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The response to each question or statement is either True or False.
1. A business organized as a separate legal entity owned by stockholders is a partnership.
2. External users of accounting information are managers who plan, organize, and run a business.
3. Two primary external users of accounting information are investors and creditors.
4. Financing activities for corporations include borrowing money and selling shares of their own stock.
5. Income will always be greater under the cash basis of accounting than under the accrual basis of accounting.
6. The difference between unearned revenue and accrued revenue is that accrued revenue has been recorded and needs adjusting and unearned revenue has never been recorded.
7. Cash is a temporary account.
8. Bonding means insuring a company against theft by employees.
9. The treasurer should prepare and sign a check only after authorization to issue a check has been provided.
10. Using borrowed money to increase the rate of return on common stockholders ' equity is called "trading on the equity."The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.
11. A good system of internal control will safeguard its assets and enhance the accuracy and reliability of its accounting records.
12. All reconciling items in determining the adjusted cash balance per books require the depositor to make adjusting journal entries to the Cash account.
13. Cash equivalents include money market accounts, commercial paper, and U.S. treasury bills held for ninety days or less.
14. A basic principle of cash management is to increase the speed of paying liabilities.
15. A cash budget contributes to more effective cash management.
16. A change in accounting principle occurs when the principle used in the current year is different from the one