Question 1

Accounting communicates financial information about a business to both internal and external users.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would not be considered an internal user of accounting data for XYZ Inc.?

Accepted Answer

A) the company president 
B) production manager 
C) merchandise inventory clerk 
D) receptionist of the employees' labour union 
A) the company president 
B) production manager 
C) merchandise inventory clerk 
D) receptionist of the employees' labour union

Question 3

The issue of shares and distribution of dividends are used in determining profit.

Accepted Answer

A) True 
 B)False

Question 4

A statement of financial position shows

Accepted Answer

A) revenues, liabilities, and shareholders' equity. 
B) expenses, dividends, and shareholders' equity. 
C) revenues, expenses, and dividends. 
D) assets, liabilities, and shareholders' equity. 
A) revenues, liabilities, and shareholders' equity. 
B) expenses, dividends, and shareholders' equity. 
C) revenues, expenses, and dividends. 
D) assets, liabilities, and shareholders' equity.

Question 5

Which form of business would have its shares listed on a stock exchange?

Accepted Answer

A) proprietorship 
B) partnership 
C) private corporation 
D) public corporation 
A) proprietorship 
B) partnership 
C) private corporation 
D) public corporation

Question 6

Shareholders and creditors are the only people who need accounting information.

Accepted Answer

A) True 
 B)False

Question 7

Shareholders' equity is usually comprised of

Accepted Answer

A) common shares and dividends. 
B) common shares and retained earnings. 
C) dividends and retained earnings. 
D) profit and retained earnings. 
A) common shares and dividends. 
B) common shares and retained earnings. 
C) dividends and retained earnings. 
D) profit and retained earnings.

Question 8

Accounting identifies and records economic events of a business.

Accepted Answer

A) True 
 B)False

Question 9

The statement of changes in equity covers a different time period than that covered by the income statement.

Accepted Answer

A) True 
 B)False

Question 10

Which financial statement is prepared first?

Accepted Answer

A) Statement of financial position 
B) Income statement 
C) Statement of changes in equity 
D) Statement of cash flows 
A) Statement of financial position 
B) Income statement 
C) Statement of changes in equity 
D) Statement of cash flows

Question 11

An income statement

Accepted Answer

A) summarizes the changes in retained earnings 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) reports the revenues and expenses for a specific period of time. 
A) summarizes the changes in retained earnings 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) reports the revenues and expenses for a specific period of time.

Question 12

The proprietorship form of business organization

Accepted Answer

A) in most provinces, must have at least two owners. 
B) is often chosen for small owner operated businesses. 
C) is difficult to set up. 
D) is classified as a separate legal entity. 
A) in most provinces, must have at least two owners. 
B) is often chosen for small owner operated businesses. 
C) is difficult to set up. 
D) is classified as a separate legal entity.

Question 13

The information needs and questions of external users vary considerably.

Accepted Answer

A) True 
 B)False

Question 14

Which financial statement would indicate whether the company relies more on debt or on shareholders' equity to finance its assets?

Accepted Answer

A) Statement of cash flows 
B) Statement of changes in equity 
C) Income statement 
D) Statement of financial position 
A) Statement of cash flows 
B) Statement of changes in equity 
C) Income statement 
D) Statement of financial position

Question 15

Expenses are incurred

Accepted Answer

A) only on rare occasions. 
B) to produce assets. 
C) to produce liabilities. 
D) to generate revenues. 
A) only on rare occasions. 
B) to produce assets. 
C) to produce liabilities. 
D) to generate revenues.

Question 16

If total liabilities increased by $15,000 and shareholders' equity increased by $15,000 during a period of time, then total assets must change by what amount and direction (increase or decrease) during that same period?

Accepted Answer

A) $15,000 decrease 
B) $15,000 increase 
C) $30,000 decrease 
D) $30,000 increase 
A) $15,000 decrease 
B) $15,000 increase 
C) $30,000 decrease 
D) $30,000 increase

Question 17

The basic accounting equation subdivides liabilities into two categories: claims of creditors and claims of the Canada Revenue Agency.

Accepted Answer

A) True 
 B)False

Question 18

Describe the purpose and content of each of the financial statements.

Accepted Answer

The income statement presents the revenu

Question 19

The purchase of equipment is an example of a financing activity.

Accepted Answer

A) True 
 B)False

Question 20

Use the following information for questions 
Kareem's Rental Ltd.started the year with total assets of $70,000 and total liabilities of $40,000.During the year, the business recorded $100,000 in car repair revenues, $65,000 in expenses, and paid dividends of $5,000.
-Shareholders' equity at the end of the year was

Accepted Answer

A) $60,000. 
B) $65,000. 
C) $70,000. 
D) $75,000. 
A) $60,000. 
B) $65,000. 
C) $70,000. 
D) $75,000.

Accounting communicates financial information about a business to both internal and external users.

Which of the following would not be considered an internal user of accounting data for XYZ Inc.?

The issue of shares and distribution of dividends are used in determining profit.

A statement of financial position shows

Which form of business would have its shares listed on a stock exchange?

Shareholders and creditors are the only people who need accounting information.

Shareholders' equity is usually comprised of

Accounting identifies and records economic events of a business.

The statement of changes in equity covers a different time period than that covered by the income statement.

Which financial statement is prepared first?

An income statement

The proprietorship form of business organization

The information needs and questions of external users vary considerably.

Which financial statement would indicate whether the company relies more on debt or on shareholders' equity to finance its assets?

Expenses are incurred

If total liabilities increased by $15,000 and shareholders' equity increased by $15,000 during a period of time, then total assets must change by what amount and direction (increase or decrease) during that same period?

The basic accounting equation subdivides liabilities into two categories: claims of creditors and claims of the Canada Revenue Agency.

Describe the purpose and content of each of the financial statements.

The purchase of equipment is an example of a financing activity.

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

Accounting communicates financial information about a business to both internal and external users.

Which of the following would not be considered an internal user of accounting data for XYZ Inc.?

The issue of shares and distribution of dividends are used in determining profit.

A statement of financial position shows

Which form of business would have its shares listed on a stock exchange?

Shareholders and creditors are the only people who need accounting information.

Shareholders' equity is usually comprised of

Accounting identifies and records economic events of a business.

The statement of changes in equity covers a different time period than that covered by the income statement.

Which financial statement is prepared first?

An income statement

The proprietorship form of business organization

The information needs and questions of external users vary considerably.

Which financial statement would indicate whether the company relies more on debt or on shareholders' equity to finance its assets?

Expenses are incurred

If total liabilities increased by $15,000 and shareholders' equity increased by $15,000 during a period of time, then total assets must change by what amount and direction (increase or decrease) during that same period?

The basic accounting equation subdivides liabilities into two categories: claims of creditors and claims of the Canada Revenue Agency.

Describe the purpose and content of each of the financial statements.

The purchase of equipment is an example of a financing activity.

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