The income of a regular corporation is subject to double taxation, first as corporate income tax and then as personal income tax to stockholders who receive any cash dividends.
True
False
The more inventory a company has on hand, the greater the company's profit.
False
True
Receivables can be used to obtain cash by either selling them or using them as security for a loan.
True
False
A sole proprietorship is an economic entity which is not a separate legal entity.
False
True
Transactions that affect inventories effect both the balance sheet and the income statement.
False
True
The cash basis of accounting does not conform with generally accepted accounting principles.
False
True
The aging of accounts receivable involves examining each account receivable and grouping by days past due.
True
False
Using a perpetual inventory system, the detailed records of the cost of each purchase and sale are continuously updated.
True
False
Current liabilities are cash, accounts receivable, inventories and other resources that are expected to be sold, collected or used within the longer of one year or the company's operating cycle.
False
True
The dividends account is closed to the Income Summary account in order to properly determine net income (or loss) for the period.
False
True
The current portion of notes receivable is classified as a current liability.
True
False
The standards and rules that are recognized as a general guide for financial reporting are called generally accepted accounting principles (GAAP).
False
True
Accounts Receivable are supported with an accounts receivable subsidiary ledger.
False
True
Debit and credit can be interpreted to mean increase and decrease, respectively.
False
True
Adjusting entries are used primarily to correct accounting and bookkeeping errors.
True
False
Revenue and expense accounts are permanent accounts and should not be closed at the end of the accounting period.
True
False
Investors(Owners) and creditors of businesses are two groups who need accounting information.
False
True
Accounting provides financial information about a business to both internal and external users.
True
False
A contingent liability is an obligation to make a future payment if an uncertain future event occurs.
True
False
The recording process becomes less efficient if accounting software is used.
False
True
The maturity date of a note refers to the date the note is signed.
False
True
Posting is the process of adding a column of figures.
False
True
The Income Summary account is a permanent(real) account.
False
True
Credit sales are recorded by crediting accounts receivable.
False
True
The time period assumption is often referred to as the matching principle.