Question

Indicate whether each of the following statements is true (T) or false (F).

e. An advantage of the corporate form of business is double taxation on the corporation’s earnings.

i. In accounting, the word “net” is often used when describing the difference between two different amounts.

j. Dividends are considered to be an expense of doing business.

k. Corporations engage in three primary types of business activities – financing, investing, and operating.

p. GAAP is primarily established by the Internal Revenue Service

q. Outside auditors are often hired by a corporation to give specific investing or lending advice to decision-makers.

Answer 1

(e) FALSE

Double taxation is not an advantage rather it is disadvantage of corporate form of business.

(i) TRUE

In accounting, "net" word is used to describe the difference between two different amounts.

(j) FALSE

Dividend is not an expense rather it is the income that is distributed to shareholders or owners.

(k) TRUE

Three primary business activities are financing, investing and operating.

(p) FALSE

GAAP stands for generally accepted accounting principles and it is established by Financial accounting standards board (FASB) and not by IRS.

(q) FALSE

Outside auditors are hired by a corporation generally to audit and provide opinion on financial statements.