Question 1

Withdrawal of cash from a business by the owner for personal reasons will NOT affect which financial statement?

Accepted Answer

A)  Balance Sheet 
B)  Income Statement 
C)  Statement of Owner's Equity 
D)  Cash Flow Statement 
A)  Balance Sheet 
B)  Income Statement 
C)  Statement of Owner's Equity 
D)  Cash Flow Statement

Question 2

The basic accounting equation, in a proprietorship, CANNOT be restated as

Accepted Answer

A)  Assets - Liabilities = Owner's Equity. 
B)  Assets - Owner's Equity = Liabilities. 
C)  Owner's Equity + Liabilities = Assets. 
D)  Assets + Liabilities = Owner's Equity. 
A)  Assets - Liabilities = Owner's Equity. 
B)  Assets - Owner's Equity = Liabilities. 
C)  Owner's Equity + Liabilities = Assets. 
D)  Assets + Liabilities = Owner's Equity.

Question 3

At the beginning of the year, Diskman Company had total assets of $700,000 and total liabilities of $300,000.
Instructions
Answer the following questions viewing each situation as being independent of the others.
1. If total assets increased $250,000 during the year, and total liabilities decreased $100,000, what is the amount of owner's equity at the end of the year?
2. During the year, total liabilities increased $340,000 and owner's equity decreased $130,000. What is the amount of total assets at the end of the year?
3. If total assets decreased $60,000 and owner's equity increased $190,000 during the year, what is the amount of total liabilities at the end of the year?

Accepted Answer

The answer of At the beginning of the year, Diskman...

Question 4

A corporation may only be formed under the federal legislation.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is correct in regards to the order of preparing financial statements?

Accepted Answer

A)  Income statement, Balance sheet, Statement of changes in owner's equity, Cash flow statement 
B)  Balance sheet, Income statement, Cash flow statement, Statement of changes in owner's equity 
C)  Income statement, Statement of changes in owner's equity, Balance sheet, Cash flow statement 
D)  Income statement, Statement of changes in owner's equity, Cash flow statement, Balance sheet 
A)  Income statement, Balance sheet, Statement of changes in owner's equity, Cash flow statement 
B)  Balance sheet, Income statement, Cash flow statement, Statement of changes in owner's equity 
C)  Income statement, Statement of changes in owner's equity, Balance sheet, Cash flow statement 
D)  Income statement, Statement of changes in owner's equity, Cash flow statement, Balance sheet

Question 6

If an owner makes a withdrawal of cash from a proprietorship, then

Accepted Answer

A)  there has been a violation of accounting principles. 
B)  assets will decrease and owner's equity will increase. 
C)  assets will decrease and owner's equity will decrease. 
D)  assets will decrease and liabilities will increase. 
A)  there has been a violation of accounting principles. 
B)  assets will decrease and owner's equity will increase. 
C)  assets will decrease and owner's equity will decrease. 
D)  assets will decrease and liabilities will increase.

Question 7

The monetary unit assumption assumes that all transactions will take place in Canadian dollars.

Accepted Answer

A) True 
 B)False

Question 8

An external user would NOT include

Accepted Answer

A)  A creditor of the company. 
B)  Canada Revenue Agency. 
C)  An employee. 
D)  The company's bank. 
A)  A creditor of the company. 
B)  Canada Revenue Agency. 
C)  An employee. 
D)  The company's bank.

Question 9

Cost value is the amount of the consideration that would be agreed upon in an arm's-length transaction between knowledgeable, willing parties who are under no compulsion to act.

Accepted Answer

A) True 
 B)False

Question 10

Accounting information is used only by external users with a direct financial interest in a company.

Accepted Answer

A) True 
 B)False

Question 11

Sometimes Canadian companies will report their results in U.S. dollars.

Accepted Answer

A) True 
 B)False

Question 12

There are ten transactions listed below:
1. Receive cash from customers on account.
2. Initial cash contribution by an owner.
3. Pay cash to reduce an accounts payable.
4. Purchase supplies for cash.
5. Pay cash to reduce a notes payable.
6. Purchase supplies on account.
7. Customers pay cash for services rendered.
8. Purchase equipment with a note payable.
9. Pay utilities with cash.
10. Owner withdraws money from the business for personal use.
Instructions
Match the transactions that have the identical effect on the accounting equation. You should end up with 5 matches. The first one has been completed for you with an explanation.
Example: 1. and 4. are a match because both of them include one increase in assets and one decrease in assets, so there is no effect on the accounting equation.

Accepted Answer

Match #1 = 1, 4
Matc

Question 13

Jamenac Company recently released its first set of financial statements. Below is a list of potential users of the financial statements.
1. Labour Union
2. Employees
3. Canadian Imperial Bank of Commerce
4. CRA
5. Potential shareholders/ investors
6. Sales Manager
7. Marketing Manager
8. Economic planners
9. Provincial Securities Commission
10. Human Resource Director
11. Customers
Instructions
a. For each user identify whether the user is an external or internal user.
b. Provide a brief explanation as to the difference between external and internal users.

