Question 1

The purchase of land for a combination of cash and issuance of shares would require which of the following?

Accepted Answer

A)  increase in Land, increase in Common shares, increase in Cash 
B)  increase in Cash, decrease in Common shares, decrease in Land 
C)  increase in Land, increase in Common shares 
D)  increase in Land, increase in Common shares, decrease in Cash 
A)  increase in Land, increase in Common shares, increase in Cash 
B)  increase in Cash, decrease in Common shares, decrease in Land 
C)  increase in Land, increase in Common shares 
D)  increase in Land, increase in Common shares, decrease in Cash D

Question 2

The issuance of common shares with a value of $9,000 to purchase land will increase the common share account.

Accepted Answer

A) True 
 B)False  True

Question 3

The purchase of a three-year insurance policy should be reflected on the Statement of Financial Position under current assets.

Accepted Answer

A) True 
 B)False  True

Question 4

The accounting basis that attempts to measure performance in the period in which it occurred is the

Accepted Answer

A)  approval basis. 
B)  cash basis. 
C)  matching basis. 
D)  accrual basis. 
A)  approval basis. 
B)  cash basis. 
C)  matching basis. 
D)  accrual basis.

Question 5

A company sold available for resale inventory for cash. What is the effect of this sale?

Accepted Answer

A)  increase in revenue, increase in COGS, decrease in inventory 
B)  increase in revenue, decrease in COGS, increase in inventory 
C)  increase in revenue, increase in COGS, increase in inventory 
D)  increase in revenue, decrease in COGS, decrease in inventory 
A)  increase in revenue, increase in COGS, decrease in inventory 
B)  increase in revenue, decrease in COGS, increase in inventory 
C)  increase in revenue, increase in COGS, increase in inventory 
D)  increase in revenue, decrease in COGS, decrease in inventory

Question 6

All public companies must follow IFRS.

Accepted Answer

A) True 
 B)False

Question 7

The asset that results from the payment of expenses in advance is

Accepted Answer

A)  Accounts receivable. 
B)  Short term investments. 
C)  Inventory. 
D)  Prepaids. 
A)  Accounts receivable. 
B)  Short term investments. 
C)  Inventory. 
D)  Prepaids.

Question 8

How are goods purchased for sale at a later date recorded in the financial statements?

Accepted Answer

A)  as inventory 
B)  as prepaid expenses 
C)  as cost of goods sold 
D)  as operating expenses 
A)  as inventory 
B)  as prepaid expenses 
C)  as cost of goods sold 
D)  as operating expenses

Question 9

A company paid $22,000 for goods it had purchased last month for resale. What is the effect of the payment?

Accepted Answer

A)  a decrease in inventory 
B)  a decrease in accounts payable 
C)  an increase in cost of goods sold 
D)  an increase in inventory 
A)  a decrease in inventory 
B)  a decrease in accounts payable 
C)  an increase in cost of goods sold 
D)  an increase in inventory

Question 10

Which of the following transactions would decrease the cash from operating activities?

Accepted Answer

A)  the payment of dividends 
B)  the sale of goods on account 
C)  the purchase of goods on account 
D)  the payment of wages 
A)  the payment of dividends 
B)  the sale of goods on account 
C)  the purchase of goods on account 
D)  the payment of wages

Question 11

Which of the following expenses has NO effect on the cash flow of a firm?

Accepted Answer

A)  salaries expense 
B)  interest expense 
C)  depreciation expense 
D)  cost of goods sold 
A)  salaries expense 
B)  interest expense 
C)  depreciation expense 
D)  cost of goods sold

Question 12

Use the following information for questions 27-28.
During a recent week, Emmy's Consulting received $25,000 cash from clients for services performed with a total value of $75,000. The balance is to be received within 30 days.
-The effect on the Statement of Financial Position equation for this transaction would be

Accepted Answer

A)  + $25,000 cash = - $50,000 accounts payable + $75,000 retained earnings. 
B)  + $25,000 cash - $50,000 accounts receivable = $75,000 retained earnings. 
C)  + $25,000 cash + $50,000 accounts receivable = + $75,000 retained earnings. 
D)  + $25,000 cash = + $25,000 retained earnings. 
A)  + $25,000 cash = - $50,000 accounts payable + $75,000 retained earnings. 
B)  + $25,000 cash - $50,000 accounts receivable = $75,000 retained earnings. 
C)  + $25,000 cash + $50,000 accounts receivable = + $75,000 retained earnings. 
D)  + $25,000 cash = + $25,000 retained earnings.

Question 13

NBV of an asset is the cost of the asset that has already been expensed.

Accepted Answer

A) True 
 B)False

Question 14

The asset that results when a customer buys goods or services on credit is

Accepted Answer

A)  Accounts receivable. 
B)  Accounts payable. 
C)  Notes receivable. 
D)  Cash. 
A)  Accounts receivable. 
B)  Accounts payable. 
C)  Notes receivable. 
D)  Cash.

Question 15

Information that has been determined based on the best information available using the correct process and with an adequate explanation provided is an example of which fundamental characteristic?

