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. 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 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.