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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Jeff Jones
Linda A. Myers
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Comprehensive Test Bank for Instructors
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and Students
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© Jay S. Rich, Jeff Jones & Linda A. Myers.
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All rights reserved. Reproduction or distribution without permission is prohibited.




© BooksbyMed

, Financial Accounting – 6th Edition
(ISBN 9780357984949)
Jay S. Rich, Jeff Jones, and Linda A. Myers



TABLE OF CONTENTS

Chapter 1. Accounting and the Financial Statements
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Chapter 2. The Accounting Information System
Chapter 3. Accrual Accounting
Chapter 4. Internal Control and Cash
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Chapter 5. Sales and Receivables
Chapter 6. Cost of Goods Sold and Inventory
Chapter 7. Operating Assets
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Chapter 8. Current and Contingent Liabilities
Chapter 9. Long-Term Liabilities
Chapter 10. Stockholders’ Equity
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Chapter 11. The Statement of Cash Flows
Chapter 12. Financial Statement Analysis
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© BooksbyMed

,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

2. Creditors use accounting information to evaluate whether to loan money to a company.
a. True
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b. False
ANSWER: True
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3. The purpose of financial reporting is to provide economic information to investors, creditors, and other financial
statement users.
a. True
b. False
ANSWER: True
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4. Investing is the business activity that measures a company's ability to generate cash from its revenue and expense
activities.
a. True
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b. False
ANSWER: False

5. The three main business activities are financing, operating, and investing.
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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

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.
a. True
b. False
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ANSWER: False

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

12. The classifications in the balance sheet are to help users determine how a company obtained its resources.
a. True
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b. False
ANSWER: True

13. Contributed capital is the residual interest that remains after deducting liabilities from stockholders' equity.
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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
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b. False
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
b. False
ANSWER: True

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