KA2e_SelfStudy_Ch01

KA2e_SelfStudy_Ch01 -...

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File: ch01, Chapter 1: Introduction to Financial Statements Multiple Choice 1. Which is not one of the three forms of business organization? a) Sole proprietorship. b) Creditorship. c) Partnership. d) Corporation. Ans: b Response A: This is one of three forms of business organization discussed in the chapter. Response B: Correct! Response C: This is one of three forms of business organization discussed in the chapter. Response D: This is one of three forms of business organization discussed in the chapter. 2. Which is an advantage of corporations relative to partnerships and sole proprietorships? a) Lower taxes. b) Harder to transfer ownership. c) Reduced legal liability for investors. d) Most common form of organization. Ans: c Response A: Corporations generally have higher taxes than partnerships and proprietorships because corporate income is taxed twice, once at the corporate level and once at the individual level. Response B: Ownership is easier to transfer in a corporation than in a partnership or proprietorship. Response C: Correct! Response D: A corporation is not the most common form of business organization. 3. Which statement about users of accounting information is incorrect ? a) Management is considered an internal user. b) Taxing authorities are considered external users. c) Present creditors are considered external users. d)
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KA2e_SelfStudy_Ch01 -...

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