TEST BANK Chapter 1: Accounting as a Form of Communication LATEST UPDATED EXAM 2026/2027 STUDY GUIDE VERSION .

TEST BANK Chapter 1: Accounting as a Form of Communication LATEST
UPDATED EXAM 2026/2027 STUDY GUIDE VERSION .
True / False

1. An auto repair company is not an example of a manufacturer.
a. True
b. False

ANSWER: True
DIFFICULTY: Easy
REFERENCES: pp. 4-5
LEARNING OBJECTIVES: FACC.PONO.13.01-01 - LO: 01-01
KEYWORDS: Bloom's: Applying

2. A department store is an example of a manufacturer.
a. True
b. False

ANSWER: False
DIFFICULTY: Easy
REFERENCES: pp. 4-5
LEARNING OBJECTIVES: FACC.PONO.13.01-01 - LO: 01-01
KEYWORDS: Bloom's: Applying

3. The FASB is an external user that has the authority of the law to obtain certain accounting information.
a. True
b. False

ANSWER: False
DIFFICULTY: Easy
REFERENCES: pp. 6-7
LEARNING OBJECTIVES: FACC.PONO.13.01-02 - LO: 01-02
KEYWORDS: Bloom's: Remembering

4. A partnership is a business owned by two or more individuals.
a. True
b. False

ANSWER: True
DIFFICULTY: Easy
REFERENCES: pp. 6-7
LEARNING OBJECTIVES: FACC.PONO.13.01-02 - LO: 01-02
KEYWORDS: Bloom's: Remembering



© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

,Chapter 1: Accounting as a Form of Communication

5. Business entities and non-business entities are both organized to earn a profit.
a. True
b. False

ANSWER: False
DIFFICULTY: Easy
REFERENCES: pp. 6-7
LEARNING OBJECTIVES: FACC.PONO.13.01-02 - LO: 01-02
KEYWORDS: Bloom's: Remembering

6. Someone to whom a company has a debt is known as a creditor.
a. True
b. False

ANSWER: True
DIFFICULTY: Easy
REFERENCES: pp. 8-10
LEARNING OBJECTIVES: FACC.PONO.13.01-03 - LO: 01-03
KEYWORDS: Bloom's: Remembering

7. Assets can be tangible or intangible in nature.
a. True
b. False

ANSWER: True
DIFFICULTY: Easy
REFERENCES: pp. 8-10
LEARNING OBJECTIVES: FACC.PONO.13.01-03 - LO: 01-03
KEYWORDS: Bloom's: Remembering

8. An asset is a future economic benefit to a business.
a. True
b. False

ANSWER: True
DIFFICULTY: Easy
REFERENCES: pp. 8-10
LEARNING OBJECTIVES: FACC.PONO.13.01-03 - LO: 01-03
KEYWORDS: Bloom's: Remembering

9. An expense is an inflow of assets resulting from the sale of goods and services.
a. True
b. False

ANSWER: False
®
© 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

,Chapter 1: Accounting as a Form of Communication

DIFFICULTY: Easy
REFERENCES: pp. 8-10
LEARNING OBJECTIVES: FACC.PONO.13.01-03 - LO: 01-03
KEYWORDS: Bloom's: Remembering
10. Capital stock indicates the owners’ ownership to a corporation.
a. True
b. False

ANSWER: True
DIFFICULTY: Easy
REFERENCES: pp. 8-10
LEARNING OBJECTIVES: FACC.PONO.13.01-03 - LO: 01-03
KEYWORDS: Bloom's: Remembering

11. Management accounting is the branch of accounting concerned with communication with internal management.
a. True
b. False

ANSWER: True
DIFFICULTY: Easy
REFERENCES: p. 12
LEARNING OBJECTIVES: FACC.PONO.13.01-04 - LO: 01-04
KEYWORDS: Bloom's: Remembering

12. External users of accounting information include present and potential stockholders, bankers and other creditors, and
management.
a. True
b. False

ANSWER: False
DIFFICULTY: Easy
REFERENCES: pp. 11-12
LEARNING OBJECTIVES: FACC.PONO.13.01-04 - LO: 01-04
KEYWORDS: Bloom's: Remembering

13. Bondholders are external users of company’s accounting information.
a. True
b. False

ANSWER: True
DIFFICULTY: Easy
REFERENCES: pp. 11-12
LEARNING OBJECTIVES: FACC.PONO.13.01-04 - LO: 01-04
KEYWORDS: Bloom's: Remembering

© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

, Chapter 1: Accounting as a Form of Communication




© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.