Chapter 01 - Uses of Accounting Information and the Financial Statements TRUE/FALSE 1. The processing stage of accounting is accomplished by the recording of data. ANS: F PTS: 1 DIF: Easy OBJ: 1 NAT: AACSB Analytic | AICPA FN Measurement LOC: Recall KEY: Recording entries MSC: ACBSP-APC-01-Purpose 2. Two major goals of business are to achieve profitability and to achieve liquidity. ANS: T PTS: 1 DIF: Easy OBJ: 1 NAT: AACSB Analytic | AICPA FN Measurement LOC: Recall KEY: Business goals MSC: ACBSP-APC-01-Purpose 3. Profitability means having enough funds on hand to pay debts when they fall due. ANS: F PTS: 1 DIF: Easy OBJ: 1 NAT: AACSB Analytic | AICPA FN Measurement LOC: Recall KEY: Liquidity and current liabilities MSC: ACBSP-APC-16-Current Liabilities Reporting 4. Earned income is a measure of profitability. ANS: T PTS: 1 DIF: Easy OBJ: 1 NAT: AACSB Analytic | AICPA FN Measurement LOC: Recall KEY: Profitability MSC: ACBSP-APC-09-Financial Statements 5. Paying taxes to the government is an example of an operating activity. ANS: T PTS: 1 DIF: Easy OBJ: 1 NAT: AACSB Analytic | AICPA FN Measurement LOC: Comprehension KEY: Business activities MSC: ACBSP-APC-09-Financial Statements 6. Obtaining funds from a bank is an example of a financing activity. ANS: T PTS: 1 DIF: Easy OBJ: 1 NAT: AACSB Analytic | AICPA FN Measurement LOC: Comprehension KEY: Business activities MSC: ACBSP-APC-09-Financial Statements