Test-Bank-Fundamentals-Of-Financial-Accounting-5th-Edition-by-Fred-Phillips-Robert-Libby-Patricia-Li

You paid $10,000 to buy 1% of the stock in a corporation that is now bankrupt. The company owes $10 million dollars to its creditors. As a result of the bankruptcy, you are responsible for paying $100,000 (or $10 million × 1%) of the amount owed to the creditors. Answer: False Difficulty: 2 Medium LO: 01-01 Topic: Organizational Forms Blooms: Apply AACSB: Analytic AICPA BB: Legal AICPA FN: Measurement Feedback: Unlike sole proprietorships and partnerships, a corporation is a separate entity from both legal and accounting perspectives. This means that a corporation, not its owners, is legally responsible for its own taxes and debts. [QUESTION] 4. Building a new warehouse is an operating activity on the statement of cash flows. Answer: False Difficulty: 1 Easy LO: 01-02 Topic: Financial Statements Blooms: Understand AACSB: Analytic