Quizes Accounting CH PDF

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CHAPTER 1 INTRODUCTION Retained earnings represent the sum of all prior earnings of the firm in excess of dividends. although true for most of the times, there are several exceptions detailed in Canadian GAAP

this is always a true statement this is always a false statement Cannot say if it is true or false given the limited information provided although false for most of the times, there are several exceptions detailed in Canadian GAAP

Financial reporting should provide useful information for making rational investment and credit decisions. Cannot say if it is true or false given the limited information provided although false for most of the times, there are several exceptions detailed in Canadian GAAP although true for most of the times, there are several exceptions detailed in Canadian GAAP

this is always a true statement this is always a false statement The three major financial statements are the: Balance sheet, statement of cash flow, and the statement of earnings per

Balance sheet, income statement, and the statement of cash flow. Balance sheet, income statement and the statement of earnings per share Other statements not named here Balance sheet, production statement, and the statement of cash flow If, during the audit of a firm, the auditor discovers something of a material nature that indicates the client's financial statements are erroneous or misleading external readers should be warned of this in the auditors' report. although true for most of the times, there are several exceptions detailed in Canadian GAAP this is always a false statement

this is always a true statement Cannot say if it is true or false given the limited information provided although false for most of the times, there are several exceptions detailed in Canadian GAAP Accounting is: None of the above

An activity which facilitates commerce A blend of art and science An art A science The two sources of any firm's assets are the firm's creditors and owners. although false for most of the times, there are several exceptions detailed in Canadian GAAP

this is always a true statement this is always a false statement although true for most of the times, there are several exceptions detailed in Canadian GAAP Cannot say if it is true or false given the limited information provided The Annual Report for a corporation:

must contain comparative financial statements for five years

must contain an MD&A section (management discussion and analysis) where the management of the company attempts to explain the significance of the numbers in the financial statements is no longer prepared in Canada since financial statements are generated at least monthly None of the above is just another way of saying the Annual Financial Statements for the Company Identify the generally accepted accounting concept principle, assumption, or constraint violated in the following situation: A business that prepares financial statements monthly, recorded revenue on July 10th when a customer paid for the goods sold to them on account on June 15th. Matching Going Concern Separate Entity None of the others alternatives are correct

Revenue recognition What account would not be found on the balance sheet of a corporation? Contributed Surplus None of the others alternatives are correct Investment n Smith Ltd. Shares

Keith, Capital Retained Earnings

Chapter 2: The Balance Sheet Equation Under the Cash Paradigm revenue is recognized when: The sale is invoiced A posting entry to the ledger is made It is earned

Cash is received None of the above On September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks. The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation: September Description 30 Richard promised to pay on October 6th to his parents the extra charge that comes in the insurance premium of their cars for having him as an additional driver (male under 25).

None of the others alternatives are correct Decrease assets and decrease liabilities Increase assets and increase liabilities Increase assets and increase Owner's equity Increase and decrease assets The concept of present value

Amount $800

determines the minimum amount that a buyer would be willing to pay for an asset implies that the value of receiving cash today will be less than the value of receiving it in the future None of the others alternatives are correct is employed extensively in the valuation of assets under current generally accepted accounting principles

can be simply defined as value today of a stream of future cash flows On September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks. The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation: September Description 26 One of the parents at the birthday party for a 4 years old boy hires him for his son's birthday party on October 10th. Received payment in cash. NO Increase assets and increase Owner's equity NO Increase and decrease assets None of the others alternatives are correct Decrease assets and decrease liabilities Increase assets and increase liabilities

Amount $1,000

The balance sheet reflects the application of various valuation methods. Which of the methods listed may be used on a balance sheet that follows generally accepted accounting principles? None of the others alternatives are correct NO Acquisition cost NO Current cash equivalent value NO Present value of future cash flows ?All of the three specific alternatives are correct Which of the following would not appear on a balance sheet? Accounts receivable None of the others alternatives are correct Retained earnings

Cost of goods sold Bonds payable

On September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks. The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation: September Description 24 Telephone bill for $150 was received for the month of September - payment due October 5th

Amount $150

Increase and decrease assets Increase assets and increase liabilities

None of the others alternatives are correct Decrease assets and decrease liabilities Increase assets and increase Owner's equity Redondo Corp. has assets and liabilities of $30,000 and $24,000, respectively. If Redondo issues an additional $3,000 worth of shares for cash, what will be the balance in shareholders' equity following this transaction? None of the others alternatives are correct NO $27,000 $9,000 NO $33,000 $30,000 Liabilities increase by $1 during the period and Assets decrease by $1 during the same period. This implies that: The impact on Equity cannot be predicted from the limited information provided Equity remains unchanged during this period Equity increases by $1 during this period

Equity decreases by $2 during this period Equity decreases by $1 during this period If a company capitalizes costs that should be expensed, how is its income statement for current period impacted? None of the above Assets will be lower than they should be.

Expenses will be lower than they should be Net income will be lower than it should be Revenues will be lower than they should be Evans Corporation's retained earnings increased by $300,000 during the year Also during the year, dividends totaling $75,000 were declared and paid to shareholders. Evans Corporation's net income for the year was. $300,000 $75,000

$375,000 $225,000 None of the others alternatives are correct On September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks. The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation: September Description 3 Paid in cash the set up of the web site. It expects to last the whole life of this

Amount $2,000

business. Increase assets and increase Owner's equity

Increase and decrease assets Increase assets and increase liabilities None of the others alternatives are correct Decrease assets and decrease liabilities On September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks.

The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation: September Description 4 Collected the brochures and presentation cards to be used in promoting the business. The invoice will be paid on October 5th. Increase and decrease assets Increase assets and increase Owner's equity None of the others alternatives are correct Decrease assets and decrease liabilities

Amount $300

Increase assets and increase liabilities Which of these liabilities would be accounted for at the present value of future cash payments?

Bonds payable Accounts payable Withholding taxes payable None of the others alternatives are correct Income taxes payable On September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks. The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation: September Description Amount 1 Opened a business bank account with $50,000 of his own personal savings $50,000 ?Increase assets and increase Owner's equity Increase and decrease assets Decrease assets and decrease liabilities NO None of the others alternatives are correct Increase assets and increase liabilities

Which of the following transactions will cause both the left and right side of the balance sheet equation to increase? We collect cash from a customer who owed us money. We pay a supplier for inventory we previously bought on account.

We borrow money from the bank.

None of the above We purchase equipment for cash. Better Company has the following information in its records:

Cost of Goods Sold = $255,000 Operating Expenses = $144,500 Net Income = $25,500 Sales for the period must have been: $400,000

$425,000 $399,500 Some other amount $280,500 Owner's withdrawals Are not allowed

Are a return of invested capital to the owner None of the others alternatives are correct Are an expense of doing business Happens when an owner withdraws the right of other companies to do business with the firm

Which of these journal entries is incorrectly recorded? Jan. 2. Dr. Prepaid Insurance 750 Cr. Cash 750 (Paid in advance for a one-year insurance policy) NONone of the others alternatives are correct Jan 4: Dr. Machinery 30,500 Cr. Notes Payable 30,500 (Gave a one-year note to acquire machinery.) Jan 3 Dr. Accounts Receivable 1,200 Cr. Merchandise Inventory 1,200 (Returned defective merchandise for credit. The merchandise has not yet been paid for) Jan. 1 Dr. Cash 33,000 Cr. Investment in X Co Ltd Shares 33,000 ???(Sale of an investment for cash)

Which of the following is not a current asset? Inventory

Patent None of the others alternatives are correct Accounts receivable

Cash Coleman Inc. reports total assets and total liabilities of $225,000 and $100/000, respectively, at the conclusion of its first year of business. The company earned $75,000 during the first year and distributed $30,000 in dividends. What was the firm's contributed capital? $95,000 $125,000 None of the others alternatives are correct

$80,000 $50,000 On September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks. The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation: September Description 29 Received the payment for the birthday party for the 7 years old boy of September 12th

Amount $1000

Increase assets and increase Owner's equity Decrease assets and decrease liabilities None of the others alternatives are correct Increase assets and increase liabilities Increase and decrease assets In what order are liabilities listed on a balance sheet?

Due date (earliest first) Importance to the operation of the business None of the others alternatives are correct Ease of conversion to cash Dollar amount (largest first)

The balance in all assets accounts combined is $100,000 on December 1 During December, the following transactions took place:

Purchase of $10,000 of inventory for cash. Purchase of $15,000 of machinery on account. Retirement of $20,000 in bonds with cash. What is the combined December 31 balance in the asset accounts? None of the others alternatives are correct $115,000

$95,000 $80,000 $105,000

In the context of financial accounting, articulation refers to: how well written (how articulate) the financial statements are the fact that the financial statements relate to a specific time frame

that the financial statements are interconnected (numbers from one are necessary to complete another) None of the above the need for footnotes to make the financial statements complete and meaningful On September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks. The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation: September Description 8 Labour day, no events, no work so Richard goes to the gym and does a double routine (the rest of the days he just does a simple routine of 2.5 hours). Decrease assets and decrease liabilities Increase and decrease assets Increase assets and increase liabilities

Amount

None of the others alternatives are correct Increase assets and increase Owner's equity

The matching principle indicates none of the above ?how expenses should be split between Cost of Goods Sold (sometimes called Cost of Sales) and Selling Expenses. when costs are recognized as expenses on the income statement the ordering of current assets and current liabilities on the balance sheet NOwhere expenses should be presented on the income statement Which of the following economic events would be captured by an accrual accounting system, but not by a cash accounting system? None of the others alternatives are correct Use of a previously purchased motor vehicle for company business. ?Receipt of payment for a previous sale made on credit. NOPayment of an amount owing on a previous purchase. Payment of dividends to shareholders. Revenues are a measure of the inflows of assets (or reductions in liabilities) from selling goods and providing services to customers. Which of the following is not a revenue transaction? Delivered weekly magazines to a subscriber, who had paid previously for a one year's subscription Sold merchandise on account to a customer None of the others alternatives are correct

Went to the local bank and borrowed money to be used in the business Sold merchandise for cash to a customer

Which of the following does not describe an expense? Salaries earned by employees but not yet paid Depreciation for the period on the firm's building None of the others alternatives are correct Cost of merchandise sold

Payment of dividends to shareholders Which of the following defines liabilities? Probable debts or obligations of an entity as a result of future transactions which will be paid with assets or services. Possible debts or obligations of an entity as a result of past transactions which will be paid with assets or services. None of the others alternatives are correct

Probable debts or obligations of an entity as a result of past transactions which will be paid with assets or services. Possible debts or obligations of an entity as a result of future transactions which will be paid with assets or services.

The Bonanza Co. Ltd. is interested in disposing of one of its subsidiaries and needs to decide on the minimum price it might be able to charge. Which valuation method would likely be used? None of the others alternatives are correct Net realizable value Replacement cost ?Present value NOAcquisition cost Payment of a liability would do which of the following?

Decrease Assets Decrease Shareholders Equity None of the above Not affect Assets Increase Assets The Pay Pac Corporation failed to record the purchase of inventory on account at the end of 20X1. In which of the following ways is the balance sheet misstated?

NONone of the others alternatives are correct ?Assets and shareholders' equity are both understated Assets and liabilities are both understated Assets, liabilities, and shareholders' equity are all correctly stated Assets are understated and liabilities are overstated

On September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks.

The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation: September Description Amount 19 & 20 Fourth event organized and delivered. Provided one of the activities of a corporate $2,000 team building extravaganza weekend. The contract signed says the payment will be effective in 30 days with a cheque. Increase assets and increase Owner's equity NO Increase assets and increase liabilities ?Increase and decrease assets Decrease assets and decrease liabilities None of the others alternatives are correct

On September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks. The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation: September Description Amount 15 Pays first 2 months of insurance $1,200

Increase and decrease assets None of the others alternatives are correct ...