True/False Chapter 1
A disadvantage of the corporate form of ownership is double taxation.
True
Accounting communicates financial information about a business to both internal and external users.
True
All publicly traded U.S. companies must provide their shareholders with an annual report each year.
True
An auditor is an accounting professional who conducts an independent examination of the accounting data presented by a company.
True
Assets are resources owned by a business and provide future services or benefits to the business.
True
Creditors' rights to assets supersede owners' rights to assets.
True
If the assets owned by business total $150,000 and the liabilities total $105,000, stockholders' equity totals $45,000.
True
The Balance Sheet reports assets and claims to those assets at a specific point in time.
True
The accounting equation can be expressed as Assets - Stockholders' Equity = Liabilities
True
The liability of corporate stockholders is limited to the amount of their investment.
True
The management discussion and analysis section of an annual report covers various financial aspects of a company.
True
The primary purpose of the Statement of Cash Flows is to provide information about cash receipts and cash payments of a company for a specific period of time.
True
Two primary external users of accounting information are investors and creditors.
True
The economic resources that are owned by a business are called stockholders' equity.
False
The majority of U.S. business is transacted by proprietorship's
False
A business is usually invoved in two types of activity - financing and investing.
False
A business organized as a separate legal entity owned by stockholders is a partnership.
False
Cash is another term for Stockholders' Equity.
False
Claims of creditors and owners on the assets of a business are called liabilities.
False
Explanatory notes and supporting schedules are an optional part of an annual report.
False
Management of a business enterprise is the major external user of information.
False
Net income for the period is determined by subtracting total expenses and dividends from revenues.
False
Net income is another term for revenue.
False
Owners of business firms are the only people who need accounting information.
False
The basic accounting equation states that Assets = Liabilities
False