Exam (elaborations)
Test Bank for Financial Accounting 5th Edition by David Spiceland, All Chapters.
Test Bank for Financial Accounting 5th Edition by David Spiceland, All Chapters.
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
Seller
Follow
Content preview
Financial Accounting, 5e (Spiceland)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.
St
Answer: TRUE
Difficulty: 1 Easy
Topic: Defining Accounting
ud
Learning Objective: 01-01 Describe the two primary functions of financial accounting.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
yN
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
es
Learning Objective: 01-01 Describe the two primary functions of financial accounting.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
t
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.
Answer: TRUE
Difficulty: 1 Easy
St
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting
measures.
Bloom's: Remember
ud
AACSB: Reflective Thinking
AICPA: FN Measurement
7) Operating activities include transactions that relate to the primary operations of the company.
yN
Answer: TRUE
Difficulty: 1 Easy
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting
measures.
Bloom's: Remember
es
AACSB: Reflective Thinking
AICPA: FN Measurement
8) A corporation is an entity that is legally separate from its owners.
t
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
,9) Cash, inventory for sale to customers, supplies, and buildings are examples of liabilities.
Answer: FALSE
Explanation: These are examples of assets.
Difficulty: 2 Medium
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting
measures.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: FN Measurement
10) Amounts owed to suppliers, employees, the government in the form of taxes, and utility
companies are examples of liabilities.
St
Answer: TRUE
Difficulty: 2 Medium
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting
ud
measures.
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: FN Measurement
yN
11) If total assets of a company equal $12,000 and total stockholders' equity equals $4,000, then
total liabilities equal $8,000.
Answer: TRUE
Difficulty: 3 Hard
Topic: Measuring Business Activities
es
Learning Objective: 01-02 Understand the business activities that financial accounting
measures.
Bloom's: Apply
AACSB: Knowledge Application
AICPA: FN Measurement
t
, 12) If total liabilities of a company equal $16,000 and total stockholders' equity equals $9,000,
then total assets equal $7,000.
Answer: FALSE
Explanation: Total assets = Total liabilities ($16,000) + Total stockholders' equity ($9,000) =
$25,000.
Difficulty: 3 Hard
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting
measures.
Bloom's: Apply
AACSB: Knowledge Application
AICPA: FN Measurement
13) The accounting equation shows that a company's resources equal creditors' and owners'
St
claims to those resources.
Answer: TRUE
Difficulty: 2 Medium
ud
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting
measures.
Bloom's: Understand
AACSB: Reflective Thinking
yN
AICPA: FN Measurement
14) The costs related to rent, utilities, and salaries in the current reporting period are examples of
liabilities.
Answer: FALSE
es
Explanation: These are examples of expenses.
Difficulty: 2 Medium
Topic: Measuring Business Activities
Learning Objective: 01-02 Understand the business activities that financial accounting
measures.
t
Bloom's: Understand
AACSB: Reflective Thinking
AICPA: FN Measurement
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller StudyNest. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $17.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79751 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now