Question 1

Owner's equity, in a proprietorship, at the end of the period is equal to

Accepted Answer

A)  owner's capital at the beginning of the period plus profit minus liabilities. 
B)  owner's capital at the beginning of the period plus profit minus drawings. 
C)  profit. 
D)  assets plus liabilities. 
A)  owner's capital at the beginning of the period plus profit minus liabilities. 
B)  owner's capital at the beginning of the period plus profit minus drawings. 
C)  profit. 
D)  assets plus liabilities. B

Question 2

If total liabilities increased by $5,000, then

Accepted Answer

A)  assets must have decreased by $5,000. 
B)  owner's equity must have increased by $5,000. 
C)  assets must have increased by $5,000, or owner's equity must have decreased by $5,000. 
D)  assets and owner's equity each increased by $2,500. 
A)  assets must have decreased by $5,000. 
B)  owner's equity must have increased by $5,000. 
C)  assets must have increased by $5,000, or owner's equity must have decreased by $5,000. 
D)  assets and owner's equity each increased by $2,500. C

Question 3

A balance sheet reports the assets, liabilities, and owner's equity at a specific date.

Accepted Answer

A) True 
 B)False  True

Question 4

The main objective of financial statements is to provide useful information to management.

Accepted Answer

A) True 
 B)False

Question 5

GAAP stands for Generally Accepted Accounting Principles.

Accepted Answer

A) True 
 B)False

Question 6

Partners' equity, in a partnership, is decreased by

Accepted Answer

A)  payment of dividends. 
B)  drawings. 
C)  owner's investments. 
D)  revenues. 
A)  payment of dividends. 
B)  drawings. 
C)  owner's investments. 
D)  revenues.

Question 7

If supplies that have been purchased are used in the course of business, then

Accepted Answer

A)  a liability will increase. 
B)  an asset will increase. 
C)  owner's equity will decrease. 
D)  owner's equity will increase. 
A)  a liability will increase. 
B)  an asset will increase. 
C)  owner's equity will decrease. 
D)  owner's equity will increase.

Question 8

The cost and fair value of an asset are the same at the time of acquisition and in all subsequent periods.

Accepted Answer

A) True 
 B)False

Question 9

A corporation is only subject to the federal laws of corporations.

Accepted Answer

A) True 
 B)False

Question 10

Each of the following independent situations represents a departure from generally accepted accounting principles.
1. Strad Music Supplies is a proprietorship owned and operated by Giuseppe Amati. Giuseppe started the business with funds given to him by his uncle. He gives his uncle a copy of Strad's financial statements each year so that his uncle will see this was a good investment. In 2011 both Giuseppe and his uncle were disappointed that sales had decreased from the prior year. When Giuseppe wins $50,000 in a lottery during 2013, he decides to record the amount as revenue in the financial statements of the business to avoid disappointing his uncle even further.
2. Xavier Quinn, the owner of Quinn's Travel is thinking of retiring in two years time because the business is not as successful as he had hoped. Xavier has always been very careful to ensure that all assets and liabilities are recorded correctly. However, since he is thinking of retiring, Xavier decides that generally accepted accounting principles are no longer relevant, so he does not double check his work as carefully as he did previously.
Instructions
For each situation listed above:
a. identify which principle has been violated
b. describe what the correct accounting treatment would be, and
c. why the correct treatment provides better information.

Accepted Answer

1. The economic entity concept has been

Question 11

Creditors are an example of an internal user of accounting information.

Accepted Answer

A) True 
 B)False

Question 12

Measurement is the process of determining the amount that should be recognized.

Accepted Answer

A) True 
 B)False

Question 13

The primary purpose of the Cash Flow Statement is to report

Accepted Answer

A)  a company's investing transactions. 
B)  a company's financing transactions. 
C)  information about cash inflows and cash outflows of a company. 
D)  the net increase or decrease in cash. 
A)  a company's investing transactions. 
B)  a company's financing transactions. 
C)  information about cash inflows and cash outflows of a company. 
D)  the net increase or decrease in cash.

Question 14

At September 1, 2013, the balance sheet accounts for Roxanne's Restaurant were as follows:   The following transactions occurred during the next two days:
Roxanne invested an additional $22,000 cash in the business. The accounts payable were paid in full. (No payment was made on the notes payable.)
Instructions
Prepare a Balance Sheet at September 3, 2013.

