,
,TEST BANK FOR
Financial Accounting 6th Edition by David Spiceland, Wayne Thomas, Don
Herrmann
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
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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
a
Learning Objective: 01-01 Describe the two primary functions of financial accounting.
Bloom's: Remember
r F
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 company
and 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 Thinking
AICPA: FN Measurement
6) Investing activities include the purchase and sale of long-term resources.
k
Answer: TRUE
Difficulty: 1 Easy
Topic: Measuring Business Activities
Bloom's: Remember
n
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
a
AACSB: Reflective Thinking
AICPA: FN Measurement
r
7) Operating activities include transactions that relate to the primary operations of the company.
F
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 Thinking
AICPA: 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 Thinking
AICPA: BB Critical Thinking
,TEST BANK FOR
Financial Accounting 6th Edition by David Spiceland, Wayne Thomas, Don
Herrmann
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
n k
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
a
Learning Objective: 01-01 Describe the two primary functions of financial accounting.
Bloom's: Remember
r F
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 company
and 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 Thinking
AICPA: FN Measurement
6) Investing activities include the purchase and sale of long-term resources.
k
Answer: TRUE
Difficulty: 1 Easy
Topic: Measuring Business Activities
Bloom's: Remember
n
Learning Objective: 01-02 Understand the business activities that financial accounting measures.
a
AACSB: Reflective Thinking
AICPA: FN Measurement
r
7) Operating activities include transactions that relate to the primary operations of the company.
F
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 Thinking
AICPA: 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 Thinking
AICPA: BB Critical Thinking
