,Financial Accounting, 5e (Spiceland)
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Chapter 1 A Framework for Financial Accounting
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1) Accounting is a system of maintaining records of a company's operations and communicating
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that information to decision makers.
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Answer: TRUE g
Difficulty: 1 Easy
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Topic: Defining Accounting
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Learning Objective: 01-01 Describe the two primary functions of financial accounting.
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Bloom's: Remember
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AACSB: Reflective Thinking
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AICPA: BB Critical
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Thinking
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2) Accounting information is used by investors to decide whether to invest in a company's stock.
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Answer: TRUE g
Difficulty: 1 Easy
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Topic: Defining Accounting
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Learning Objective: 01-01 Describe the two primary functions of financial accounting.
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Bloom's: Remember
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AACSB: Reflective Thinking
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AICPA: BB Critical
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Thinking
g
3) Accounting information is used by creditors to decide whether to invest in a company's stock.
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Answer: FALSE g
Explanation: Creditors lend money to a company.
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Difficulty: 1 Easy
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Topic: Defining Accounting
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Learning Objective: 01-01 Describe the two primary functions of financial accounting.
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Bloom's: Remember
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AACSB: Reflective Thinking
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AICPA: BB Critical
g g g
Thinking
g
4) The primary functions of financial accounting are to measure business activities of a company
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and to communicate those measurements to internal parties for decision-making purposes.
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Answer: FALSE g
Explanation: Financial accounting primarily serves to provide information to external parties.
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Difficulty: 2 Medium
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Topic: Defining Accounting
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Learning Objective: 01-01 Describe the two primary functions of financial accounting.
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Bloom's: Understand
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1
Copyright © 2019 McGraw-Hill Education. All rights reserved. g g g g g g g
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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,AACSB: Reflective Thinking
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AICPA: BB Critical
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Thinking
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2
Copyright © 2019 McGraw-Hill Education. All rights reserved.
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No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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, 5) Financing activities are transactions involving external sources of funding.
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Answer: TRUE g
Difficulty: 1 Easy
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Topic: Measuring Business Activities
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Learning Objective: 01-02 Understand the business activities that financial accounting
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measures.
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Bloom's: Remember g
gAACSB: Reflective g
Thinking AICPA: FN
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Measurement
g
6) Investing activities include the purchase and sale of long-term resources.
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Answer: TRUE g
Difficulty: 1 Easy
g g g
Topic: Measuring Business Activities
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Learning Objective: 01-02 Understand the business activities that financial accounting
g g g g g g g g g
measures.
g
Bloom's: Remember g
gAACSB: Reflective g
Thinking AICPA: FN
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Measurement
g
7) Operating activities include transactions that relate to the primary operations of the company.
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Answer: TRUE g
Difficulty: 1 Easy
g g g
Topic: Measuring Business Activities
g g g
Learning Objective: 01-02 Understand the business activities that financial accounting
g g g g g g g g g
measures.
g
Bloom's: Remember g
gAACSB: Reflective g
Thinking AICPA: FN
g g g
Measurement
g
8) A corporation is an entity that is legally separate from its owners.
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Answer: TRUE g
Difficulty: 1 Easy
g g g
Topic: Measuring Business Activities
g g g
Learning Objective: 01-02 Understand the business activities that financial accounting
g g g g g g g g g
measures.
g
Bloom's: Remember g
gAACSB: Reflective g
Thinking AICPA: BB
g g g
Critical Thinking
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3
Copyright © 2019 McGraw-Hill Education. All rights reserved.
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No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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g g g
Chapter 1 A Framework for Financial Accounting
g g g g g g g
1) Accounting is a system of maintaining records of a company's operations and communicating
g g g g g g g g g g g g
that information to decision makers.
g g g g g
Answer: TRUE g
Difficulty: 1 Easy
g g g
Topic: Defining Accounting
g g
Learning Objective: 01-01 Describe the two primary functions of financial accounting.
g g g g g g g g g g
Bloom's: Remember
g g
AACSB: Reflective Thinking
g g
AICPA: BB Critical
g g g
Thinking
g
2) Accounting information is used by investors to decide whether to invest in a company's stock.
g g g g g g g g g g g g g g
Answer: TRUE g
Difficulty: 1 Easy
g g g
Topic: Defining Accounting
g g
Learning Objective: 01-01 Describe the two primary functions of financial accounting.
g g g g g g g g g g
Bloom's: Remember
g g
AACSB: Reflective Thinking
g g
AICPA: BB Critical
g g g
Thinking
g
3) Accounting information is used by creditors to decide whether to invest in a company's stock.
g g g g g g g g g g g g g g
Answer: FALSE g
Explanation: Creditors lend money to a company.
g g g g g g
Difficulty: 1 Easy
g g g
Topic: Defining Accounting
g g
Learning Objective: 01-01 Describe the two primary functions of financial accounting.
g g g g g g g g g g
Bloom's: Remember
g g
AACSB: Reflective Thinking
g g
AICPA: BB Critical
g g g
Thinking
g
4) The primary functions of financial accounting are to measure business activities of a company
g g g g g g g g g g g g g
and to communicate those measurements to internal parties for decision-making purposes.
g g g g g g g g g g g
Answer: FALSE g
Explanation: Financial accounting primarily serves to provide information to external parties.
g g g g g g g g g g
Difficulty: 2 Medium
g g g
Topic: Defining Accounting
g g
Learning Objective: 01-01 Describe the two primary functions of financial accounting.
g g g g g g g g g g
Bloom's: Understand
g g
1
Copyright © 2019 McGraw-Hill Education. All rights reserved. g g g g g g g
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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,AACSB: Reflective Thinking
g g
AICPA: BB Critical
g g g
Thinking
g
2
Copyright © 2019 McGraw-Hill Education. All rights reserved.
g g g g g g g
No reproduction or distribution without the prior written consent of McGraw-Hill Education.
g g g g g g g g g g g
, 5) Financing activities are transactions involving external sources of funding.
g g g g g g g g
Answer: TRUE g
Difficulty: 1 Easy
g g g
Topic: Measuring Business Activities
g g g
Learning Objective: 01-02 Understand the business activities that financial accounting
g g g g g g g g g
measures.
g
Bloom's: Remember g
gAACSB: Reflective g
Thinking AICPA: FN
g g g
Measurement
g
6) Investing activities include the purchase and sale of long-term resources.
g g g g g g g g g
Answer: TRUE g
Difficulty: 1 Easy
g g g
Topic: Measuring Business Activities
g g g
Learning Objective: 01-02 Understand the business activities that financial accounting
g g g g g g g g g
measures.
g
Bloom's: Remember g
gAACSB: Reflective g
Thinking AICPA: FN
g g g
Measurement
g
7) Operating activities include transactions that relate to the primary operations of the company.
g g g g g g g g g g g g
Answer: TRUE g
Difficulty: 1 Easy
g g g
Topic: Measuring Business Activities
g g g
Learning Objective: 01-02 Understand the business activities that financial accounting
g g g g g g g g g
measures.
g
Bloom's: Remember g
gAACSB: Reflective g
Thinking AICPA: FN
g g g
Measurement
g
8) A corporation is an entity that is legally separate from its owners.
g g g g g g g g g g g
Answer: TRUE g
Difficulty: 1 Easy
g g g
Topic: Measuring Business Activities
g g g
Learning Objective: 01-02 Understand the business activities that financial accounting
g g g g g g g g g
measures.
g
Bloom's: Remember g
gAACSB: Reflective g
Thinking AICPA: BB
g g g
Critical Thinking
g g
3
Copyright © 2019 McGraw-Hill Education. All rights reserved.
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No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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