Question 1

Which of the following is not normally a current liability?

Accepted Answer

A) salaries payable 
B) accounts payable 
C) income tax payable 
D) bonds payable 
A) salaries payable 
B) accounts payable 
C) income tax payable 
D) bonds payable

Question 2

Which of the following statements is false?

Accepted Answer

A) The going concern assumption states that the business will continue in operation for the foreseeable future. 
B) If a company is not a going concern, the classification of its assets and liabilities does not matter. 
C) The going concern assumption underlies the preparation of financial statements. 
D) The going concern assumption does not create a foundation for the accounting process. 
A) The going concern assumption states that the business will continue in operation for the foreseeable future. 
B) If a company is not a going concern, the classification of its assets and liabilities does not matter. 
C) The going concern assumption underlies the preparation of financial statements. 
D) The going concern assumption does not create a foundation for the accounting process.

Question 3

The objective of financial reporting is to

Accepted Answer

A) provide information to the Canada Revenue Agency. 
B) provide financial information that is useful to existing and potential investors and creditors. 
C) comply with Accounting Standards for Private Enterprises. 
D) comply with International Financial Reporting Standards. 
A) provide information to the Canada Revenue Agency. 
B) provide financial information that is useful to existing and potential investors and creditors. 
C) comply with Accounting Standards for Private Enterprises. 
D) comply with International Financial Reporting Standards.

Question 4

Two measurement principles are historical cost and current value.

Accepted Answer

A) True 
 B)False

Question 5

The conceptual framework is fundamentally similar for both Canadian publicly traded companies and Canadian private companies.

Accepted Answer

A) True 
 B)False

Question 6

The most liquid resource is inventory.

Accepted Answer

A) True 
 B)False

Question 7

The cost constraint ensures that

Accepted Answer

A) the value of information provided is greater than the cost of providing it. 
B) that information costs less than budget. 
C) the value of information provided is less than the cost of providing it. 
D) that information costs more than budget. 
A) the value of information provided is greater than the cost of providing it. 
B) that information costs less than budget. 
C) the value of information provided is less than the cost of providing it. 
D) that information costs more than budget.

Question 8

The difference between cost and accumulated depreciation is referred to as

Accepted Answer

A) net depreciation. 
B) carrying amount. 
C) fair value. 
D) cost value. 
A) net depreciation. 
B) carrying amount. 
C) fair value. 
D) cost value.

Question 9

The most important information needed to determine if a company can pay its current obligations is the

Accepted Answer

A) net income for this year. 
B) projected net income for next year. 
C) relationship between current assets and current liabilities. 
D) relationship between current and non-current liabilities. 
A) net income for this year. 
B) projected net income for next year. 
C) relationship between current assets and current liabilities. 
D) relationship between current and non-current liabilities.

Question 10

Use the following information to answer questions 
  
-The total dollar amount of assets to be classified as current assets is

Accepted Answer

A) $295,000. 
B) $235,000. 
C) $175,000. 
D) $160,000. 
A) $295,000. 
B) $235,000. 
C) $175,000. 
D) $160,000.

Question 11

If accounting information has predictive value, it will help users

Accepted Answer

A) prepare for future Canada Revenue Agency audits. 
B) make predictions about future events. 
C) make predictions about foreign currency exchange rates. 
D) confirm or correct previous predictions or expectations. 
A) prepare for future Canada Revenue Agency audits. 
B) make predictions about future events. 
C) make predictions about foreign currency exchange rates. 
D) confirm or correct previous predictions or expectations.

Question 12

Use the following information to answer questions 
  
-Net income retained for use in the business is

Accepted Answer

A) $712,000. 
B) $396,000. 
C) $316,000. 
D) $146,000. 
A) $712,000. 
B) $396,000. 
C) $316,000. 
D) $146,000.

Question 13

Long-term creditors are usually most interested in evaluating

Accepted Answer

A) liquidity and profitability. 
B) comparability and profitability. 
C) profitability and solvency. 
D) consistency and solvency. 
A) liquidity and profitability. 
B) comparability and profitability. 
C) profitability and solvency. 
D) consistency and solvency.

Question 14

The going concern assumption is inappropriate when

Accepted Answer

A) the business is just starting up. 
B) liquidation appears likely. 
C) fair values are higher than costs. 
D) the business is organized as a proprietorship. 
A) the business is just starting up. 
B) liquidation appears likely. 
C) fair values are higher than costs. 
D) the business is organized as a proprietorship.

Question 15

The current assets of Brothers Corporation are $615,000.The current liabilities are $512,500.The current ratio expressed as a ratio is

Accepted Answer

A) 120% 
B) 1.2:1 
C) 0.8:1 
D) 80% 
A) 120% 
B) 1.2:1 
C) 0.8:1 
D) 80%

Question 16

Using a simplified version of Canadian GAAP for small companies in order to reduce the cost of providing financial information is an example of the application of materiality.

Accepted Answer

A) True 
 B)False

Question 17

The price-earnings ratio is calculated by dividing

Accepted Answer

A) the market price per share by basic earnings per share. 
B) basic earnings per share by the average number of shares. 
C) net income by the market price per share. 
D) basic earnings per share by the market price per share. 
A) the market price per share by basic earnings per share. 
B) basic earnings per share by the average number of shares. 
C) net income by the market price per share. 
D) basic earnings per share by the market price per share.

Question 18

Calculating financial ratios can give clues to underlying conditions that may not be noticed by examining each financial statement item separately.

Accepted Answer

A) True 
 B)False

Question 19

Marvel Inc.has $180,000 in current assets and $150,000 in current liabilities.When the company pays $35,000 owed to employees (salaries payable), what effect does this have on their current ratio?

Accepted Answer

A) The ratio increases. 
B) The ratio decreases. 
C) The ratio stays the same. 
D) Cannot be determined. 
A) The ratio increases. 
B) The ratio decreases. 
C) The ratio stays the same. 
D) Cannot be determined.

Question 20

Enhancing qualitative characteristics include timeliness and comparability.

Accepted Answer

A) True 
 B)False

Which of the following is not normally a current liability?

Which of the following statements is false?

The objective of financial reporting is to

Two measurement principles are historical cost and current value.

The conceptual framework is fundamentally similar for both Canadian publicly traded companies and Canadian private companies.

The most liquid resource is inventory.

The cost constraint ensures that

The difference between cost and accumulated depreciation is referred to as

The most important information needed to determine if a company can pay its current obligations is the

Use the following information to answer questions -The total dollar amount of assets to be classified as current assets is

If accounting information has predictive value, it will help users

Use the following information to answer questions -Net income retained for use in the business is

Long-term creditors are usually most interested in evaluating

The going concern assumption is inappropriate when

The current assets of Brothers Corporation are $615,000.The current liabilities are $512,500.The current ratio expressed as a ratio is

Using a simplified version of Canadian GAAP for small companies in order to reduce the cost of providing financial information is an example of the application of materiality.

The price-earnings ratio is calculated by dividing

Calculating financial ratios can give clues to underlying conditions that may not be noticed by examining each financial statement item separately.

Marvel Inc.has $180,000 in current assets and $150,000 in current liabilities.When the company pays $35,000 owed to employees (salaries payable), what effect does this have on their current ratio?

Enhancing qualitative characteristics include timeliness and comparability.

The Purpose and Use of Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters

Exam 2: A Further Look at Financial Statements

Which of the following is not normally a current liability?

Which of the following statements is false?

The objective of financial reporting is to

Two measurement principles are historical cost and current value.

The conceptual framework is fundamentally similar for both Canadian publicly traded companies and Canadian private companies.

The most liquid resource is inventory.

The cost constraint ensures that

The difference between cost and accumulated depreciation is referred to as

The most important information needed to determine if a company can pay its current obligations is the

Use the following information to answer questions -The total dollar amount of assets to be classified as current assets is

If accounting information has predictive value, it will help users

Use the following information to answer questions -Net income retained for use in the business is

Long-term creditors are usually most interested in evaluating

The going concern assumption is inappropriate when

The current assets of Brothers Corporation are $615,000.The current liabilities are $512,500.The current ratio expressed as a ratio is

Using a simplified version of Canadian GAAP for small companies in order to reduce the cost of providing financial information is an example of the application of materiality.

The price-earnings ratio is calculated by dividing

Calculating financial ratios can give clues to underlying conditions that may not be noticed by examining each financial statement item separately.

Marvel Inc.has $180,000 in current assets and $150,000 in current liabilities.When the company pays $35,000 owed to employees (salaries payable), what effect does this have on their current ratio?

Enhancing qualitative characteristics include timeliness and comparability.

The Purpose and Use of Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters