MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following is not a principal type of business activity? 1) A) Financing B) Delivering C) Investing D) Operating 2) Which of the following statements is true about a sole proprietorship? 2) A) The owner and the business are separate accounting entities but not separate legal entities. B) The owner and the business are separate legal entities and separate accounting entities. C) Most large businesses in this country are organized as sole proprietorships. D) The owner and the business are separate legal entities but not separate accounting entities. 3) What is the amount of revenue recognized in the statement of earnings by a company that sells goods to customers? 3) A) The amount of cash collected plus the beginning amount of trade receivables. B) The cash collected from customers during the current period. C) Total sales minus beginning amount of trade receivables. D) Total sales, both cash and credit sales, for the period. 4) Which of the following statements is true about the price earnings (P/E) ratio? 4) A) It is a ratio of importance to creditors. B) The P/E ratio increases as profit increases. C) A high P/E ratio indicates investors have little confidence in the future profit potential of the company. D) The P/E ratio could be used to approximate the value investors would be willing to pay for the company's acquisition from existing owners. 5) The statement of financial position 5) A) reports the assets, liabilities, and shareholders' equity at a specific date.