Test Bank — Financial Accounting, 6th Edition — Jay S. Rich, Jeff Jones & Linda A. Myers — ISBN 9780357984949 — Latest Update 2025/2026 — (All Chapters Covered)

Financial Accounting

6th Edition
ST
UV

TEST BANK
IA
_A

Jay S. Rich
PP
RO

Comprehensive Test Bank for Instructors

and Students
VE

© Jay S. Rich. All rights reserved. Reproduction or distribution without permission is
D?

prohibited.




©MedConnoisseur

, ABLE OF CONTENTS

Test Bank – Financial Accounting, 6th Edition (ISBN 9780357984949)
Jay S. Rich, Jeffrey S. Thomson, David A. Muir
ST
Chapter 1. Accounting and the Financial Statements
Chapter 2. The Accounting Information System
Chapter 3. Accrual Accounting
Chapter 4. Internal Control and Cash
Chapter 5. Sales and Receivables
UV

Chapter 6. Cost of Goods Sold and Inventory
Chapter 7. Operating Assets
Chapter 8. Current and Contingent Liabilities
Chapter 9. Long-Term Liabilities
Chapter 10. Stockholders’ Equity
Chapter 11. The Statement of Cash Flows
IA

Chapter 12. Financial Statement Analysis
_A
PP
RO
VE
D?


©MedConnoisseur

, Name: Class: Date:

Ch 01 Accounting and the Financial Statements
1. Internal users of accounting information include present creditors and management.
a. True
b. False
ANSWER: False
ST
2. Creditors use accounting information to evaluate whether to loan money to a company.
a. True
b. False
ANSWER: True
UV
3. The purpose of financial reporting is to provide economic information to investors, creditors, and other financial
statement users.
a. True
b. False
IA
ANSWER: True

4. Investing is the business activity that measures a company's ability to generate cash from its revenue and expense
activities.
_A
a. True
b. False
ANSWER: False

5. The three main business activities are financing, operating, and investing.
PP
a. True
b. False
ANSWER: True

6. The owners of a sole proprietorship, a partnership, and corporations have limited liability.
RO
a. True
b. False
ANSWER: False

7. There are more corporations than sole proprietorships and partnerships in the United States.
VE
a. True
b. False
ANSWER: False

8. The four basic financial statements are the income statement, retained earnings statement, balance sheet, and statement
D?
of cash flows.
a. True
b. False
ANSWER: True

9. Stockholders' equity is composed of two main sources: liabilities and contributed capital.
a. True
Copyright Cengage Learning. Powered by Cognero. Page 1

, Name: Class: Date:

Ch 01 Accounting and the Financial Statements
b. False
ANSWER: False

10. The first step in preparing the classified balance sheet is to list the assets in order of liquidity.
a. True
ST
b. False
ANSWER: False

11. Stockholders' equity is composed of contributed capital and retained earnings.
UV
a. True
b. False
ANSWER: True

12. The classifications in the balance sheet are to help users determine how a company obtained its resources.
IA
a. True
b. False
ANSWER: True
_A
13. Contributed capital is the residual interest that remains after deducting liabilities from stockholders' equity.
a. True
b. False
ANSWER: False
PP
14. Current assets include cash, inventory, equipment, supplies, and accounts receivable.
a. True
b. False
ANSWER: False
RO
15. In the stockholders' equity section of a classified balance sheet, a distinction is made between the amounts invested by
owners and the amounts financed by creditors.
a. True
b. False
ANSWER: False
VE
16. One primary purpose of the classified balance sheet is to help users evaluate the working capital of a company.
a. True
b. False
ANSWER: True
D?
17. Three common categories of long-term assets are property, plant, and equipment; long-term investments;
and intangible and other noncurrent assets.
a. True
b. False
ANSWER: True

Copyright Cengage Learning. Powered by Cognero. Page 2