Financial Accounting (6th Edition) – David Spiceland, Wayne Thomas & Don Herrmann – Comprehensive textbook summary and key concepts

TEST BANK
Financial Accounting, 6th Edition
Chapters 1 – 12 Complete
By David Spiceland, Wayne Thomas and Don Herrmann

,TABLE OF CONTENTS




Chapter 1: A Framework for Financial Accounting Chapter 2: The

Accounting Cycle: During the Period Chapter 3: The Accounting Cycle:

End of the Period Chapter 4: Cash and Internal Controls

Chapter 5: Receivables and Sales

Chapter 6: Inventory and Cost of Goods Sold Chapter 7: Long-Term

Assets

Chapter 8: Current Liabilities Chapter 9: Long-

Term Liabilities Chapter 10: Stockholders’ Equity

Chapter 11: Statement of Cash Flows

Chapter 12: Financial Statement Analysis

,Chapter 1 A Framework for Financial Accounting

1) Accounting is a system of maintaining records of a company's operations and communicating
that information to decision makers.

Answer: TRUE
Difficulty: 1 Easy
Topic: Defining Accounting
Learning Objective: 01-01 Describe the two primary functions of financial accounting.Bloom's:
Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking

2) Accounting information is used by investors to decide whether to invest in a company's stock.

Answer: TRUE
Difficulty: 1 Easy
Topic: Defining Accounting
Learning Objective: 01-01 Describe the two primary functions of financial accounting.Bloom's:
Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking

3) Accounting information is used by creditors to decide whether to invest in a company's stock.

Answer: FALSE
Explanation: Creditors lend money to a company.
Difficulty: 1 Easy
Topic: Defining Accounting
Learning Objective: 01-01 Describe the two primary functions of financial accounting.Bloom's:
Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking

4) The primary functions of financial accounting are to measure business activities of a
company and to communicate those measurements to internal parties for decision-making
purposes.

Answer: FALSE
Explanation: Financial accounting primarily serves to provide information to external parties.
Difficulty: 2 Medium
Topic: Defining Accounting
Learning Objective: 01-01 Describe the two primary functions of financial accounting.Bloom's:
Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking

, 5) Financing /Iactivities /Iare /Itransactions /Iinvolving /Iexternal /Isources /Iof /Ifunding.

Answer: /ITRUE
/ I Difficulty: /I1 /IEasy

Topic: / I Measuring /IBusiness /IActivities
Learning /IObjective: / I 01-02 /IUnderstand /Ithe /Ibusiness /Iactivities /Ithat /Ifinancial
/Iaccountingmeasures. / I Bloom's: /I / I Remember /IAACSB:

Reflective /IThinkingAICPA:
/ I FN /IMeasurement




6) Investing /Iactivities /Iinclude /Ithe /Ipurchase /Iand /Isale /Iof /Ilong-term /Iresources.

Answer: /ITRUE
/ I Difficulty: /I1 /IEasy

Topic: / I Measuring /IBusiness /IActivities
Learning /IObjective: / I 01-02 /IUnderstand /Ithe /Ibusiness /Iactivities /Ithat /Ifinancial
/Iaccountingmeasures. / I Bloom's: /I / I Remember /IAACSB:

Reflective /IThinkingAICPA:
/ I FN /IMeasurement




7) Operating /Iactivities /Iinclude /Itransactions /Ithat /Irelate /Ito /Ithe /Iprimary /Ioperations /Iof /Ithe
/Icompany.




Answer: /ITRUE
/ I Difficulty: /I1 /IEasy

Topic: / I Measuring /IBusiness /IActivities
Learning /IObjective: / I 01-02 /IUnderstand /Ithe /Ibusiness /Iactivities /Ithat /Ifinancial
/Iaccountingmeasures. / I Bloom's: /I / I Remember /IAACSB:

Reflective /IThinkingAICPA:
/ I FN /IMeasurement




8) A /Icorporation /Iis /Ian /Ientity /Ithat /Iis /Ilegally /Iseparate /Ifrom /Iits /Iowners.

Answer: /ITRUE
/ I Difficulty: /I1 /IEasy

Topic: / I Measuring /IBusiness /IActivities
Learning /IObjective: / I 01-02 /IUnderstand /Ithe /Ibusiness /Iactivities /Ithat /Ifinancial
/Iaccountingmeasures. / I Bloom's: /I / I Remember /IAACSB:

Reflective /IThinkingAICPA:
/ I BB /ICritical /IThinking