Test Bank Hr

Chapter 01

Accounting Information and Decision Making

True / False Questions

1. Accounting is a system of maintaining records of a company's operations and communicating this information to decision makers. 

True    False

2. Accounting information is used by investors to decide whether to invest in a company's stock. 

True    False

3. Accounting information is used by creditors to decide whether to invest in a company's stock. 

True    False

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. 

True    False

5. Financing activities are transactions involving externals sources of funding. 

True    False

6. Investing activities include the purchase and sale of (1) long-term resources and (2) any resources not directly related to a company's normal operations. 

True    False

7. Operating activities include transactions that relate to the primary operations of the company. 

True    False

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

True    False

9. Cash, inventory, supplies, and buildings are examples of liabilities. 

True    False

10. Amounts owed to suppliers, workers, governments, and utility companies are examples of liabilities. 

True    False

11. If total assets of a company equal $12,000 and total stockholders' equity equals $4,000, then total liabilities equal $8,000. 

True    False

12. If total liabilities of a company equal $16,000 and total stockholders' equity equals $9,000, then total assets equal $7,000. 

True    False

13. The accounting equation shows that a company's resources equal creditors' and owners' claims to those resources. 

True    False

14. The costs of advertising, utilities, and salaries in the current reporting period are examples of liabilities. ...