41.A statement of owner's equity reports the changes in the owner's equity for a period of time.

ANS: T PTS: 1 DIF: Easy OBJ: 01-05

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-09-Financial Statements

42. The statement of cash flows consists of three sections: cash flows from operating activities, cash flows
from income activities, and cash flows from equity activities.

ANS: F PTS: 1 DIF: Easy OBJ: 01-05

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-09-Financial Statements

43. The financial statements of a proprietorship should include the owner's personal assets and liabilities.

ANS: F PTS: 1 DIF: Moderate OBJ: 01-05

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-09-Financial Statements

44. The balance sheet represents the accounting equation.

ANS: T PTS: 1 DIF: Easy OBJ: 01-05

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-09-Financial Statements

45. An example of a general-purpose financial statement would be a report about projected price increases
related to transportation costs.

ANS: F PTS: 1 DIF: Easy OBJ: 01-01

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-09-Financial Statements

46. No significant differences exist between the accounting standards issued by the FASB and the IASB.

ANS: F PTS: 1 DIF: Easy OBJ: 01-02

NAT: AACSB Analytic | AICPA FN-Measurement |ACBSP-APC-02-GAAP

47. The Sarbanes-Oxley Act prohibits CPAs from providing nonaudit investment banking services.

ANS: T PTS: 1 DIF: Easy OBJ: 01-01

NAT: AACSB Analytic | AICPA BB-Industry

48. The main objective for all business is to maximize unrealized profits.

ANS: F PTS: 1 DIF: Easy OBJ: 01-01

NAT: AACSB Analytic| AICPA BB-Industry

49. The basic difference between manufacturing and merchandising companies is the completion level of the
products they purchase for resale to customers.

ANS: T PTS: 1 DIF: Easy OBJ: 01-01

NAT: AACSB Analytic| AICPA BB-Industry

50. Net income and net profit do not mean the same thing.

ANS: F PTS: 1 DIF: Easy OBJ: 01-05

NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-09-Financial Statements