Accepted Answer

A)  neutral 
B)  free from bias 
C)  timeliness 
D)  verifiability 
A)  neutral 
B)  free from bias 
C)  timeliness 
D)  verifiability

Question 16

The profit margin ratio = sales ÷ net income.

Accepted Answer

A) True 
 B)False

Question 17

The sale of merchandise to a customer partly for cash and partly on account would require which of the following?

Accepted Answer

A)  increase in Accounts receivable, increase in Cash, increase in Sales revenue 
B)  increase in Cash, decrease in Accounts payable, increase in Sales revenue 
C)  increase in Cash, increase in Sales revenue 
D)  decrease in Accounts payable, increase in Accounts receivable, increase in Sales revenue 
A)  increase in Accounts receivable, increase in Cash, increase in Sales revenue 
B)  increase in Cash, decrease in Accounts payable, increase in Sales revenue 
C)  increase in Cash, increase in Sales revenue 
D)  decrease in Accounts payable, increase in Accounts receivable, increase in Sales revenue

Question 18

When the board of directors declares a $500 dividend, which of the following would be included in recording the transaction?

Accepted Answer

A)  increase in Retained Earnings, increase in Dividends Declared 
B)  decrease in Cash, decrease in Dividends Payable 
C)  increase in Dividends Declared, increase in Dividends Payable 
D)  decrease in Dividends Payable, increase in Cash 
A)  increase in Retained Earnings, increase in Dividends Declared 
B)  decrease in Cash, decrease in Dividends Payable 
C)  increase in Dividends Declared, increase in Dividends Payable 
D)  decrease in Dividends Payable, increase in Cash

Question 19

Information is considered to be material if it would impact the decisions of a financial statement user.

Accepted Answer

A) True 
 B)False

Question 20

Dividends are an expense of doing business.

Accepted Answer

A) True 
 B)False

The purchase of land for a combination of cash and issuance of shares would require which of the following?

The issuance of common shares with a value of $9,000 to purchase land will increase the common share account.

The purchase of a three-year insurance policy should be reflected on the Statement of Financial Position under current assets.

The accounting basis that attempts to measure performance in the period in which it occurred is the

A company sold available for resale inventory for cash. What is the effect of this sale?

All public companies must follow IFRS.

The asset that results from the payment of expenses in advance is

How are goods purchased for sale at a later date recorded in the financial statements?

A company paid $22,000 for goods it had purchased last month for resale. What is the effect of the payment?

Which of the following transactions would decrease the cash from operating activities?

Which of the following expenses has NO effect on the cash flow of a firm?

NBV of an asset is the cost of the asset that has already been expensed.

The asset that results when a customer buys goods or services on credit is

Information that has been determined based on the best information available using the correct process and with an adequate explanation provided is an example of which fundamental characteristic?

The profit margin ratio = sales ÷ net income.

The sale of merchandise to a customer partly for cash and partly on account would require which of the following?

When the board of directors declares a $500 dividend, which of the following would be included in recording the transaction?

Information is considered to be material if it would impact the decisions of a financial statement user.

Dividends are an expense of doing business.

Overview of Corporate Financial Reporting

Double-Entry Accounting and the Accounting Cycle

Revenue Recognition and the Statement of Incom

Revenue Recognition and the Statement of Income

The Statement of Cash Flows

Cash and Accounts

Inventory

Long-Term Assets

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

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Exam 2: Nalyzing Transaction and Their Effect on Financial Statement

The purchase of land for a combination of cash and issuance of shares would require which of the following?

The issuance of common shares with a value of $9,000 to purchase land will increase the common share account.

The purchase of a three-year insurance policy should be reflected on the Statement of Financial Position under current assets.

The accounting basis that attempts to measure performance in the period in which it occurred is the

A company sold available for resale inventory for cash. What is the effect of this sale?

All public companies must follow IFRS.

The asset that results from the payment of expenses in advance is

How are goods purchased for sale at a later date recorded in the financial statements?

A company paid $22,000 for goods it had purchased last month for resale. What is the effect of the payment?

Which of the following transactions would decrease the cash from operating activities?

Which of the following expenses has NO effect on the cash flow of a firm?

NBV of an asset is the cost of the asset that has already been expensed.

The asset that results when a customer buys goods or services on credit is

Information that has been determined based on the best information available using the correct process and with an adequate explanation provided is an example of which fundamental characteristic?

The profit margin ratio = sales ÷ net income.

The sale of merchandise to a customer partly for cash and partly on account would require which of the following?

When the board of directors declares a $500 dividend, which of the following would be included in recording the transaction?

Information is considered to be material if it would impact the decisions of a financial statement user.

Dividends are an expense of doing business.

Overview of Corporate Financial Reporting

Double-Entry Accounting and the Accounting Cycle

Revenue Recognition and the Statement of Incom

Revenue Recognition and the Statement of Income

The Statement of Cash Flows

Cash and Accounts

Inventory

Long-Term Assets

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

Filters