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Financial Accounting, 10e (Libby) Chapter 1 Financial Statements and Business Decisions 1) A business entity's accounting system creates financial accounting reports which are provided to external decision makers. Answer: TRUE Explanation: The accounting system collects financial data and produces reports used by both internal decision makers and external decision makers. Difficulty: 1 Easy Topic: Accounting system-Information users Learning Objective: 01-01 Recognize the information conveyed in each of the four basic financial statements and the way that it is used by different decision makers (investors, creditors, and managers). Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 2) Business managers utilize managerial accounting reports to plan and manage the daily operations. Answer: TRUE Explanation: Managerial accounting reports are for internal use to assist managers with day-today operations. Unlike financial accounting reports, managerial reports are for internal use. Difficulty: 1 Easy Topic: Accounting system-Information users Learning Objective: 01-01 Recognize the information conveyed in each of the four basic financial statements and the way that it is used by different decision makers (investors, creditors, and managers). Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 3) Borrowing money is an investing activity. Answer: FALSE Explanation: Borrowing money is a form of financing and therefore is a financing activity. Difficulty: 1 Easy Topic: Accounting system-Information c
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