,TEST BANK FOR zl zl
Financial Accounting 6th Edition by David Spiceland, Wayne Thomas, Don Herrma
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nn
Chapter 1 zl A Framework for Financial Accounting
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1) Accounting is a system of maintaining records of a company's operations and communicating th
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at information to decision makers.
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Answer: TRUE Diff z l zl
iculty: 1 Easy zl zl
Topic: Defining Accounting zl
Learning Objective: 01- zl
01 Describe the two primary functions of financial accounting. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: BB Critical Thinking zl zl
2) Accounting information is used by investors to decide whether to invest in a company's stock.
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Answer: TRUE Diff z l zl
iculty: 1 Easy zl zl
Topic: Defining Accounting zl
Learning Objective: 01- zl
01 Describe the two primary functions of financial accounting. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: BB Critical Thinking zl zl
3) Accounting information is used by creditors to decide whether to invest in a company's stock.
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Answer: FALSE z l z l
Explanation:
Creditors lend money to a company. zl zl zl zl zl zl
Difficulty: 1 Easy zl zl
Topic: Defining Accounting zl
Learning Objective: 01- zl
01 Describe the two primary functions of financial accounting. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: BB Critical Thinking zl zl
4) The primary functions of financial accounting are to measure business activities of a company an
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d to communicate those measurements to internal parties for decision-making purposes.
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Answer: FALSE z l z l
Explanation:
Financial accounting primarily serves to provide information to external parties. D zl zl zl zl zl zl zl zl zl zl
ifficulty: 2 Medium zl zl
Topic: Defining Accounting zl
,Learning Objective:
zl 01-01 Describe the two primary functions of financial accounting.
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, Bloom's:
Understand AACSB: zl
Reflective Thinking zl zl zl
AICPA: BB Critical Thinking zl zl
5) Financing activities are transactions involving external sources of funding.
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Answer: TRUE Diff z l zl
iculty: 1 Easy
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Topic: Measuring Business Activities zl zl
Learning Objective: 01- zl
02 Understand the business activities that financial accounting measures. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: FN Measurement zl
6) Investing activities include the purchase and sale of long-term resources.
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Answer: TRUE Diff z l zl
iculty: 1 Easy
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Topic: Measuring Business Activities zl zl
Learning Objective: 01- zl
02 Understand the business activities that financial accounting measures. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: FN Measurement zl
7) Operating activities include transactions that relate to the primary operations of the company.
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Answer: TRUE Diff z l zl
iculty: 1 Easy
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Topic: Measuring Business Activities zl zl
Learning Objective: 01- zl
02 Understand the business activities that financial accounting measures. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: FN Measurement zl
8) A corporation is an entity that is legally separate from its owners.
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Answer: TRUE Diff z l zl
iculty: 1 Easy
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Topic: Measuring Business Activities zl zl
Learning Objective: 01- zl
02 Understand the business activities that financial accounting measures. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: BB Critical Thinking zl zl
Financial Accounting 6th Edition by David Spiceland, Wayne Thomas, Don Herrma
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nn
Chapter 1 zl A Framework for Financial Accounting
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1) Accounting is a system of maintaining records of a company's operations and communicating th
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at information to decision makers.
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Answer: TRUE Diff z l zl
iculty: 1 Easy zl zl
Topic: Defining Accounting zl
Learning Objective: 01- zl
01 Describe the two primary functions of financial accounting. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: BB Critical Thinking zl zl
2) Accounting information is used by investors to decide whether to invest in a company's stock.
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Answer: TRUE Diff z l zl
iculty: 1 Easy zl zl
Topic: Defining Accounting zl
Learning Objective: 01- zl
01 Describe the two primary functions of financial accounting. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: BB Critical Thinking zl zl
3) Accounting information is used by creditors to decide whether to invest in a company's stock.
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Answer: FALSE z l z l
Explanation:
Creditors lend money to a company. zl zl zl zl zl zl
Difficulty: 1 Easy zl zl
Topic: Defining Accounting zl
Learning Objective: 01- zl
01 Describe the two primary functions of financial accounting. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: BB Critical Thinking zl zl
4) The primary functions of financial accounting are to measure business activities of a company an
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d to communicate those measurements to internal parties for decision-making purposes.
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Answer: FALSE z l z l
Explanation:
Financial accounting primarily serves to provide information to external parties. D zl zl zl zl zl zl zl zl zl zl
ifficulty: 2 Medium zl zl
Topic: Defining Accounting zl
,Learning Objective:
zl 01-01 Describe the two primary functions of financial accounting.
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, Bloom's:
Understand AACSB: zl
Reflective Thinking zl zl zl
AICPA: BB Critical Thinking zl zl
5) Financing activities are transactions involving external sources of funding.
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Answer: TRUE Diff z l zl
iculty: 1 Easy
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Topic: Measuring Business Activities zl zl
Learning Objective: 01- zl
02 Understand the business activities that financial accounting measures. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: FN Measurement zl
6) Investing activities include the purchase and sale of long-term resources.
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Answer: TRUE Diff z l zl
iculty: 1 Easy
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Topic: Measuring Business Activities zl zl
Learning Objective: 01- zl
02 Understand the business activities that financial accounting measures. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: FN Measurement zl
7) Operating activities include transactions that relate to the primary operations of the company.
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Answer: TRUE Diff z l zl
iculty: 1 Easy
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Topic: Measuring Business Activities zl zl
Learning Objective: 01- zl
02 Understand the business activities that financial accounting measures. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: FN Measurement zl
8) A corporation is an entity that is legally separate from its owners.
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Answer: TRUE Diff z l zl
iculty: 1 Easy
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Topic: Measuring Business Activities zl zl
Learning Objective: 01- zl
02 Understand the business activities that financial accounting measures. Bloom's: Remember
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AACSB:
Reflective Thinking zl zl
AICPA: BB Critical Thinking zl zl
