Question

         1. a) T or F: A business operation that is 1) organized according to state or federal statutes as a separate legal entity, and 2) ownership is

divided into shares of stock is a sole proprietorship.   (If false, identify and correct the errors.)

b) T or F: A publicly-held company would prefer its external auditor issue an unqualified opinion upon examination of its financial data

that is reported in the Form 10-K filed with the SEC. (If false, identify and correct the errors.)

         2. a) A financial statement that summarizes: 1) assets; 2) liabilities and 3) stockholders’ equity as of a specific date is a(n):

______________________________

b) T or F: Revenues – Expenses = Net Income. Net Income increases retained earnings. And the payment of dividends is an expense that

reduces net income. (If false, identify and correct the error.)  

Answer 1

Ans-1-a)- False

Explanation:- A Company is a seperate legal entity and it is distinct from its members.Therefore it is seperate at law from its shareholders,directors, promoters and investors etc. Ownership is divided into shares of stock is a company not sole proprietorship because in sole proprietorship one is owner of the complete business.

1-b)-True

2-a)- A financial statement that summarizes: 1)assets; 2) liabilities and 3) stockholders' equity as of a specific date is an Balance Sheet.

2-b)-True.