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