Proprietorship is an entity owned by a single owner. This type of entity is the smallest and simplest one among the different types of entities.

The statement of cash flows reports: • Where cash came from (receipts) and how cash was spent (payments) • Why cash increased or decreased during period • Covers a span of time and is dated the same as the income statement. The correct answer is C.

Investing activities are the activities that increase or decrease long term assets such as property, plant, equipment, notes receivable and investments. This section of statement of cash flows shows cash inflows from selling long term assets and collecting of long term notes receivable and cash outflows for the purchase of long term assets and loaning long term notes receivable.

Bonds issued at face value (at par value) means stated interest rate is equal to market interest rate and no premium and discount exists. The correct answer is A.

Cash Flows from Investing Activities (CFI) contains:

• Cash inflows
  • From the sale of property, plant, equipment, and investments
  • From the collection of long term notes receivable
• Cash outflows
  • To purchase property, plant, equipment, and investments
  • For loans made to borrowers

Another distinguishing difference of a corporation is about taxation. Corporations are taxable entities. All of the corporations have to pay tax. Besides, when corporations make cash payments to the shareholders, double taxation may occur. The imposed taxation is paid by the corporation and the cash received by the shareholders is reported on the income tax return of the shareholder. The correct answer is C.

The cash outflows from financing activities are for payment of dividends and buying treasury share  and for repayments of loans. The correct answer is D.

If a corporation wants to pay cash dividends, three conditions required are as follows: 1. Sufficient retained earnings 2. Adequate cash 3. Declared dividends by the board of directors. The correct answer is C. 

Depletion - Depreciation - Amortization should be brought to the places left blank in the question.

Amortization rate = 1/Patent's useful life = 1/5 =% 20

Adjustment process to the cost as bond interest expense over the life of bonds called amortization. The method used for amortization of a discount or premium is called effective interest method. The correct answer is E.

= 2.500.000 /10= 250.000

Face value is the amount written on a debt security to be paid by issuer upon delivery at maturity date. The correct answer is D.

A corporation is a legal entity which is organized under state law and owned by shareholders. Thus, the owners in a corporation are called shareholders.

Partnership is an entity owned by two or more owners.

The cancellation of the corporation does not depend on the death of any shareholder or their choices to cancel it. In other words, the corporation is a permanent organization. The transfer of the shares, anyone’s death or withdrawal do not put an end to the corporation. The correct answer is D.

Present Value of the Principal
150,000 TL x 0.56743 (Appendix A, Table 1, n: 5, i: 12%) 85,114 TL
Present Value of the Interest Payments
18,000 TL x 3.60478 (Appendix A, Table 2, n: 5, i: 12% ) 64,886 TL
Present value (selling price) of the bonds 150,000 TL

The correct answer is D.

Companies normally use the straight-line method for amortizing intangible assets.

Shareholders’ Equity in Corporations

Long term liabilities consist of an expected outflow of resources arising from present obligations that are not payable within a year or the operating cycle of
the company whichever is longer.