Accounts Chapter - 1 MCQ - Multiple Choice Questions PDF

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Accounts Chapter - 1 MCQ - Multiple Choice Questions...

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Accounting Chapter - 1 1) The reasons for a decrease in cash can be determined by examining the statement of earnings. Select one: True False ---> Correct Answer

2) Why is the operating activities section often believed to be the most important part of a statement of cash flows? Select one: a. It shows the net increase or decrease in cash during the period. b. It shows the dividends that have been paid to shareholders. c. It gives the most information about how operations have been financed. d. It indicates a company's ability to generate cash from sales to meet current cash needs. ---> Correct Answer

3) For what reason might a group of people establishing a business prefer to set it up as a corporation rather than a partnership? Select one: a. To avoid double taxation. b. Because of ease of formation. c. To have limited liability. ---> Correct Answer d. To avoid complex reporting procedure for government agencies.

4) If total liabilities increased by $25,000 and shareholders' equity increased by $5,000 during a period, then total assets must change by what amount and direction during that same period? Select one: a. $20,000 increase. b. $30,000 increase. ---> Correct Answer c. $20,000 decrease. d. $25,000 increase.

5) Primary responsibility for the information in the financial statements lies with management. Select one: True ---> Correct Answer False

6) The primary purpose of the statement of cash flows is to report Select one: a. a company's financing transactions. b. information about cash receipts and cash payments of a company. ---> Correct Answer c. the net increase or decrease in cash. d. a company's investing transactions.

7) Which government regulatory agency has the legal authority to prescribe financial reporting requirements for corporations that sell their securities in Canadian stock exchanges in the province of Ontario? Select one: a. CICA. b. AcSB. c. OSC. ---> Correct Answer d. CRA.

8) Shareholders' equity can be described as claims of Select one: a. customers on total assets. b. owners on total assets. ---> Correct Answer c. debtors on total assets. d. creditors on total assets.

9) The financial statement that shows an entity's economic resources and its liabilities is the statement of retained earnings. Select one: True

False ---> Correct Answer

10 ) What is one of the disadvantages of a corporation, when compared to a partnership? Select one: a. The corporation and its shareholders are potentially subject to double taxation. ---> Correct Answer b. The shareholders are treated as a separate legal entity from the corporation. c. The shareholders have limited liability. d. The corporation provides continuity of life....