Cornerstones of Financial Accounting 1st Canadian Edition By Jay Rich et.al – Test Bank

Chapter 1–Accounting and the Financial Statements 4 copy
1. There are more corporations than sole proprietorships and partnerships in the United States.
True False
2. The three main business activities are financing, operating, and investing.
True False
3. Internal users of accounting information include present creditors and management.
True False
4. The income statement summarizes the assets, liabilities and stockholders’ equity for a period of time.
True False
5. The four basic financial statements are the Income Statement, Statement of Retained Earnings, Balance
Sheet, and Statement of Cash Flows.
True False
6. The amount of earnings distributed to stockholders can be found in the income statement as an
expense.
True False
7. Stockholders’ equity is composed of two main sources: liabilities and contributed capital.
True False
8. The first step in preparing the classified balance sheet is to list the assets in order of liquidity.
True False
9. The only financial statement that reports the retained earnings balance at the end of the period is the
Statement of Retained Earnings.
True False
10. An income statement provides information at one specific point in time, while the other basic financial
statements provide information on activities that occur over a period of time.
True False