Question

II. True/False Questions (2 points each, 20points) 1. Accounting is a system that collects and processes financial information about an organization and reports that information to decision makers. 2. In accounting and reporting for a business entity, the accounting and reporting for the business must be kept separate from other economic affairs of its owners. 3. The accounting period in which service revenue is recognized (i.e., revenue for services rendered) is generally the period in which the cash is collected. 4. The payment of a cash dividend to stockholders increases stockholders' equity. 5. The financial statement that shows an entity's economic resources and its liabilities is the statement of cash flows. 6. Companies prepare financial statements at the end of each year and more often as needed. 7. One of the advantages of a corporation when compared to a partnership is the limited liability of the owners

Answer 1

QuestionAnswer Explanation Accounting is the system of providing the reports of the financial statement from the financial information of the firnm TRUE 2 TRUE According to the separate entity concept owner is separate from organization in preparation of Financial accounts and Statement FALSE Revenue is recognised when the serve is rendered, service FALSEPayment of Cash dividend not increases the share holders FALSE Balance sheet is the statement to shows the economic resources 3 revenue may be received in the nextyear 4 Equity and liabilities of a firm. TRUE Firm normally prepare the financial statement at the end of the TRUE Corporate has the underlying feature of Limited liability to the TRUE Current Liability is a short-run obligation to pay with in the FALSE Deferred revenue will appear in the liabilities side of the TRUE Repayment of bank loan will reduce the cash, this will effect he 6 financial period or when ever is required. 7 share holders. 8 financial year balance sheet. credit entry of the cash account 9 10