Test Bank for Financial Accounting 6th Edition Latest Update 2026 Exam Prep | Complete Chapters | Verified Questions & Answers

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
communicatingthat 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
companyand 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 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 ThinkingAICPA:
FN Measurement

6) Investing activities include the purchase and sale of long-term resources.

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 ThinkingAICPA:
FN Measurement

7) Operating activities include transactions that relate to the primary operations of the company.

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 ThinkingAICPA:
FN Measurement

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 ThinkingAICPA:
BB Critical Thinking
9) Cash, inventory for sale to customers, supplies, and buildings are examples of liabilities.