Chapter 6

Chapter 6 - Term Definition A business organized as a...

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Term A business organized as a separate legal entity owned by stockholders is a partnership. True or False Definition False Term Corporate stockholders generally pay higher taxes but have no personal liability. True or False Definition True Term The liability of corporate stockholders is limited to the amount of their investment. True or False Definition True Term Owners of business firms are the only people who need accounting information. True or False Definition False Term Management of a business enterprise is the major external user of information. True or False Definition False Term External users of accounting information are managers who plan, organize, and run a business. True or false Definition False Term The purchase of equipment is an example of a financing activity. True or False Definition False Term Payments to owners are operating activities. True or False Definition False Term Net income for the period is determined by Definition False
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Term A business organized as a separate legal entity owned by stockholders is a partnership. True or False Definition False subtracting total expenses and dividends from revenues. True or False Term A different set of financial statements usually is prepared for each user. True or False Definition False Term A liability is classified as a current liability if it is to be paid within the coming year. True or False Definition True Term Profitability means having enough funds on hand to pay debts when they fall due. True or False Definition False Term Revenues have the effect of increasing retained earnings. True or False Definition True Term Solvency ratios measure the short-term ability of the company to pay its maturing obligations. True or False Definition False Term Revenue increases stockholders' equity and should be recorded whenever cash is received from customers. True or False Definition False Term Collection on an account receivable will increase both cash and accounts receivable. True or False Definition False
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Term A business organized as a separate legal entity owned by stockholders is a partnership. True or False Definition False Term The payment of a liability decreases both cash and accounts payable. True or False Definition True Term A debit to an account always indicates an increase in that account. True or False Definition False Term If a revenue account is credited, the revenue account is increased. True or False Definition True Term Debit and credit can be interpreted to mean "bad" and "good", respectively. True or False Definition False Term A decrease in a liability account is recorded by a debit. True or False Definition True Term Prepaid expenses are assets. True or False Definition True Term Wages payable is a type of expense. True or False Definition False Term The time period assumption states that the economic life of a business entity can be divided into artificial time periods. True or False Definition True Term Definition
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Term A business organized as a separate legal entity
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This note was uploaded on 02/14/2011 for the course ACC 101 taught by Professor Danielschwartz during the Spring '11 term at Pima CC.

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Chapter 6 - Term Definition A business organized as a...

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