Test bank for Financial Accounting, 6th Edition By David Spiceland, Wayne Thomas and Don HerrmannTest bank for Financial Accounting, 6th Edition By David Spiceland, Wayne Thomas and Don HerrmannTest bank for Financial Accounting, 6th Edition By David Spiceland, Wayne Thomas and Don HerrmannTest ban...
By David Spiceland, Wayne Thomas and Don Herrmann
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,TABLEOFCONTENTS l l ll
Chapter 1:A Framework for Financial Accounting Chapter 2:The
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Accounting Cycle: During the Period Chapter 3: The Accounting Cycle:
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End of the Period Chapter 4: Cash and Internal Controls
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Chapter 5: Receivables and Sales
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Chapter 6: Inventory and Cost of Goods Sold Chapter7: Long-Term
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Assets
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Chapter8: Current Liabilities Chapter9: Long-
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Term Liabilities Chapter10:Stockholders’Equity
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l l Chapter 11: Statement of Cash Flows
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Chapter12:FinancialStatementAnalysis
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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 l
Difficulty:1Easy
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Topic: Defining Accounting
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Learning Objective: 01-01 Describe the two primary functions of financial accounting.Bloom's:
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l Rememberl
AACSB: Reflective Thinking l ll
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.
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Answer: TRUE l
Difficulty:1Easy
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Topic: Defining Accounting
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Learning Objective: 01-01 Describe the two primary functions of financial accounting.Bloom's:
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l Rememberl
AACSB: Reflective Thinking l ll
AICPA: BB Critical Thinking
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3) Accounting information is used by creditors to decide whether to invest in a company's stock.
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Answer: FALSE l l
Explanation: Creditors lend money to a company. ll ll ll ll ll ll
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.Bloom's:
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l Rememberl
AACSB: Reflective Thinking l ll
AICPA: BB Critical Thinking
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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 l l
Explanation: Financial accounting primarily serves to provide information to external parties.
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lDifficulty: 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.Bloom's:
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l Understand
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AACSB: Reflective Thinking l ll
AICPA: BB Critical Thinking
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, 5) Financing activities are transactions involving external sources of funding.
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Answer: TRUE l
Difficulty:1Easy
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Topic: Measuring Business Activities
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Learning Objective: 01-02 Understand the business activities that financial accountingmeasures.
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l Bloom's: Remember AACSB:
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ReflectiveThinkingAICPA: FN l l l
Measurement
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6) Investing activities include the purchase and sale of long-term resources.
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Answer: TRUE l
Difficulty:1Easy
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Topic: Measuring Business Activities
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Learning Objective: 01-02 Understand the business activities that financial accountingmeasures.
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l Bloom's: Remember AACSB:
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ReflectiveThinkingAICPA: FN l l l
Measurement
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7) Operating activities include transactions that relate to the primary operations of the company.
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Answer: TRUE l
Difficulty:1Easy
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Topic: Measuring Business Activities
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Learning Objective: 01-02 Understand the business activities that financial accountingmeasures.
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l Bloom's: Remember AACSB:
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ReflectiveThinkingAICPA: FN l l l
Measurement
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8) A corporation is an entity that is legally separate from its owners.
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Answer: TRUE l
Difficulty:1Easy
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Topic: Measuring Business Activities
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Learning Objective: 01-02 Understand the business activities that financial accountingmeasures.
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l Bloom's: Remember AACSB:
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Reflective ThinkingAICPA: BB l l l
Critical Thinking
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