Financial accounting 6th Edition

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 communicating that 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
Answer FALSE
Difficulty: 1
Explanation:
:Easy Creditors lend money to a
company.
Topic: Difficulty: 1 Easy
Topic: Defining Accounting
Defining
Accounting
Learning Objective: 01-01 Describe the two primary functions of financial
accounting.Bloom's:
Learning Objective: Remember
01-01 Describe the two primary functions of financial
AACSB: Reflective
accounting.Bloom's: Remember
Thinking AICPA: BB
AACSB: Reflective
Critical
ThinkingThinking
AICPA: BB
Critical Thinking
4) The primary functions of financial accounting are to measure business
activities of a company and to communicate those measurements to
3)Accounting
internal
information isfor
parties decision-making purposes.
used
by creditors
Answer FALSE to
: decide whether
Explanation: Financial
to accounting primarily serves to provide information to
external parties.
invest in a Difficulty: 2 Medium
Topic: Defining Accounting
company's stock.
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 accountingmeasures. 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 accountingmeasures. 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 accountingmeasures. Bloom's: Remember
AACSB:
Reflective ThinkingAICPA:
FN Measurement

8)A corporation is an
entity that is legally
separate from its
owners.

Answer: TRUE