1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
69) Retained earnings represent cash that is available to a company for future operations and expansion.
Answer: FALSE
Diff: 3 Type: TF
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
70) Liabilities are often referred to as "outsider claims" and owners' equity as "insider claims" to assets.
Answer: TRUE
Diff: 2 Type: TF
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
71) It would be unusual for the balance sheet of a proprietorship to include the term "retained earnings."
Answer: TRUE
Diff: 3 Type: TF
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
72) A form of the accounting equation can be stated as Assets - Liabilities = Share capital + Retained earnings.
Answer: TRUE
Diff: 2 Type: TF
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
73) The income statement measures the company's financial position at the end of the year.
Answer: FALSE
Explanation: The balance sheet measures the company's financial position at the end of the year.
Diff: 1 Type: TF
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
74) The balance sheet measures how well the company performed during the year.
Answer: FALSE
Explanation: The income statement measures how well the company performed during the year.
Diff: 2 Type: TF
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
75) The basic component of share capital is retained earnings.
Answer: FALSE
Diff: 1 Type: TF
L.O.: 1-2
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
76) Shareholders' equity is often referred to as "net assets" and represents the residual amount of business assets that can be claimed by the owners.