period are reported on the income statement.

F

Consumers are the main providers of resources in any market.

F

Expenses are reported on the balance sheet.

F

Financial resources can be provided to a business by conversion agents.

F

Issuing common stock for cash increases retained earnings.

F

Liabilities are reported on the statement of cash flows of a business.

F

Making a payment on a bank loan is an example of an asset exchange transaction.

F

Purchasing equipment for cash is an example of an asset use transaction

F

Resource owners are the businesses that transform resources into products that satisfy consumer desires.

F

The accounting equation requires that liabilities be equal to equity.

F

The amount of net income for a period must equal retained earnings.

F

The issuance of stock to owners for cash would be an example of an asset exchange transaction.

F

The purchase of a truck decreases retained earnings.

F

A cash dividend paid to stockholders is reported on the statement of changes in stockholders' equity.

T

A dividend paid to stockholders decreases retained earnings.

T

An asset source transaction increases total assets and increases claims to assets.

T

Conversion agents purchase their resources from resource owners.

T

Labor resources include both the physical and intellectual labor of a business's employees.

T

Net income increases retained earnings.

T

Paying a dividend to stockholders is an example of an asset use transaction.

T

The acquisition of a bank loan increases both assets and liabilities.

T

The amount of a company's liabilities is equal to the difference between its assets and its equity.

T

The balance sheet reports the ending balances of permanent accounts as of the last day of the accounting period.

T


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