TEST BANK For Financial Accounting, 6th Edition By David Spiceland, Wayne Thomas, Verified Chapters 1 - 12, Complete Newest Version

, Chapter 1 A Framework for Financial Accounting
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1) Accounting is a system of maintaining records of a company's operations and communicati
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ng that information to decision makers.
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Answer: TRUE Dif2 p 2p


ficulty: 1 Easy
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Topic: Defining Accounting 2p


Learning Objective: 01-
2p


01 Describe the two primary functions of financial accounting. Bloom's:
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Remember
AACSB:
Reflective Thinking 2p 2p


AICPA:
BB Critical Thinkin 2p 2p


g

2) Accounting information is used by investors to decide whether to invest in a company's stock.
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Answer: TRUE Dif2 p 2p


ficulty: 1 Easy
2p 2p


Topic: Defining Accounting 2p


Learning Objective: 01-
2p


01 Describe the two primary functions of financial accounting. Bloom's:
2p 2p 2p 2p 2p 2p 2p 2p 2p


Remember
AACSB:
Reflective Thinking 2p 2p


AICPA:
BB Critical Thinkin 2p 2p


g

3) Accounting information is used by creditors to decide whether to invest in a company's stock.
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Answer: FALSE 2 p 2 p


Explanation:
Creditors lend money to a company. 2p 2p 2p 2p 2p


Difficulty: 1 Easy
2p 2p 2p


Topic: Defining Accounting 2p


Learning Objective: 01-
2p


01 Describe the two primary functions of financial accounting. Bloom's:
2p 2p 2p 2p 2p 2p 2p 2p 2p


Remember
AACSB:
Reflective Thinking 2p 2p


AICPA:
BB Critical Thinkin 2p 2p


g

4) The primary functions of financial accounting are to measure business activities of a compa
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ny and to communicate those measurements to internal parties for decision-making purposes.
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Answer: 2 p 2 p FALSE

,Explanation:
Financial accounting primarily serves to provide information to external partie
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s. Difficulty: 2 Medium
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Topic: Defining Accounting
2p


Learning Objective: 01-01 Describe the two primary functions of financial accounting.
2p 2p 2p 2p 2p 2p 2p 2p 2p

, Bloom's:
Understand AACSB: 2p




Reflective Thinking
p
2 2p 2p


AICPA:
BB Critical Thinkin
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g

5) Financing activities are transactions involving external sources of funding.
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Answer: TRUE Dif 2 p 2p


ficulty: 1 Easy
2p 2p


Topic: Measuring Business Activities 2p 2p


Learning Objective: 01-2p


02 Understand the business activities that financial accounting measures. Bloom's:
2p 2p 2p 2p 2p 2p 2p 2p 2p Remember
AACSB:
Reflective Thinking 2p 2p


AICPA: FN Measurement 2p




6) Investing activities include the purchase and sale of long-term resources.
2p 2p 2p 2p 2p 2p 2p 2p 2p




Answer: TRUE Dif 2 p 2p


ficulty: 1 Easy
2p 2p


Topic: Measuring Business Activities 2p 2p


Learning Objective: 01-2p


02 Understand the business activities that financial accounting measures. Bloom's:
2p 2p 2p 2p 2p 2p 2p 2p 2p Remember
AACSB:
Reflective Thinking 2p 2p


AICPA: FN Measurement 2p




7) Operating activities include transactions that relate to the primary operations of the company.
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p




Answer: TRUE Dif 2 p 2p


ficulty: 1 Easy
2p 2p


Topic: Measuring Business Activities 2p 2p


Learning Objective: 01-2p


02 Understand the business activities that financial accounting measures. Bloom's:
2p 2p 2p 2p 2p 2p 2p 2p 2p Remember
AACSB:
Reflective Thinking 2p 2p


AICPA: FN Measurement 2p




8) A corporation is an entity that is legally separate from its owners.
2p 2p 2p 2p 2p 2p 2p 2p 2p 2p 2p




Answer: TRUE Dif 2 p 2p


ficulty: 1 Easy
2p 2p


Topic: Measuring Business Activities 2p 2p


Learning Objective: 01-2p


02 Understand the business activities that financial accounting measures. Bloom's:
2p 2p 2p 2p 2p 2p 2p 2p 2p Remember
AACSB:
Reflective Thinking 2p 2p


AICPA: