Question 1

Assets are resources owned by a business that provide current services or benefits to the business.

Accepted Answer

A) True 
 B)False  False

Question 2

Authorities, such as the Canada Revenue Agency, want to know whether a business complies with the tax laws.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following would not be considered an external user of accounting data?

Accepted Answer

A) Canada Revenue Agency 
B) management 
C) creditors 
D) customers 
A) Canada Revenue Agency 
B) management 
C) creditors 
D) customers B

Question 4

A negative balance in retained earnings is called a deficit.

Accepted Answer

A) True 
 B)False

Question 5

Explain the three main types of business activity.

Accepted Answer

Financing activities involve raising the

Question 6

If the retained earnings account increases from the beginning of the year to the end of the year, then

Accepted Answer

A) profit is greater than dividends. 
B) a loss is less than dividends. 
C) additional investments are less than reported losses. 
D) dividends were received. 
A) profit is greater than dividends. 
B) a loss is less than dividends. 
C) additional investments are less than reported losses. 
D) dividends were received.

Question 7

Retained earnings are

Accepted Answer

A) the shareholders' claim on total assets. 
B) equal to cash. 
C) equal to revenues. 
D) the amount of profit kept in the corporation for future use. 
A) the shareholders' claim on total assets. 
B) equal to cash. 
C) equal to revenues. 
D) the amount of profit kept in the corporation for future use.

Question 8

The partnership form of business organization

Accepted Answer

A) is a separate legal entity. 
B) is a common form of organization for service-type businesses. 
C) enjoys an unlimited life. 
D) has limited liability. 
A) is a separate legal entity. 
B) is a common form of organization for service-type businesses. 
C) enjoys an unlimited life. 
D) has limited liability.

Question 9

Any deficiency in cash from operating activities must be made up by issuing shares.

Accepted Answer

A) True 
 B)False

Question 10

Payments to shareholders are called

Accepted Answer

A) expenses. 
B) liabilities. 
C) dividends. 
D) shares. 
A) expenses. 
B) liabilities. 
C) dividends. 
D) shares.

Question 11

The statement of financial position

Accepted Answer

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

Question 12

The statement of changes in equity would not show

Accepted Answer

A) the beginning retained earnings balance. 
B) revenues and expenses. 
C) dividends. 
D) the ending retained earnings balance. 
A) the beginning retained earnings balance. 
B) revenues and expenses. 
C) dividends. 
D) the ending retained earnings balance.

Question 13

Which of the following is the most appropriate definition of accounting?

Accepted Answer

A) The information system that identifies, records, and communicates the economic events of an organization to interested users. 
B) a means of collecting information 
C) The interconnected network of subsystems necessary to operate a business. 
D) electronic collection, organization, and communication of vast amounts of information 
A) The information system that identifies, records, and communicates the economic events of an organization to interested users. 
B) a means of collecting information 
C) The interconnected network of subsystems necessary to operate a business. 
D) electronic collection, organization, and communication of vast amounts of information

Question 14

Investing activities involve collecting the necessary funds to operate the business.

Accepted Answer

A) True 
 B)False

Question 15

Profit for the period is determined by subtracting total expenses and dividends from revenues.

Accepted Answer

A) True 
 B)False

Question 16

Common shares are reported on

Accepted Answer

A) the statement of financial position. 
B) the statement of changes in equity. 
C) both the statement of financial position and the income statement. 
D) both the statement of changes in equity and the statement of financial position. 
A) the statement of financial position. 
B) the statement of changes in equity. 
C) both the statement of financial position and the income statement. 
D) both the statement of changes in equity and the statement of financial position.

Question 17

Financial statement users are interested in profit because it may be a predictor of future profit.

Accepted Answer

A) True 
 B)False

Question 18

The financial statement that summarizes the changes in common shares and retained earnings for a specific period of time is the

Accepted Answer

A) statement of financial position. 
B) income statement. 
C) statement of cash flows. 
D) statement of changes in equity. 
A) statement of financial position. 
B) income statement. 
C) statement of cash flows. 
D) statement of changes in equity.

Question 19

An advantage of the corporate form of business is that

Accepted Answer

A) it has limited life. 
B) its shareholders' personal resources are at stake. 
C) its ownership is easily transferable via the sale of shares. 
D) it is simple to establish. 
A) it has limited life. 
B) its shareholders' personal resources are at stake. 
C) its ownership is easily transferable via the sale of shares. 
D) it is simple to establish.

Question 20

Buying and selling products are examples of

Accepted Answer

A) operating activities. 
B) investing activities. 
C) financing activities. 
D) manufacturing activities. 
A) operating activities. 
B) investing activities. 
C) financing activities. 
D) manufacturing activities.

Assets are resources owned by a business that provide current services or benefits to the business.

Authorities, such as the Canada Revenue Agency, want to know whether a business complies with the tax laws.

Which of the following would not be considered an external user of accounting data?

A negative balance in retained earnings is called a deficit.

Explain the three main types of business activity.

If the retained earnings account increases from the beginning of the year to the end of the year, then

Retained earnings are

The partnership form of business organization

Any deficiency in cash from operating activities must be made up by issuing shares.

Payments to shareholders are called

The statement of financial position

The statement of changes in equity would not show

Which of the following is the most appropriate definition of accounting?

Investing activities involve collecting the necessary funds to operate the business.

Profit for the period is determined by subtracting total expenses and dividends from revenues.

Common shares are reported on

Financial statement users are interested in profit because it may be a predictor of future profit.

The financial statement that summarizes the changes in common shares and retained earnings for a specific period of time is the

An advantage of the corporate form of business is that

Buying and selling products are examples of

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Filters

Exam 1: Introduction to Financial Statements

Assets are resources owned by a business that provide current services or benefits to the business.

Authorities, such as the Canada Revenue Agency, want to know whether a business complies with the tax laws.

Which of the following would not be considered an external user of accounting data?

A negative balance in retained earnings is called a deficit.

Explain the three main types of business activity.

If the retained earnings account increases from the beginning of the year to the end of the year, then

Retained earnings are

The partnership form of business organization

Any deficiency in cash from operating activities must be made up by issuing shares.

Payments to shareholders are called

The statement of financial position

The statement of changes in equity would not show

Which of the following is the most appropriate definition of accounting?

Investing activities involve collecting the necessary funds to operate the business.

Profit for the period is determined by subtracting total expenses and dividends from revenues.

Common shares are reported on

Financial statement users are interested in profit because it may be a predictor of future profit.

The financial statement that summarizes the changes in common shares and retained earnings for a specific period of time is the

An advantage of the corporate form of business is that

Buying and selling products are examples of

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Filters