Accepted Answer

a.
1. External
2. Internal
3. External
4

Question 14

Revenues decrease owner's equity and expenses increase owner's equity.

Accepted Answer

A) True 
 B)False

Question 15

In Canada, the main standard setting board is the Accounting Standards Board.

Accepted Answer

A) True 
 B)False

Question 16

In a partnership, all of the partners will generally have unlimited liability for the debts of the partnerships.

Accepted Answer

A) True 
 B)False

Question 17

All of the following are steps used to analyze ethical dilemmas EXCEPT

Accepted Answer

A)  using the organization's code of ethics to identify ethical situations. 
B)  using personal ethics to identify ethical situations. 
C)  identifying potential stakeholders. 
D)  discussing the ethical dilemma with co-workers. 
A)  using the organization's code of ethics to identify ethical situations. 
B)  using personal ethics to identify ethical situations. 
C)  identifying potential stakeholders. 
D)  discussing the ethical dilemma with co-workers.

Question 18

Canadian Accounting Standards allow a choice of whether or not to use International Financial Reporting Standards for which type of company?

Accepted Answer

A)  Public companies 
B)  Only small private companies 
C)  Banks 
D)  All private companies in Canada 
A)  Public companies 
B)  Only small private companies 
C)  Banks 
D)  All private companies in Canada

Question 19

Bing Company has total liabilities of $10,000 and total assets of $15,000. Based on this information, Bing Company's owner's equity must be

Accepted Answer

A)  $10,000. 
B)  $ 0. 
C)  $5,000. 
D)  $15,000. 
A)  $10,000. 
B)  $ 0. 
C)  $5,000. 
D)  $15,000.

Question 20

Two or more items could be affected by a transaction. Which of the following statements is INCORRECT?

Accepted Answer

A)  An increase in an asset may result in a decrease in another asset. 
B)  An increase in an asset may result in a decrease in an asset and increase in a liability. 
C)  An increase in a liability may result in a decrease in an asset. 
D)  An increase in a liability may result in a decrease in owner's equity. 
A)  An increase in an asset may result in a decrease in another asset. 
B)  An increase in an asset may result in a decrease in an asset and increase in a liability. 
C)  An increase in a liability may result in a decrease in an asset. 
D)  An increase in a liability may result in a decrease in owner's equity.

Withdrawal of cash from a business by the owner for personal reasons will NOT affect which financial statement?

The basic accounting equation, in a proprietorship, CANNOT be restated as

A corporation may only be formed under the federal legislation.

Which of the following statements is correct in regards to the order of preparing financial statements?

If an owner makes a withdrawal of cash from a proprietorship, then

The monetary unit assumption assumes that all transactions will take place in Canadian dollars.

An external user would NOT include

Cost value is the amount of the consideration that would be agreed upon in an arm's-length transaction between knowledgeable, willing parties who are under no compulsion to act.

Accounting information is used only by external users with a direct financial interest in a company.

Sometimes Canadian companies will report their results in U.S. dollars.

Revenues decrease owner's equity and expenses increase owner's equity.

In Canada, the main standard setting board is the Accounting Standards Board.

In a partnership, all of the partners will generally have unlimited liability for the debts of the partnerships.

All of the following are steps used to analyze ethical dilemmas EXCEPT

Canadian Accounting Standards allow a choice of whether or not to use International Financial Reporting Standards for which type of company?

Bing Company has total liabilities of $10,000 and total assets of $15,000. Based on this information, Bing Company's owner's equity must be

Two or more items could be affected by a transaction. Which of the following statements is INCORRECT?

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

Withdrawal of cash from a business by the owner for personal reasons will NOT affect which financial statement?

The basic accounting equation, in a proprietorship, CANNOT be restated as

A corporation may only be formed under the federal legislation.

Which of the following statements is correct in regards to the order of preparing financial statements?

If an owner makes a withdrawal of cash from a proprietorship, then

The monetary unit assumption assumes that all transactions will take place in Canadian dollars.

An external user would NOT include

Cost value is the amount of the consideration that would be agreed upon in an arm's-length transaction between knowledgeable, willing parties who are under no compulsion to act.

Accounting information is used only by external users with a direct financial interest in a company.

Sometimes Canadian companies will report their results in U.S. dollars.

Revenues decrease owner's equity and expenses increase owner's equity.

In Canada, the main standard setting board is the Accounting Standards Board.

In a partnership, all of the partners will generally have unlimited liability for the debts of the partnerships.

All of the following are steps used to analyze ethical dilemmas EXCEPT

Canadian Accounting Standards allow a choice of whether or not to use International Financial Reporting Standards for which type of company?

Bing Company has total liabilities of $10,000 and total assets of $15,000. Based on this information, Bing Company's owner's equity must be

Two or more items could be affected by a transaction. Which of the following statements is INCORRECT?

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