1. Which of the statements below is TRUE?

A) Accounting Identity is: Assets Liabilities - Owners' Equity.

B) Accounting Identity is: Assets Liabilities + Owners' Equity.

C) Accounting Identity is: Assets Owners' Equity - Liabilities.

D) Accounting Identity is: Liabilities Assets + Owners' Equity.

Answer:

2. Which of the statements below is FALSE?

A) The income statement summaries and categorizes a company's revenues and expenses for that period.

B) Typically, income statements are prepared quarterly and annually for distribution outside the company, but usually monthly for internal managers.

C) The income statement begins with revenue and subtracts various operating expenses until arriving at Earnings Before Interest and Taxes (EBIT).

D) The balance sheet reports the performance of the firm over the past period. It summarizes and categorizes a company's revenues and expenses for that period.

Answer: