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
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TEST BANK
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Jay S. Rich
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Comprehensive Test Bank for Instructors

and Students
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© Jay S. Rich. All rights reserved. Reproduction or distribution without permission is

prohibited.
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, TABLE OF CONTENTS

Test Bank – Financial Accounting, 6th Edition (ISBN 9780357984949)
Jay S. Rich, Jeff Jones, Linda A. Myers
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Chapter 1. Accounting and the Financial Statements,
Chapter 2. The Accounting Information System,
Chapter 3. Accrual Accounting,
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Chapter 4. Internal Control and Cash,
Chapter 5. Sales and Receivables,
Chapter 6. Cost of Goods Sold and Inventory,
Chapter 7. Operating Assets,
Chapter 8. Current and Contingent Liabilities,
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Chapter 9. Long-Term Liabilities,
Chapter 10. Stockholders’ Equity,
Chapter 11. The Statement of Cash Flows,
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Chapter 12. Financial Statement Analysis
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, 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
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ANSWER: False

2. Creditors use accounting information to evaluate whether to loan money to a company.
a. True
b. False
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ANSWER: True

3. The purpose of financial reporting is to provide economic information to investors, creditors, and other financial
statement users.
a. True
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b. False
ANSWER: True

4. Investing is the business activity that measures a company's ability to generate cash from its revenue and expense
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activities.
a. True
b. False
ANSWER: False
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5. The three main business activities are financing, operating, and investing.
a. True
b. False
ANSWER: True
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6. The owners of a sole proprietorship, a partnership, and corporations have limited liability.
a. True
b. False
ANSWER: False
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7. There are more corporations than sole proprietorships and partnerships in the United States.
a. True
b. False
ANSWER: False
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8. The four basic financial statements are the income statement, retained earnings statement, balance sheet, and statement
of cash flows.
a. True
b. False
ANSWER: True
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9. Stockholders' equity is composed of two main sources: liabilities and contributed capital.
a. True
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, 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.
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a. True
b. False
ANSWER: False
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11. Stockholders' equity is composed of contributed capital and retained earnings.
a. True
b. False
ANSWER: True
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12. The classifications in the balance sheet are to help users determine how a company obtained its resources.
a. True
b. False
ANSWER: True
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13. Contributed capital is the residual interest that remains after deducting liabilities from stockholders' equity.
a. True
b. False
ANSWER: False
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14. Current assets include cash, inventory, equipment, supplies, and accounts receivable.
a. True
b. False
ANSWER: False
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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
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ANSWER: False

16. One primary purpose of the classified balance sheet is to help users evaluate the working capital of a company.
a. True
b. False
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ANSWER: True

17. Three common categories of long-term assets are property, plant, and equipment; long-term investments;
and intangible and other noncurrent assets.
a. True
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b. False
ANSWER: True

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