Chapter 1 Review Questions True-False Statements – Flashcards
Unlock all answers in this set
Unlock answersquestion
A business organized as a separate legal entity owned by stockholders is a partnership,
answer
False
question
Corporate stockholder generally pay higher taxes but have no personal liability.
answer
True
question
The liability of corporate stockholders is limited to the amount of their investment.
answer
True
question
The majority of U.S. business is transacted by proprietorships.
answer
False
question
Proprietorships in the United States generate more revenue than the other two forms of business enterprise.
answer
False
question
Owners of business firms are the only people who need accounting information.
answer
False
question
Management of a business firms are the only people who need accounting information.
answer
False
question
External users of accounting information are managers who plan, organize, and run a business.
answer
False
question
The information needs and questions of external users vary considerably.
answer
True
question
Accounting communicates financial information about a business to both internal and external users.
answer
True
question
Two primary external users of accounting information are investors and creditors.
answer
True
question
Financing activities for corporations include borrowing money and selling shares of their own stock.
answer
True
question
Investing activities involve collecting the necessary funds to support the business.
answer
False
question
The purchase of equipment is an example of a financing activity.
answer
False
question
Assets are resources owned by a business and provide future services or benefits to the business.
answer
True
question
Payments to the owners are operating activities.
answer
False
question
The economic resources that are owned by a business are called stockholders' equity.
answer
False
question
Operating activities involve putting the resources of the business into action to generate a profit.
answer
True
question
A business is usually involved in two types of activity -financing and investing.
answer
False
question
Net income for the period if determined by subtracting total expenses and dividends from revenues.
answer
False
question
A different set of financial statements usually is prepared for each user.
answer
False
question
The heading for the income statement might include the line "As of December 31, 20xx."
answer
False
question
Net income is another term for revenue.
answer
False
question
Cash is another term for Stockholders' Equity.
answer
False
question
The primary purpose of statement of cash flows is to provide information about the cash receipts and cash payments of a company for a specific period of time.
answer
True
question
The balance sheet reports assets and claims to those assets at a specific point in time.
answer
True