Accepted Answer

@#IMG-DLM& Cash ($5,000 + $22,000 - $3,8

Question 15

Match between columns
                        Premises: Consumed assets or services
A separate legal entity under federal or provincial laws
Reflective of two or more owners
Future economic benefits
Results when revenues exceed expenses.
Rules for ethical business practices
Ownership claims against the assets of the business
Economic events can be identified with a particular unit of accountability.
Economic events recorded by accountants.
Ownership is limited to one person.

Accepted Answer

The Answer of Assets and Expenses and Transactions and Partnership is...

Question 16

An Income Statement

Accepted Answer

A)  summarizes the changes in owner's equity for a specific period of time. 
B)  reports the changes in assets, liabilities, and owner's equity over a period of time. 
C)  reports the assets, liabilities, and owner's equity at a specific date. 
D)  presents the revenues and expenses for a specific period of time. 
A)  summarizes the changes in owner's equity for a specific period of time. 
B)  reports the changes in assets, liabilities, and owner's equity over a period of time. 
C)  reports the assets, liabilities, and owner's equity at a specific date. 
D)  presents the revenues and expenses for a specific period of time.

Question 17

Sources of increases to owner's equity, in a proprietorship, are

Accepted Answer

A)  additional investments by owners. 
B)  purchases of merchandise. 
C)  withdrawals by the owner. 
D)  sale of share capital. 
A)  additional investments by owners. 
B)  purchases of merchandise. 
C)  withdrawals by the owner. 
D)  sale of share capital.

Question 18

Which of the following accounts would NOT be found on the Balance Sheet?

Accepted Answer

A)  Cash 
B)  Drawings 
C)  Equipment 
D)  Accounts Payable. 
A)  Cash 
B)  Drawings 
C)  Equipment 
D)  Accounts Payable.

Question 19

An external user could be

Accepted Answer

A)  employees. 
B)  management. 
C)  Canada Revenue Agency. 
D)  the human resource director. 
A)  employees. 
B)  management. 
C)  Canada Revenue Agency. 
D)  the human resource director.

Question 20

The income statement is prepared from the data in the

Accepted Answer

A)  assets column. 
B)  liabilities column. 
C)  owner's equity column. 
D)  liabilities and owner's equity column. 
A)  assets column. 
B)  liabilities column. 
C)  owner's equity column. 
D)  liabilities and owner's equity column.

Owner's equity, in a proprietorship, at the end of the period is equal to

If total liabilities increased by $5,000, then

A balance sheet reports the assets, liabilities, and owner's equity at a specific date.

The main objective of financial statements is to provide useful information to management.

GAAP stands for Generally Accepted Accounting Principles.

Partners' equity, in a partnership, is decreased by

If supplies that have been purchased are used in the course of business, then

The cost and fair value of an asset are the same at the time of acquisition and in all subsequent periods.

A corporation is only subject to the federal laws of corporations.

Creditors are an example of an internal user of accounting information.

Measurement is the process of determining the amount that should be recognized.

The primary purpose of the Cash Flow Statement is to report

An Income Statement

Sources of increases to owner's equity, in a proprietorship, are

Which of the following accounts would NOT be found on the Balance Sheet?

An external user could be

The income statement is prepared from the data in the

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters

Exam 1: Accounting in Action

Owner's equity, in a proprietorship, at the end of the period is equal to

If total liabilities increased by $5,000, then

A balance sheet reports the assets, liabilities, and owner's equity at a specific date.

The main objective of financial statements is to provide useful information to management.

GAAP stands for Generally Accepted Accounting Principles.

Partners' equity, in a partnership, is decreased by

If supplies that have been purchased are used in the course of business, then

The cost and fair value of an asset are the same at the time of acquisition and in all subsequent periods.

A corporation is only subject to the federal laws of corporations.

Creditors are an example of an internal user of accounting information.

Measurement is the process of determining the amount that should be recognized.

The primary purpose of the Cash Flow Statement is to report

An Income Statement

Sources of increases to owner's equity, in a proprietorship, are

Which of the following accounts would NOT be found on the Balance Sheet?

An external user could be

The income statement is prepared from the data in the

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters