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26.If the liabilities owed by a business total $300,000 and owners equity is equal to $300,000, then the assets
also total $300,000.
27. If total assets decreased by $30,000 during a specific period and owner's equity decreased by $35,000
during the same period, the period's change in total liabilities was an $65,000 increase.
28. If total assets increased by $190,000 during a specific period and liabilities decreased by $10,000 during
the same period, the period's change in total owner's equity was a $200,000 increase.
29. If net income for a proprietorship was $50,000, the owner withdrew $20,000 in cash and the owner
invested $10,000 in cash, the capital of the owner increased by $40,000.
30. An account receivable is a claim against a customer arising from a sale on account.
32. Receiving payments on an account receivable increases both equity and assets.
35. Receiving a bill or otherwise being notified that an amount is owed is not recorded until the amount is
paid.
37. Expenses are assets that are used up during the process of earning revenue.
38. The excess of revenue over the expenses incurred in earning the revenue is called capital.
39. The principal financial statements of a proprietorship are the income statement, statement of owner's
equity, and the balance sheet.
40. An income statement is a summary of the revenues and expenses of a business as of a specific date.
41. A statement of owner's equity reports the changes in the owner's equity for a period of time.
42. The statement of cash flows consists of three sections: cash flows from operating activities, cash flows
from income activities, and cash flows from equity activities.
43. The financial statements of a proprietorship should include the owner's personal assets and liabilities.
45. An example of a general-purpose financial statement would be a report about projected price increases
related to transportation costs.
46. No significant differences exist between the accounting standards issued by the FASB and the IASB.
47. The Sarbanes-Oxley Act prohibits CPAs from providing nonaudit investment banking services.
48. The main objective for all business is to maximize unrealized profits.
49. The basic difference between manufacturing and merchandising companies is the completion level of the
products they purchase for resale to customers.
50. Net income and net profit do not mean the same thing.