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Investors and creditors look at the balance sheet to see whether the company:


A) is profitable.
B) owns enough assets to pay what it owes to creditors.
C) has had a positive cash flow from operations.
D) is paying sufficient dividends to shareholders.

E) None of the above
F) A) and C)

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Which one of the following is not an accounting assumption?


A) Separate entity
B) Time period
C) Integrity
D) Unit of measure

E) C) and D)
F) A) and B)

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Each item in the statement of retained earnings can appear on another financial statement.Match the letter of the financial statement with the item in the statement of retained earnings. A.Balance sheet at end of 2011 B.Statement of cash flows for 2011 C.Income statement for 2010 D.Balance sheet at end of 2010 E.Income statement for 2011 ____ Retained earnings,January 1,2011 ____ Net income for 2011 ____ Dividends for 2011 ____ Retained earnings,December 31,2011

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Statement of retained earnings is prepared is prepared before the income statement. BT: Knowledge

A) True
B) False

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Match the term and the explanation.(There are more explanations than terms.) _____ investors _____ audit _____ balance sheet _____ operating activity _____ unit of measure concept _____ retained earnings _____ investing activity _____ income statement


A) An exchange of money between a company and its investors or creditors.
B) An example of an internal user of financial statements.
C) The idea that a company reports sales only after a payment has been received.
D) Share of a company's earnings given to owners as dividends.
E) A financial statement showing a company's assets,liabilities and shareholders' equity.
F) When a company acquires money from investors.
G) A financial statement that summarizes a company's past and current cash situation.
H) An external user of financial statements.
I) The idea that the financial statements of a company include the results of only that company's business activities.
J) Day to day events involved in the production and sales of a company's goods or services.
K) A financial statement that shows a company's revenues and expenses.
L) Borrowing money from lenders.
M) The total amount of profits that are held by the company since its inception.
N) Companies should report financial data in the relevant currency.
O) A procedure by which independent evaluators assess the accounting procedures and financial reports of a company.
P) Purchase or sale of long-term assets,like property and equipment used in production process.

Q) J) and O)
R) B) and N)

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Building a new warehouse is an operating activity. BT: Comprehension

A) True
B) False

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Auditors while examining the financial records must follow:


A) International Financial Reporting Standards
B) Canadian Auditing standards
C) Canadian Accounting standards for auditing
D) International Auditing standards

E) A) and C)
F) B) and D)

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Which of the following is not an expense?


A) Wages of employees.
B) Interest incurred on a loan the company had taken out.
C) Dividends.
D) Corporate income tax.

E) All of the above
F) B) and C)

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To make sure that managers have followed GAAP rules in producing financial statements,all public companies must:


A) Hire independent auditors to scrutinize their financial records.
B) Hire independent detectives to scrutinize the background of all their accountants.
C) let the government regulators scrutinize their financial records.
D) let their shareholders check their financial records.

E) B) and D)
F) C) and D)

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A company is involved in financing activities when these:


A) activities are directly related to running the core business to earn profits.
B) activities involve buying and selling productive resources with long lives (such as buildings,land,equipment,and tools) ,purchasing investments,and lending to others.
C) activities involve borrowing from banks,repaying bank loans,receiving contributions from shareholders,or paying dividends to shareholders
D) All of the above

E) A) and B)
F) All of the above

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Which of the following is true?


A) Companies are allowed to choose their fiscal year-end date.
B) Companies must end their fiscal year on March 31,June 30,September 30,or December 31.
C) Companies can select any date except a holiday to end their fiscal year.
D) Companies must end their fiscal year on December 31.

E) C) and D)
F) A) and C)

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In which of the following business organization the business is considered separate from the owner/s:


A) A state-owned entity.
B) A sole proprietorship.
C) A corporation.
D) A partnership.

E) All of the above
F) C) and D)

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A investor might look at a company's financial statements to determine if the:


A) company is likely to have the resources to repay its debts.
B) company's stock is likely to fall,signalling a good time to sell.
C) company's stock is likely to rise,signalling a good time to buy.
D) company is likely to pay a good dividend.

E) B) and D)
F) B) and C)

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Financing that individuals or institutions have provided to a company is


A) always classified as liabilities.
B) classified as liabilities when provided by creditors and shareholders' equity when provided by owners.
C) always classified as shareholders' equity.
D) classified as shareholders' equity when provided by creditors and liabilities when provided by owners.

E) A) and D)
F) B) and D)

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The CICA:


A) has primary responsibility for setting the underlying rules of accounting in Canada.
B) is an entity that regulates issuance of securities in Ontario.
C) an independent body to develop and establish standards and guidance than govern financial accounting and reporting in Canada.
D) is an examination of a company's financial statements by an independent auditor.

E) C) and D)
F) A) and B)

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Which of the following are assumptions of accounting?


A) Unit of measure,separate entity,going concern,time period
B) Cost,revenue recognition,matching,full disclosure
C) Cost-benefit,materiality,industry practices
D) Unit of measure,cost-benefit,materiality,industry practices

E) B) and C)
F) C) and D)

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Match the characteristic of the company with the description of the type of company. A.Partnership. B.Publicly traded corporation. C.Privately traded corporation. _____ 1.Issues shares of stock that are traded on a stock exchange such as the TSX. _____ 2.Owners are personally liable for the debts of the company. _____ 3.Shares of stock must be purchased directly from current owners. _____ 4.Can raise more financial capital by selling stock to the greatest number of investors.

Correct Answer

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The separate entity assumption means:


A) a company's financial statements reflect only the business activities of that company and not that of the shareholders.
B) each separate owner's finances must be revealed in the financial statements.
C) each separate entity that has a claim on a company's assets must be shown in the financial statements
D) all of the above.

E) All of the above
F) B) and D)

Correct Answer

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Which of the following is not an alternative term used for the income statement?


A) Statement of Income.
B) Statement of Financial Position.
C) Statement of Earnings.
D) Profit and Loss Statement.

E) B) and C)
F) A) and C)

Correct Answer

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A company's quarterly income statements show that in the last three quarters both sales revenue and net income have been growing.Which of the following statements is then true?


A) Creditors are likely to conclude that the risk of lending to the company is falling and be willing to accept a lower interest rate on loans.
B) Investors are likely to conclude that the stock price is likely to rise,making the company more attractive as a potential investment.
C) Investors are likely to conclude that the company will be better able to pay dividends in the future,making it more attractive as a potential investment.
D) All of the above.

E) A) and B)
F) A) and D)

Correct Answer

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Showing 41 - 60 of 116

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