(Test Bank) Introduction to Financial Accounting in the 21st Century

Gaber,Porporato, 5

Business

Test Bank

5th Edition

• $15.00 $50.00

---

Description

Test Bank for Introduction to Financial Accounting in the 21st Century, The downloadable file consists of 574 pages, and the total size of the file is 3.53 MB. Purchase now only for highly discounted price.

Author(s): Gaber, Porporato

---

---

Study Note Preview

Version 1 1 Chapter 1 Student name:__________ MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 1) Which of these transactions of Corley Limited is not a use of cash? A) Purchased a tract of land B) Paid dividends to shareholders C) Reacquired some of the company's common shares D) Long - term debt was issued E) None of the other alternatives are correct 2) Which of these financial statements provides information about sources and uses of cash? A) Income statement B) Balance sheet C) Cash flow statement D) Income Statement and Balance Sheet E) None of the other alternatives are correct 3) Which of these equations is incorrect? A) Shareholders' Equity = Contributed Capital + Retained Earnings B) Revenues − Expenses = Net Income C) Assets = Liabilities + Shareholders ' Equity D) All of the equations included in the other alternatives are correct E) None of the other alternatives are correct 4) Which one of these assets is not a current asset?Version 1 2 A) Cash B) Land C) Merchandise inventory D) Accounts receivable E) None of the other alternatives are correct 5) Which of these transactions of Fort Ltd is not a source of cash? A) Additional common shares were issued B) Additional equipment was acquired C) A long - term note was issued D) A tract of land was sold E) None of the other alternatives are correct 6) Which of these persons would be least likely to receive a firm's managerial accounting reports? A) A creditor of the firm B) One of the firm's production supervisors C) One of the firm's vice - presidents D) One of the firm's salespeople E) None of the other alternatives are correct 7) Which of these financial statements provides information about eco nomic resources and claims on those resources? A) Income statement B) Balance sheet C) Cash flow statement D) Income Statement and Balance Sheet E) None of the other alternatives are correct Version 1 3 8) Which equation does not represent an acceptable presentation of the balance sheet equation? A) Assets + Liabilities = Owners' Equity B) Assets = Liabilities + Capital stock + Contributed Surplus + Retained Earnings C) Assets = Claim on Assets D) All of the equ ations included in the other alternatives are correct E) None of the other alternatives are correct 9) From the following list of accounts, determine the amount that would be properly classified as Capital Assets (property, plant, and equi pment). Land Used in Business $ 100,000 Machinery Leased from Others (no liability has been recorded) 60,000 Accumulated Depreciation (80,000 ) Inventories 124,000 Land Held for Future Plant Site 40,000 Building 200,000 Investment in Shares of Construction Co. Inc. 50,000 A) $320,000 B) $360,000 C) $260,000 D) $280,000 E) None of the other alternatives are correct Version 1 4 10) Which of the following would cause an imbalance in the accounting equation? A) Recording a purchase on account at the wrong amount B) Recording a 20X1 purchase in 20X2 instead C) Posting the credit for a cash purchase at the wrong amount D) All of the statements included in the other altern atives are correct E) None of the other alternatives are correct 11) All of the following assets are nonmonetary, except one. Which one? A) accounts receivable B) land C) inventory D) patent E) None of the other alte rnatives are correct 12) From this list of selected account balances/ determine the total for the Shareholders' Equity section of the balance sheet for Cabbage Company Ltd. Investment in Shares of Rutabaga Limited $ 2,500 Retained Earnings 5,000 Cash (in special bank account for a payment of dividends) 3,000 Note Payable to Suppliers 2,000 Common Stock 10,000 8% Preferred Stock 7,500 Version 1 5 A) $20,500 B) $22,500 C) $24,500 D) $25,500 E) None of the other alternatives are correct 13) What account would not be found on the balance sheet of a corporation? A) Contributed Surplus B) Retained Earnings C) Investment n Smith Ltd. Shares D) Keith, Capital E) None of the other alternatives are correct 14) Identify the generally accepted accounting concept principle, assumption, or constraint violated in the following situation: A business that prepares financial statements monthly, recorded rev enue on July 10th when a customer paid for the goods sold to them on account on June 15th. A) Revenue recognition B) Going Concern C) Separate Entity D) Matching E) None of the other alternatives are correct 15) Identif y the generally accepted accounting concept principle, assumption, or constraint violated in the following situation: A company which expects to discontinue operations next month, records an equipment purchase as an increase in capital assets and plans to amortize the cost over the next ten years.Version 1 6 A) Revenue recognition B) Going Concern C) Separate Entity D) Matching E) None of the other alternatives are correct 16) Identify the generally accepted accounting concept prin ciple, assumption, or constraint violated in the following situation: M.T. Careless, does not keep the books of his business, Careless Creations, separate from his personal records. A) Revenue recognition B) Going Concern C) Separate Entit y D) Matching E) None of the other alternatives are correct 17) Identify the generally accepted