Question 1

The primary responsibility for the information reported by a company rests with which of the following?

Accepted Answer

A)  The company's management. 
B)  The company's auditors. 
C)  The local city council. 
D)  The Canada Revenue Agency. 
A)  The company's management. 
B)  The company's auditors. 
C)  The local city council. 
D)  The Canada Revenue Agency.

Question 2

The cost constraint ensures that information costs less than budget.

Accepted Answer

A) True 
 B)False

Question 3

Liberward, Inc. sold and issued 1,000 shares for $15 per share. The book value of the shares was $10 per share. The journal entry to record the share issue would include which of the following?

Accepted Answer

A)  a credit to Cash for $15,000 
B)  a debit to Cash for $10,000. 
C)  a credit to Contributed capital for $15,000. 
D)  a credit to Contributed capital for $10,000. 
A)  a credit to Cash for $15,000 
B)  a debit to Cash for $10,000. 
C)  a credit to Contributed capital for $15,000. 
D)  a credit to Contributed capital for $10,000.

Question 4

West Corporation reported the following amounts on its statement of financial position at December 31, 20A:
   West's current ratio would be:

Accepted Answer

$3,400,000

Question 5

This question focuses on the financial statements. Indicate the letter that best applies to each statement in the blank provided.
A. Does not apply to a corporation.
B. Reports the results of operations.
C. Reports changes in retained earnings and changes in share capital.
D. Reports cash inflows and outflows.
E. Reports financial position.
F. None of the above.
1. Income statement
2. Statement of financial position
____ 3. Statement of cash flows
4. Statement of changes in equity
____ 5. Statement of partners' equity

Accepted Answer

1. B; 2. E

Question 6

Which of the following would appear in the intangible assets section of a classified statement of financial position?

Accepted Answer

A)  Trade receivables. 
B)  Patents. 
C)  Cash. 
D)  Accumulated depreciation. 
A)  Trade receivables. 
B)  Patents. 
C)  Cash. 
D)  Accumulated depreciation.

Question 7

An increase in return on equity (ROE), over the three most recent years reported, can be a signal that a company has not invested in modernization of plant and equipment or research and development, which in the long run might lead to declining profits.

Accepted Answer

A) True 
 B)False

Question 8

The Ontario Securities Commission (OSC) is not empowered to do which of the following?

Accepted Answer

A)  Set reporting standards for firms with publicly traded debt or equity securities. 
B)  Conduct external audits for a fee. 
C)  File anti-trust suits against companies involved in restraint of trade. 
D)  Bring non-enforcement actions against company executives and auditors for accounting related violations. 
A)  Set reporting standards for firms with publicly traded debt or equity securities. 
B)  Conduct external audits for a fee. 
C)  File anti-trust suits against companies involved in restraint of trade. 
D)  Bring non-enforcement actions against company executives and auditors for accounting related violations.

Question 9

Gross profit is an important profit measure for companies that sell inventory because it shows the profit left from net sales after the cost of inventory sold has been deducted.

Accepted Answer

A) True 
 B)False

Question 10

Quarterly reports are most likely unaudited and condensed reports.

Accepted Answer

A) True 
 B)False

Question 11

Virginia Equipment, Inc., sold and issued 4,000 shares for $20 per share on January 1, 20B. On the same day, the company purchased a piece of land valued at $30,000 and a building valued at $80,000 The building will be used for 40 years and has a zero estimated salvage (residual) value. The company uses straight-line depreciation.
Required:
Prepare the general journal entries to record the share issue and the purchase of the land and building on January 1 and the depreciation expense on December 31, 20B.

Accepted Answer

The answer of Virginia Equipment, Inc., sold and issued 4,000...

Question 12

How is the debt-to-equity ratio computed?

Accepted Answer

A)  total liabilities divided by total shareholders' equity 
B)  current liabilities divided by total shareholders' equity 
C)  current assets divided by total shareholders' equity 
D)  total assets divided by total shareholders' equity 
A)  total liabilities divided by total shareholders' equity 
B)  current liabilities divided by total shareholders' equity 
C)  current assets divided by total shareholders' equity 
D)  total assets divided by total shareholders' equity

Question 13

What happens when the actual profit reported exceed the expected profit for a company?

Accepted Answer

A)  It causes an increase in the share price. 
B)  It causes a decrease in the share price. 
C)  It is impossible to understand the changes in market price of share. 
D)  There is no share price reaction because forecasts of profit almost never reflect actual results. 
A)  It causes an increase in the share price. 
B)  It causes a decrease in the share price. 
C)  It is impossible to understand the changes in market price of share. 
D)  There is no share price reaction because forecasts of profit almost never reflect actual results.

Question 14

Which of the following is not used by financial analysts in forming a recommendation about whether a company's shares should be sold, held or bought?

