Unit 2 Exam

Inventory is an example of a current asset.

• True

• False

A sole proprietorship tends to be both larger and more profitable than a partnership.

• True

• False

The owner of a sole proprietorship must share any after-tax profits with the company's shareholders.

• True

• False

In the context of the U.S. economy, small firms tend to be effective innovators because of the presence of revolutionary new ideas.

• True

• False

Intangible assets are assets that have no physical existence—you can't see or touch them—but they still have value.

• True

• False

Balance sheets usually classify assets into at least two major categories: current assets and property, plant, and equipment assets.

• True

• False

The deduction of a firm's expenses from its revenue is shown in the income statement of the firm.

• True

• False

For research purposes, the U.S. Small Business Administration (SBA) defines small business as companies with up to 1000 employees.

• True

• False

Expenses such as insurance and advertising that have been cleared before they are due are known as prepaid expenses.

• True

• False

Corporations are by far the most common type of business organization in the United States.

• True

• False