Question 1

Which of the following statements best describes the difference between current and long-term liabilities?

Accepted Answer

A) Current liabilities are debts that need to be paid immediately,whereas long-term liabilities do not. 
B) Current liabilities are those which will cost less in debt interest than long-term liabilities. 
C) Current liabilities are debts that are settled sooner than long-term debts. 
D) Current liabilities are debts on tangible assets,whereas long-term liabilities are debts on intangible assets. 
E) Current liabilities are debts on current assets,whereas long-term liabilities are debts on fixed and intangible assets. 
A) Current liabilities are debts that need to be paid immediately,whereas long-term liabilities do not. 
B) Current liabilities are those which will cost less in debt interest than long-term liabilities. 
C) Current liabilities are debts that are settled sooner than long-term debts. 
D) Current liabilities are debts on tangible assets,whereas long-term liabilities are debts on intangible assets. 
E) Current liabilities are debts on current assets,whereas long-term liabilities are debts on fixed and intangible assets.

Question 2

Which of the following is the formula used by accountants to balance data for the firm's financial transactions at various points in the year?

Accepted Answer

A) Owner's equity = assets + liabilities 
B) Liabilities = assets + owner's equity 
C) Assets = capital + owner's equity 
D) Owner's equity = assets + capital 
E) Assets - liabilities = owner's equity 
A) Owner's equity = assets + liabilities 
B) Liabilities = assets + owner's equity 
C) Assets = capital + owner's equity 
D) Owner's equity = assets + capital 
E) Assets - liabilities = owner's equity

Question 3

Streeter & Sons is a regional service company that has been in business for a few years but has not employed a controller or anyone else full-time to keep track of its financial state.The company needs to take a good look at its financial state to determine whether it needs to make any changes in its practices,in order to prevent possible financial meltdown. Which of the following questions would a balance sheet not be able to help answer about the current state of Streeter & Sons?

Accepted Answer

A) Is it a good time for the business to grow? 
B) Can the company survive a season of low revenues? 
C) Does the company have too many employees? 
D) Can the company take on more debt? 
E) What is the value of the company's assets? 
A) Is it a good time for the business to grow? 
B) Can the company survive a season of low revenues? 
C) Does the company have too many employees? 
D) Can the company take on more debt? 
E) What is the value of the company's assets?

Question 4

What does a balance sheet show?

Accepted Answer

The information on a balance sheet shows

Question 5

Bennequin Manufacturing was a highly profitable firm five years ago,but its net revenue has since been severely declining,even though the amount of business has been stable.Marlena has been hired as the new Chief Executive Officer to help turn things around for the company.She would like to understand what happened financially to the company in the past five years in order to start coming up with possible solutions.Which of the following documents would be most useful for her?

Accepted Answer

A) Income statements from the past five years 
B) Debt statements from the past five years 
C) Statements of cash flows from the past five years 
D) Budgets from the past five years 
E) Balance sheets from the past five years 
A) Income statements from the past five years 
B) Debt statements from the past five years 
C) Statements of cash flows from the past five years 
D) Budgets from the past five years 
E) Balance sheets from the past five years

Question 6

Streeter & Sons is a regional service company that has been in business for a few years but has not employed a controller or anyone else full-time to keep track of its financial state.The company needs to take a good look at its financial state to determine whether it needs to make any changes in its practices,in order to prevent possible financial meltdown. Which of the following,if true,would weaken the case that more than one type of financial statement should be examined in order to determine a company's financial health?

Accepted Answer

A) Nowadays,many companies burnish their balance sheet by claiming inflated figures for goodwill. 
B) An income statement from one year may be radically different from the one for the previous year. 
C) It can be difficult for auditors to independently verify certain figures in income statements. 
D) The management by data trend has led companies to consider detailed and accurate financial statements imperative. 
E) In times of recession,companies often reduce their accounting and financial management staffs. 
A) Nowadays,many companies burnish their balance sheet by claiming inflated figures for goodwill. 
B) An income statement from one year may be radically different from the one for the previous year. 
C) It can be difficult for auditors to independently verify certain figures in income statements. 
D) The management by data trend has led companies to consider detailed and accurate financial statements imperative. 
E) In times of recession,companies often reduce their accounting and financial management staffs.

Question 7

Owners' equity consists of two sources: the amount that the owners originally invested,and profits earned by and reinvested in the company.

Accepted Answer

A) True 
 B)False

Question 8

The CPA Canada Handbook now has various parts,Part I is known as ________ and is designed for publicly accountable enterprises and government private enterprises;Part II is known by the abbreviation ________ and is designed for private companies.

Accepted Answer

A) ASPE,IMF 
B) IFRS,ASPE 
C) Global GAAP,GAAP 
D) CPA,CGA 
E) GAAP,IPRS 
A) ASPE,IMF 
B) IFRS,ASPE 
C) Global GAAP,GAAP 
D) CPA,CGA 
E) GAAP,IPRS

Question 9

What is a detailed statement of estimated receipts and expenditures for a future period of time called?

Accepted Answer

A) Financial plan 
B) Budget 
C) Balance sheet 
D) Forecast 
E) Income statement 
A) Financial plan 
B) Budget 
C) Balance sheet 
D) Forecast 
E) Income statement

Question 10

With fixed assets of $4 billion and current assets of $1.7 billion,Realm Company has long-term liabilities of $2 billion and current liabilities of $0.34 billion.What is Realm's current ratio?

Accepted Answer

A) 0.85 
B) 2 
C) 2.44 
D) 5 
E) 11.76 
A) 0.85 
B) 2 
C) 2.44 
D) 5 
E) 11.76

Question 11

Rose is reviewing a company's accounting system,checking the ledgers and journals,and tracking some transactions to see how they were handled.Rose is engaged in

Accepted Answer

A) financial accounting. 
B) managerial accounting. 
C) auditing. 
D) public accounting. 
E) bookkeeping. 
A) financial accounting. 
B) managerial accounting. 
C) auditing. 
D) public accounting. 
E) bookkeeping.

Question 12

Owners' equity is meaningful information for investors,but not for lenders.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a type of financial statement that describes a firm's revenues and expenses and indicates whether the firm has earned a profit or suffered a loss during a given period?

Accepted Answer

A) Income statement 
B) Balance sheet 
C) Cash flow statement 
D) Statement of financial position 
E) Statement of owner's equity 
A) Income statement 
B) Balance sheet 
C) Cash flow statement 
D) Statement of financial position 
E) Statement of owner's equity

Question 14

At the end of the fiscal year for Santos Industrial Machinery,management raised concerns about the company's financial performance.The company's accountants have been asked to analyze the current financial state of the company by using ratio analysis. Santos's executives are most interested in seeing the company's short-term solvency ratios.Based on this information,what question do they most likely want to have answered?

Accepted Answer

A) Can the company pay its immediate debts without obtaining further loans? 
B) Does the company have enough inventory to meet sales demands? 
C) How much inventory on hand does Santos have? 
D) How much bonds payable debt is Santos carrying? 
E) Is the company selling products at an appropriate price? 
A) Can the company pay its immediate debts without obtaining further loans? 
B) Does the company have enough inventory to meet sales demands? 
C) How much inventory on hand does Santos have? 
D) How much bonds payable debt is Santos carrying? 
E) Is the company selling products at an appropriate price?

Question 15

Which of the following is correct with regard to auditing?

Accepted Answer

A) An audit focuses specifically on whether the inventory the company claims it has is actually there. 
B) Companies do not normally have to supply audited financial statements when they apply for loans or when selling stock. 
C) Audits determine if the firm has controls in place to prevent errors or fraud from going undetected. 
D) Auditors generally do not have to examine documents such as cancelled cheques,payroll record,and cash receipts in order to conduct their audit. 
E) Auditors ensures that the financial state of the company will be accurately reported. 
A) An audit focuses specifically on whether the inventory the company claims it has is actually there. 
B) Companies do not normally have to supply audited financial statements when they apply for loans or when selling stock. 
C) Audits determine if the firm has controls in place to prevent errors or fraud from going undetected. 
D) Auditors generally do not have to examine documents such as cancelled cheques,payroll record,and cash receipts in order to conduct their audit. 
E) Auditors ensures that the financial state of the company will be accurately reported.

Question 16

Documents generated by the financial accounting system focus on the activities of the company as a whole,rather than on individual departments or divisions.By contrast,documents generated by the management accounting system focus on individual departments.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following financial statements is designed primarily for internal use of the corporation managers (e.g. ,the production manager)?

Accepted Answer

A) Income statements 
B) Statement of retained earnings 
C) Budget 
D) Balance sheets 
E) Statements of cash flow 
A) Income statements 
B) Statement of retained earnings 
C) Budget 
D) Balance sheets 
E) Statements of cash flow

Question 18

Sheena is a private accountant who is working through the accounting cycle.She has completed transferring entries from the journal to a ledger.Her next step is to

Accepted Answer

A) record transactions in a journal. 
B) do a trial balance. 
C) prepare financial statements. 
D) analyze the financial statements using ratio analysis. 
E) transfer entries from the journal to the ledger. 
A) record transactions in a journal. 
B) do a trial balance. 
C) prepare financial statements. 
D) analyze the financial statements using ratio analysis. 
E) transfer entries from the journal to the ledger.

Question 19

Aardvark is a small pest-control business that has 30 employees.The company started business within the past year and needs to decide on how best to manage its finances as the company continues to grow its customer base and its business. Which of the following questions would be least relevant to a controller as he or she develops a financial forecast for Aardvark?