accounting concept principle, assumption, or constraint violated in the following situation: Guard It Ltd., provides security services to ot her businesses. Guard It Ltd. charges customers double the hourly rate that it pays its security guards. Guards are paid on the 15th of each month. Guard It records revenue at the time the guarding services are provided, records wage expenses at the time t he guards are paid, and prepares financial statements at the end of each month. A) Revenue recognition B) Going Concern C) Separate Entity D) Matching E) None of the other alternatives are correct Version 1 7 18) On June 30, 2014, the balance sheet of Zorab & Co. showed total assets of $400,000, total liabilities of $300,000, and owner's equity of $100,000. The following transactions occurred in July of 2014: ● The owner invested an additional $70,000 cash in the business. ● The business purchased equipment for $150,000, paying $60,000 cash and issuing a note payable for $90,000. ● The business paid off $40,000 of its accounts payable. As of July 31, 2014 what is the amount reported in Total assets? A) $400,0 00 B) $350,000 C) $170,000 D) $520,000 E) $300,000 19) On June 30, 2014, the balance sheet of Zorab & Co. showed total assets of $400,000, total liabilities of $300,000, and owner's equity of $100,000. The following transactions occurred in July of 2014: ● The owner invested an additional $70,000 cash in the business. ● The business purchased equipment for $150,000, paying $60,000 cash and issuing a note payable for $90,000. ● The business paid off $40,000 of its accoun ts payable. As of July 31, 2014 what is the amount reported in Total liabilities? A) $400,000 B) $350,000 C) $170,000 D) $520,000 E) $300,000 Version 1 8 20) On June 30, 2014, the balance sheet of Zorab & Co. showed total assets of $400,000, total liabilities of $300,000, and owner's equity of $100,000. The following transactions occurred in July of 2014: ● The owner invested an additional $70,000 cash in the business. ● The business purchased equipment for $150,000, paying $60,000 cash and issuing a note payable for $90,000. ● The business paid off $40,000 of its accounts payable. As of July 31, 2014 what is the amount reported in Owner's equity? A) $400,000 B) $350,000 C) $170,000 D) $520 ,000 E) $300,000 21) On June 30, 2014, the balance sheet of Zorab & Co. showed total assets of $400,000, total liabilities of $300,000, and owner's equity of $100,000. The following transactions occurred in July of 2014: ● The owner inv ested an additional $70,000 cash in the business. ● The business purchased equipment for $150,000, paying $60,000 cash and issuing a note payable for $90,000. ● The business paid off $40,000 of its accounts payable. As of July 31, 2014, what bes t represents the accounting equation of this company? A) $520,000 = $350,000 + $170,000 B) $470,000 = $300,000 + $170,000 C) $490,000 = $390,000 + $100,000 D) $430,000 = $260,000 + $170,000 E) None of the other alternatives are corr ect 22) Current liabilities include liabilities that are expected to be paid within one year.Version 1 9 A) this is always a true statement B) this is always a false statement C) although true for most of the times, there are several ex ceptions detailed in Canadian GAAP D) although false for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 23) "Generally accepted accou nting principles" are the accounting methods and procedures used by firms in preparing their financial statements. A) this is always a true statement B) this is always a false statement C) although true for most of the times, there are sev eral exceptions detailed in Canadian GAAP D) although false for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 24) The income stateme nt attempts to present an overall view of a firm's financial position at a given date. A) this is always a true statement B) this is always a false statement C) although true for most of the times, there are several exceptions detailed in Canadian GAAP D) although false for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 25) The terms net income, earnings, and profits ar e synonymous and are defined as the difference between revenues and expenses for a periodVersion 1 10 A) this is always a true statement B) this is always a false statement C) although true for most of the times, there are several exceptions detailed in Canadian GAAP D) although false for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 26) Financial reporting should provide useful i nformation for making rational investment and credit decisions. A) this is always a true statement B) this is always a false statement C) although true for most of the times, there are several exceptions detailed in Canadian GAAP D) alt hough false for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 27) One of the objectives of accounting is to help investors and creditor s assess the amount, timing, and uncertainty of cash flows to them. A) this is always a true statement B) this is always a false statement C) although true for most of the times, there are several exceptions detailed in Canadian GAAP D) although false for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 28) Financial accounting is concerned with the preparation of reports that provide information to users external to the firm.Version 1 11 A) this is always a true statement B) this is always a false statement C) although true for most of the times, there are several exceptions detailed in Canadian GAAP D) although f alse for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 29) 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. A) this is always a true statement B) this is always a false statement C) although true for most of the times, there are several exceptions detailed in Canadian GAAP D) although false for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited informa tion provided 30) The balance sheet presents the results of earnings activity over time. A) this is always a true statement B) this is always a false statement C) although true for most of the times, there are several excepti ons detailed in Canadian GAAP D) although false for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 31) Shareholders' equity is the ow ner's claim on the assets of the firm.Version 1 12 A) this is always a true statement B) this is always a false statement C) although true for most of the times, there are several exceptions detailed in Canadian GAAP D) although false for most of t he times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 32) The two sources of any firm's assets are the firm's creditors and owners. A) this is always a true statement B) this is always a false statement C) although true for most of the times, there are several exceptions detailed in Canadian GAAP D) although false for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 33) The cash flow statement provides information about the principal operating, financing and investing activities of a firm. A) this is always a t rue statement B) this is always a false statement C) although true for most of the times, there are several exceptions detailed in Canadian GAAP D) although false for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 34) Retained earnings represent the sum of all prior earnings of the firm in excess of dividends.Version 1 13 A) this is always a true statement B) this is always a f alse statement C) although true for most of the times, there are several exceptions detailed in Canadian GAAP D) although false for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false give n the limited information provided 35) A multiple - step income statement shows readers more detail than a single step income statement. A) this is always a true statement B) this is always a false statement C) although true fo r most of the times, there are several exceptions detailed in Canadian GAAP D) although false for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 36) Noncurrent assets provide firms with long - term productive capacity. A) this is always a true statement B) this is always a false statement C) although true for most of the times, there are several exceptions detailed in Ca nadian GAAP D) although false for most of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 37) Acquisition of noncurrent assets is an activity that is typically a source of cash for a firm.Version 1 14 A) this is always a true statement B) this is always a false statement C) although true for most of the times, there are several exceptions detailed in Canadian GAAP D) although false for m ost of the times, there are several exceptions detailed in Canadian GAAP E) Cannot say if it is true or false given the limited information provided 38) If a business declared and paid a $500 dividend, it would appear on which of the follo wing? A) Income statement only B) Balance sheet only C) Statement of retained earnings and cash flow statement* D) Statement of retained earnings only E) None of the other alternatives are correct 39) If a business declared $500 dividend, it would appear on which of the following? A) Income statement only B) Balance sheet only C) Statement of retained earnings and cash flow statement* D) Statement of retained earnings only E) None of the other alternatives are correct 40) The accounting concept that justifies the usage of accruals and deferrals is: A) The going concern B) Materiality C) Consistency D) Monetary unity E) None of the other alternatives are corre ct Version 1 15 41) Which of the following correctly represents the concept of the "magic" of accounting? A) The present value of a lump sum payment is always a figure lower in value than the future value of the amount. B) No matter how many transactions a company records in a particular period, they can all be summarized in four financial statements: the balance sheet, income statement, owner's equity statement and cash flow statement. C) There are many stakeholders, but financial stateme nts are prepared principally with the bias of creditors in mind. D) Financial statements can magically predict with certainty the future financial results of the company. E) Accrual accounting is much more accurate than cash accounting. 42) Which of the following is correct regarding the balance sheet equation? A) The balance sheet equation is: Assets equals liabilities plus owner's equity. B) The balance sheet equation is the most basic tool which measures the resources of a business and the claims to those resources. C) The balance sheet equation is: Liabilities equals assets minus owner's equity. D) The balance sheet equation is: Assets equals liabilities plus [owner's capital minus owner's withdrawals plus/minus ne t income/net loss]. E) All of the other alternatives are correct 43) Which of the following is an example of an external financial statement user? A) Lenders from unrelated parties other than the bank. B) Tax authorities such as the CRA in Canada. C) Potential investors including individuals and corporate investors. D) The bank such as TD, CIBC or RBC in Canada. E) All of the examples provided in the other alternatives are correct 44) Which of the follow ing are MOST likely to be interested in calculating and using a company's financial statement ratios?