true or false 1. A business organized as a separate legal entity owned by stockholders is...

true or false

1. A business organized as a separate legal entity owned by stockholders is a sole proprietorship.

2. Management of a business enterprise is the major internal user of information.

3. Owner's rights to assets supersede creditors in a liquidation event.

4. One way of stating the accounting equation is: Assets - Stockholders’ Equity = Liabilities

5. The normal balance of an asset is a credit.

Solutions

Expert Solution

Solution. 1. The given statement is False.

Explanation: The given statement is false as a business organized as a separate legal entity owned by stockholders is known as a Corporation and not a sole proprietorship as a sole proprietorship is owned by an individual with no legal distinction between the entity and the owner.

2. The given statement is True.

Explanation: An organization's management forms the major internal user of information along with employees to facilitate decision making purposes in order to meet objectives effectively and efficiently to sustain, the given statement holds true.

3. The given statement is False.

Explanation: The given statement is false as the correct answer would be creditors rights to assets supersede owner's in a liquidation event under established rules and regulations.

4. The given statement is True.

Explanation: The given statement holds true as the accounting equation for a corporation states: Assets - Stockholder's Equity = Liabilities during an accounting period.

5. The given statement is False.

Explanation: The given statement holds false as the normal balance of an assets is a debit and that of liabilities and capital account is a credit, which are represented in organization's balance sheet at the end of an accounting period to facilitate decision making purposes for both internal and external users.

ekkarill92 answered 10 months ago

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