Indicate whether the sentence or statement is true or false.

1. The business form which is equivalent to the personal cash flow statement is the income statement.

2. The business form which is equivalent to the personal statement of financial position is the balance sheet.

3. Joan has a $100,000 mortgage on her commercial building. This would be carried on her balance sheet as a current liability.

4. The income statement shows the cash flows of a business during the accounting period. 5. Vertical analysis of a balance sheet is obtained by using Total Liabilities as a constant and dividing every figure on the balance sheet by Total Liabilities.

6. A single ratio ALWAYS provides us with meaningful information.

7. Liquidity ratios measure the ability of a firm to meet its long-term obligations. 8. Profitability ratios determine how well a firm is using its assets and sales revenue to generate a positive return for its owners. 9. Your company is efficient if you set a specific goal and accomplish that goal with the use of maximum resources. 10. When you go into business (other things constant), your goal should be to earn both an accounting and an entrepreneurial profit. 11. Chapter 11 bankruptcy occurs when a business has to liquidate all of its assets in order to pay off its creditors. 12. Once a company sells more units of a product than are required to break even, the company will make a profit.