@PROFDOCDIGITALLIBRARIES
TEST BANK
Financial Accounting
David Spiceland; Wayne M. Thomas; Don Herrmann
6th Edition
SO
LU
TI
O
N
S
,@PROFDOCDIGITALLIBRARIES
David Spiceland: Financial Accounting 6th Edition Test Bank
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
SO
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
LU
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
TI
3) Accounting information is used by creditors to decide whether to invest in a company's stock.
Answer: FALSE
O
Explanation: Creditors lend money to a company.
Difficulty: 1 Easy
Topic: Defining Accounting
N
Learning Objective: 01-01 Describe the two primary functions of financial accounting.
Bloom's: Remember
AACSB: Reflective Thinking
S
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.
,@PROFDOCDIGITALLIBRARIES
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
5) Financing activities are transactions involving external sources of funding.
Answer: TRUE
Difficulty: 1 Easy
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: FN Measurement
SO
6) Investing activities include the purchase and sale of long-term resources.
Answer: TRUE
Difficulty: 1 Easy
Topic: Measuring Business Activities
LU
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: FN Measurement
7) Operating activities include transactions that relate to the primary operations of the company.
TI
Answer: TRUE
Difficulty: 1 Easy
O
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Remember
N
AACSB: Reflective Thinking
AICPA: FN Measurement
S
8) A corporation is an entity that is legally separate from its owners.
Answer: TRUE
Difficulty: 1 Easy
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
, @PROFDOCDIGITALLIBRARIES
9) Cash, inventory for sale to customers, supplies, and buildings are examples of liabilities.
Answer: FALSE
Explanation: These are examples of assets.
Difficulty: 2 Medium
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: FN Measurement
10) Amounts owed to suppliers, employees, the government in the form of taxes, and utility
companies are examples of liabilities.
SO
Answer: TRUE
Difficulty: 2 Medium
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Understand
LU
AACSB: Reflective Thinking
AICPA: FN Measurement
11) If total assets of a company equal $12,000 and total stockholders' equity equals $4,000, then
total liabilities equal $8,000.
TI
Answer: TRUE
Difficulty: 3 Hard
Topic: Measuring Business Activities
O
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Apply
AACSB: Knowledge Application
N
AICPA: FN Measurement
S
TEST BANK
Financial Accounting
David Spiceland; Wayne M. Thomas; Don Herrmann
6th Edition
SO
LU
TI
O
N
S
,@PROFDOCDIGITALLIBRARIES
David Spiceland: Financial Accounting 6th Edition Test Bank
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
SO
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
LU
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
TI
3) Accounting information is used by creditors to decide whether to invest in a company's stock.
Answer: FALSE
O
Explanation: Creditors lend money to a company.
Difficulty: 1 Easy
Topic: Defining Accounting
N
Learning Objective: 01-01 Describe the two primary functions of financial accounting.
Bloom's: Remember
AACSB: Reflective Thinking
S
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.
,@PROFDOCDIGITALLIBRARIES
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
5) Financing activities are transactions involving external sources of funding.
Answer: TRUE
Difficulty: 1 Easy
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: FN Measurement
SO
6) Investing activities include the purchase and sale of long-term resources.
Answer: TRUE
Difficulty: 1 Easy
Topic: Measuring Business Activities
LU
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: FN Measurement
7) Operating activities include transactions that relate to the primary operations of the company.
TI
Answer: TRUE
Difficulty: 1 Easy
O
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Remember
N
AACSB: Reflective Thinking
AICPA: FN Measurement
S
8) A corporation is an entity that is legally separate from its owners.
Answer: TRUE
Difficulty: 1 Easy
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
, @PROFDOCDIGITALLIBRARIES
9) Cash, inventory for sale to customers, supplies, and buildings are examples of liabilities.
Answer: FALSE
Explanation: These are examples of assets.
Difficulty: 2 Medium
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: FN Measurement
10) Amounts owed to suppliers, employees, the government in the form of taxes, and utility
companies are examples of liabilities.
SO
Answer: TRUE
Difficulty: 2 Medium
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Understand
LU
AACSB: Reflective Thinking
AICPA: FN Measurement
11) If total assets of a company equal $12,000 and total stockholders' equity equals $4,000, then
total liabilities equal $8,000.
TI
Answer: TRUE
Difficulty: 3 Hard
Topic: Measuring Business Activities
O
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
Bloom's: Apply
AACSB: Knowledge Application
N
AICPA: FN Measurement
S