Accepted Answer

A) What are the future plans of the company? 
B) What is the current state of the local economy? 
C) What is the future state of the local economy likely to be? 
D) What subcontractors should the company use? 
E) What is the company's competition likely to do? 
A) What are the future plans of the company? 
B) What is the current state of the local economy? 
C) What is the future state of the local economy likely to be? 
D) What subcontractors should the company use? 
E) What is the company's competition likely to do?

Question 20

Last year,Mainline Corporation's gross profit was $5 million,its net income was $2 million,and operating expenses were $1 million.Its owners' equity is $100 million.Its return on equity is therefore 2 percent.

Accepted Answer

A) True 
 B)False

Which of the following statements best describes the difference between current and long-term liabilities?

Which of the following is the formula used by accountants to balance data for the firm's financial transactions at various points in the year?

What does a balance sheet show?

Owners' equity consists of two sources: the amount that the owners originally invested,and profits earned by and reinvested in the company.

The CPA Canada Handbook now has various parts,Part I is known as and is designed for publicly accountable enterprises and government private enterprises;Part II is known by the abbreviation and is designed for private companies.

What is a detailed statement of estimated receipts and expenditures for a future period of time called?

With fixed assets of $4 billion and current assets of $1.7 billion,Realm Company has long-term liabilities of $2 billion and current liabilities of $0.34 billion.What is Realm's current ratio?

Rose is reviewing a company's accounting system,checking the ledgers and journals,and tracking some transactions to see how they were handled.Rose is engaged in

Owners' equity is meaningful information for investors,but not for lenders.

Which of the following is a type of financial statement that describes a firm's revenues and expenses and indicates whether the firm has earned a profit or suffered a loss during a given period?

Which of the following is correct with regard to auditing?

Documents generated by the financial accounting system focus on the activities of the company as a whole,rather than on individual departments or divisions.By contrast,documents generated by the management accounting system focus on individual departments.

Which of the following financial statements is designed primarily for internal use of the corporation managers (e.g. ,the production manager)?

Sheena is a private accountant who is working through the accounting cycle.She has completed transferring entries from the journal to a ledger.Her next step is to

Last year,Mainline Corporation's gross profit was $5 million,its net income was $2 million,and operating expenses were $1 million.Its owners' equity is $100 million.Its return on equity is therefore 2 percent.

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship,small Business,and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating,satisfying,and Leading Employees

Operations Management,productivity,and Quality

Understanding Marketing Principles and Developing Products

Pricing,promoting,and Distributing Products

Money and Banking

Financial Decisions and Risk Management

Filters

Exam 11: Understanding Accounting

Which of the following statements best describes the difference between current and long-term liabilities?

Which of the following is the formula used by accountants to balance data for the firm's financial transactions at various points in the year?

What does a balance sheet show?

Owners' equity consists of two sources: the amount that the owners originally invested,and profits earned by and reinvested in the company.

The CPA Canada Handbook now has various parts,Part I is known as ________ and is designed for publicly accountable enterprises and government private enterprises;Part II is known by the abbreviation ________ and is designed for private companies.

What is a detailed statement of estimated receipts and expenditures for a future period of time called?

With fixed assets of $4 billion and current assets of $1.7 billion,Realm Company has long-term liabilities of $2 billion and current liabilities of $0.34 billion.What is Realm's current ratio?

Rose is reviewing a company's accounting system,checking the ledgers and journals,and tracking some transactions to see how they were handled.Rose is engaged in

Owners' equity is meaningful information for investors,but not for lenders.

Which of the following is a type of financial statement that describes a firm's revenues and expenses and indicates whether the firm has earned a profit or suffered a loss during a given period?

Which of the following is correct with regard to auditing?

Documents generated by the financial accounting system focus on the activities of the company as a whole,rather than on individual departments or divisions.By contrast,documents generated by the management accounting system focus on individual departments.

Which of the following financial statements is designed primarily for internal use of the corporation managers (e.g. ,the production manager)?

Sheena is a private accountant who is working through the accounting cycle.She has completed transferring entries from the journal to a ledger.Her next step is to

Last year,Mainline Corporation's gross profit was $5 million,its net income was $2 million,and operating expenses were $1 million.Its owners' equity is $100 million.Its return on equity is therefore 2 percent.

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship,small Business,and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating,satisfying,and Leading Employees

Operations Management,productivity,and Quality

Understanding Marketing Principles and Developing Products

Pricing,promoting,and Distributing Products

Money and Banking

Financial Decisions and Risk Management

Filters

The CPA Canada Handbook now has various parts,Part I is known as and is designed for publicly accountable enterprises and government private enterprises;Part II is known by the abbreviation and is designed for private companies.