True or False ?

1) In a general partnership, each partner is individually liable to creditors for debts

incurred by the partnership, to the extent of the partner’s capital balance.

2)A stock split results in a transfer at market value from retained earnings to paid-in


3)The actual benefits paid to terminated employees should be debited to the liability

as the employees leave the firm.

4)A bond is simply a form of an interest bearing note.

5) To determine cash payments for operating expenses for the cash flow statement

using the direct method, a decrease in accrued expenses is added to operating

expenses other than depreciation


When bonds held as long-term investments are purchased at a price other than the

face value, the premium or discount should be amortized over the remaining life of

the bonds.


A devotes full time and B devotes one-half time to their partnership. If the

partnership agreement is silent concerning the division of net income, A will

receive a $20,000 share of a net income of $30,000.

8) Income tax expense reported on the income statement is the total taxes to be paid.

9)The statement of cash flows is not one of the basic financial statements.


The financial loss that each stockholder in a corporation can incur is usually

limited to the amount invested by the stockholder.