Solution Manual For Horngren's Accounting, The Financial Chapters, 14th Edition by Tracie Miller-Nobles, Brenda Mattison
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Test Bank Horngren's Accounting, The Financial Chapters, 14th
Edition by Tracie Miller Nobles - Latest Complete Guide A+
Chapter F:1 Accounting and the Business Environment
Learning Objective F:1-1
1) Accounting is the information system that measures business activities, processes
the information into reports, and communicates the results to decision makers.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2 : Why is Accounting Important? (H1)
2) The knowledge of accounting is rarely used to help make business and personal
financial decisions.
Answer: FALSE
Explanation: The knowledge of accounting is used daily to assist in making decisions for
both businesses and personal items.
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2 : Why is Accounting Important? (H1)
3) Accounting starts with economic activities that accountants review and evaluate
using critical thinking and judgment to create useful information that helps individuals
make good decisions.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
Page | 1
,Created By : TestsBanks
H2 : Why is Accounting Important? (H1)
4) Accounting is referred to as the language of business because it is the method of
communicating business information to decision makers.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2 : Why is Accounting Important? (H1)
5) A model called the ________ was created to help students and the public understand
what accounting is.
A) Decision Making Model
B) Business Model
C) Pathways Vision Model
D) Cost Model
Answer: C
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2 : Why is Accounting Important? (H1)
6) The Pathways Vision Model emphasizes that good decisions have an impact on
________.
A) accounting judgments and economic activity
B) accounting judgments only
C) economic activity only
D) neither accounting judgments nor economic activity Answer: A
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2 : Why is Accounting Important? (H1)
Page | 2
,Created By : TestsBanks
7) Managerial accounting focuses on providing information for external decision makers.
Answer: FALSE
Explanation: Managerial accounting focuses on providing information for internal
decision makers.
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2 : Decision Makers: The Users of Accounting Information
8) Investors primarily use managerial accounting information for decision-making
purposes.
Answer: FALSE
Explanation: External users (investors) use financial accounting information.
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2 : Decision Makers: The Users of Accounting Information
9) A creditor is a person who owes money to the business.
Answer: FALSE
Explanation: A creditor is a person to whom a business owes money.
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2 : Decision Makers: The Users of Accounting Information
10) Income tax is calculated using accounting information.
Answer: TRUE
Diff: 1
LO: F:1-1 AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2 : Decision Makers: The Users of Accounting Information
Page | 3
, Created By : TestsBanks
11) Financial accounting focuses on information for decision makers outside of the
business, such as creditors and taxing authorities.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2 : Decision Makers: The Users of Accounting Information
12) Business owners use accounting information to set goals, evaluate progress toward
those goals, and make adjustments when needed.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2 : Decision Makers: The Users of Accounting Information
13) Outside investors ordinarily use financial accounting information to decide whether
or not to invest in a business.
Answer: TRUE
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
H2 : Decision Makers: The Users of Accounting Information
14) A creditor is any person who has an ownership interest in a business.
Answer: FALSE
Explanation: A creditor is any person to whom money is owed.
Diff: 1
LO: F:1-1
AACSB: Application of knowledge
AICPA Functional: Measurement
PE Question Type: Concept
Page | 4
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