Accepted Answer

A)  Opinions of "the man on the street". 
B)  Information about competitors within the industry. 
C)  Information about the general economy. 
D)  Knowledge of alternative accounting methods used by companies in their financial statement preparation. 
A)  Opinions of "the man on the street". 
B)  Information about competitors within the industry. 
C)  Information about the general economy. 
D)  Knowledge of alternative accounting methods used by companies in their financial statement preparation.

Question 15

The cash flow statement

Accepted Answer

A)  summarizes the operating, financing, and investing activities of a company. 
B)  is another name for the statement of earnings. 
C)  is a special section of the statement of earnings. 
D)  must be prepared on a daily basis. 
A)  summarizes the operating, financing, and investing activities of a company. 
B)  is another name for the statement of earnings. 
C)  is a special section of the statement of earnings. 
D)  must be prepared on a daily basis.

Question 16

Which of the following is an example of a non-current asset?

Accepted Answer

A)  prepaid expenses 
B)  inventory 
C)  trade receivables 
D)  long term investments 
A)  prepaid expenses 
B)  inventory 
C)  trade receivables 
D)  long term investments

Question 17

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is:

Accepted Answer

A)  cash flows from investing activities. 
B)  usually different from year to year. 
C)  cash flows from operating activities. 
D)  cash flows from financing activities. 
A)  cash flows from investing activities. 
B)  usually different from year to year. 
C)  cash flows from operating activities. 
D)  cash flows from financing activities.

Question 18

Financial leverage is computed by dividing average shareholders' equity by average total assets.

Accepted Answer

A) True 
 B)False

Question 19

The objective of financial reporting is to provide financial information about a company that is useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources to the company.

Accepted Answer

A) True 
 B)False

Question 20

The securities commission staff reviews public reports for compliance with legal and professional standards, investigates irregularities, and punishes violators.

Accepted Answer

A) True 
 B)False

The primary responsibility for the information reported by a company rests with which of the following?

The cost constraint ensures that information costs less than budget.

Liberward, Inc. sold and issued 1,000 shares for $15 per share. The book value of the shares was $10 per share. The journal entry to record the share issue would include which of the following?

West Corporation reported the following amounts on its statement of financial position at December 31, 20A: West's current ratio would be:

Which of the following would appear in the intangible assets section of a classified statement of financial position?

An increase in return on equity (ROE), over the three most recent years reported, can be a signal that a company has not invested in modernization of plant and equipment or research and development, which in the long run might lead to declining profits.

The Ontario Securities Commission (OSC) is not empowered to do which of the following?

Gross profit is an important profit measure for companies that sell inventory because it shows the profit left from net sales after the cost of inventory sold has been deducted.

Quarterly reports are most likely unaudited and condensed reports.

How is the debt-to-equity ratio computed?

What happens when the actual profit reported exceed the expected profit for a company?

Which of the following is not used by financial analysts in forming a recommendation about whether a company's shares should be sold, held or bought?

The cash flow statement

Which of the following is an example of a non-current asset?

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is:

Financial leverage is computed by dividing average shareholders' equity by average total assets.

The objective of financial reporting is to provide financial information about a company that is useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources to the company.

The securities commission staff reviews public reports for compliance with legal and professional standards, investigates irregularities, and punishes violators.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters

Exam 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash

The primary responsibility for the information reported by a company rests with which of the following?

The cost constraint ensures that information costs less than budget.

Liberward, Inc. sold and issued 1,000 shares for $15 per share. The book value of the shares was $10 per share. The journal entry to record the share issue would include which of the following?

West Corporation reported the following amounts on its statement of financial position at December 31, 20A: West's current ratio would be:

Which of the following would appear in the intangible assets section of a classified statement of financial position?

An increase in return on equity (ROE), over the three most recent years reported, can be a signal that a company has not invested in modernization of plant and equipment or research and development, which in the long run might lead to declining profits.

The Ontario Securities Commission (OSC) is not empowered to do which of the following?

Gross profit is an important profit measure for companies that sell inventory because it shows the profit left from net sales after the cost of inventory sold has been deducted.

Quarterly reports are most likely unaudited and condensed reports.

How is the debt-to-equity ratio computed?

What happens when the actual profit reported exceed the expected profit for a company?

Which of the following is not used by financial analysts in forming a recommendation about whether a company's shares should be sold, held or bought?

The cash flow statement

Which of the following is an example of a non-current asset?

The category that is generally considered to be the best measure of a company's ability to continue as a going concern is:

Financial leverage is computed by dividing average shareholders' equity by average total assets.

The objective of financial reporting is to provide financial information about a company that is useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources to the company.

The securities commission staff reviews public reports for compliance with legal and professional standards, investigates irregularities, and punishes violators.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters