Self-Test Questions Answers are on page 42 (501) 1. Which is not one of the three forms of business organization? (a) Sole proprietorship. (e) Partnership (b) Creditorship (d) Corporation (801) 2. Which is an advantage of corporations relative to partnerships and sole proprietorships? (a) Lower taxes, (b) Harder to transfer ownership (e) Reduced legal liability for investors. (d) Most common form of organization. (502) 3. Which statement about users of accounting infor mation is incorrect? (a) Management is considered an internal user. (b) Taxing authorities are considered external users. (c) Present creditors are considered external users. (d) Regulatory authorities are considered internal users (802 4. Which of the following did not result from the Sarbanes-Oxley Act? (a) Top management must now certify the accuracy of financial information. (b) Penalties for fraudulent activity increased. (c) Independence of auditors increased (d) Tax rates on corporations increased. 5. Which is not one of the three primary business (503) activities? (a) Financing (e) Advertising. (b) Operating (d) Investing 6. Which of the following is an example of a financing (593) activity? (a) Issuing shares of common stock. (b) Selling goods on account (c) Buying delivery equipment. (d) Buying inventory 7. Net income will result during a time period when: (804) (a) assets exceed liabilities. (b) assets exceed revenues. (c) expenses exceed revenues. (d) revenues exceed expenses