Question 1

A statement of income

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 2

The concept that economic activity, which can be identified with a particular company must be kept separate and distinct from the owner(s) and from all other economic entities is known as

Accepted Answer

A) the separation concept. 
B) the reporting entity concept. 
C) the economic concept. 
D) the business organization concept. 
A) the separation concept. 
B) the reporting entity concept. 
C) the economic concept. 
D) the business organization concept.

Question 3

If total liabilities decreased by $134,000 during a period of time and shareholders' equity increased by $103,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n)

Accepted Answer

A) $134,000 increase. 
B) $103,000 increase. 
C) $31,000 decrease. 
D) $31,000 increase. 
A) $134,000 increase. 
B) $103,000 increase. 
C) $31,000 decrease. 
D) $31,000 increase.

Question 4

The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is called a(n)

Accepted Answer

A) account payable. 
B) account receivable. 
C) revenue. 
D) expense. 
A) account payable. 
B) account receivable. 
C) revenue. 
D) expense.

Question 5

High standards of ethics are not required for preparers of financial information.

Accepted Answer

A) True 
 B)False

Question 6

Companies present summarized financial information in the form of financial statements for both internal and external use.

Accepted Answer

A) True 
 B)False

Question 7

Use the following information for questions 
Plumbers-on-the-Go Ltd.started the year with total assets of $120,000 and total liabilities of $75,000.During the year, the business recorded $82,000 in service revenues, $45,000 in expenses, and paid dividends of $2,500.
-Shareholders' equity at the end of the year was

Accepted Answer

A) $79,500. 
B) $45,000. 
C) $82,000. 
D) $77,000. 
A) $79,500. 
B) $45,000. 
C) $82,000. 
D) $77,000.

Question 8

Cost of goods sold is a(n)

Accepted Answer

A) liability. 
B) financing activity. 
C) asset. 
D) expense. 
A) liability. 
B) financing activity. 
C) asset. 
D) expense.

Question 9

A proprietorship is usually operated by the owner.

Accepted Answer

A) True 
 B)False

Question 10

If total liabilities increased by $18,000 and shareholders' equity increased by $21,000 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) $18,000 increase 
B) $21,000 increase 
C) $39,000 decrease 
D) $39,000 increase 
A) $18,000 increase 
B) $21,000 increase 
C) $39,000 decrease 
D) $39,000 increase

Question 11

Which one of the following statements is false?

Accepted Answer

A) The basic accounting equation does not subdivide liabilities into two categories: claims of creditors and claims of the Canada Revenue Agency. 
B) The accounting equation can be expressed as: Assets - Shareholders' Equity = Liabilities. 
C) The accounting equation can be expressed as: Assets + Liabilities = Shareholders' Equity. 
D) If the assets owned by a business total $100,000 and liabilities total $52,000, shareholders' equity must total $48,000. 
A) The basic accounting equation does not subdivide liabilities into two categories: claims of creditors and claims of the Canada Revenue Agency. 
B) The accounting equation can be expressed as: Assets - Shareholders' Equity = Liabilities. 
C) The accounting equation can be expressed as: Assets + Liabilities = Shareholders' Equity. 
D) If the assets owned by a business total $100,000 and liabilities total $52,000, shareholders' equity must total $48,000.

Question 12

Use the following information for questions 
Plumbers-on-the-Go Ltd.started the year with total assets of $120,000 and total liabilities of $75,000.During the year, the business recorded $82,000 in service revenues, $45,000 in expenses, and paid dividends of $2,500.
-The net income reported for the year was

Accepted Answer

A) $34,500. 
B) $37,000. 
C) $45,000. 
D) $82,000. 
A) $34,500. 
B) $37,000. 
C) $45,000. 
D) $82,000.

Question 13

A partnership is a business organized as a separate legal entity.

Accepted Answer

A) True 
 B)False

Question 14

Allocating and recording the cost of using property, plant & equipment over its useful life is called

Accepted Answer

A) allocation expense. 
B) depreciation expense. 
C) a general expense. 
D) amortization expense. 
A) allocation expense. 
B) depreciation expense. 
C) a general expense. 
D) amortization expense.

Question 15

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

Accepted Answer

A) the president of a company 
B) the controller of a company 
C) a creditor of a company 
D) a sales manager of a company 
A) the president of a company 
B) the controller of a company 
C) a creditor of a company 
D) a sales manager of a company

Question 16

A company's policy toward dividends and growth could best be determined by examining the

Accepted Answer

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

Question 17

Which of the following uses accounting information to determine whether a company's net income will result in a share price increase?

Accepted Answer

A) shareholders 
B) marketing managers 
C) creditors 
D) Chief Financial Officer 
A) shareholders 
B) marketing managers 
C) creditors 
D) Chief Financial Officer

Question 18

Liabilities of a company are owed to

Accepted Answer

A) debtors. 
B) owners. 
C) creditors. 
D) shareholders. 
A) debtors. 
B) owners. 
C) creditors. 
D) shareholders.

Question 19

The statement of changes in equity would not show

Accepted Answer

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

Question 20

Expenses are the cost of assets consumed or services used in the process of generating revenue.

Accepted Answer

A) True 
 B)False

A statement of income

The concept that economic activity, which can be identified with a particular company must be kept separate and distinct from the owner(s) and from all other economic entities is known as

If total liabilities decreased by $134,000 during a period of time and shareholders' equity increased by $103,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n)

The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is called a(n)

High standards of ethics are not required for preparers of financial information.

Companies present summarized financial information in the form of financial statements for both internal and external use.

Cost of goods sold is a(n)

A proprietorship is usually operated by the owner.

If total liabilities increased by $18,000 and shareholders' equity increased by $21,000 during a period of time, then total assets must change by what amount and direction (increase or decrease) during that same period?

Which one of the following statements is false?

A partnership is a business organized as a separate legal entity.

Allocating and recording the cost of using property, plant & equipment over its useful life is called

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

A company's policy toward dividends and growth could best be determined by examining the

Which of the following uses accounting information to determine whether a company's net income will result in a share price increase?

Liabilities of a company are owed to

The statement of changes in equity would not show

Expenses are the cost of assets consumed or services used in the process of generating revenue.

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters

Exam 1: The Purpose and Use of Financial Statements

A statement of income

The concept that economic activity, which can be identified with a particular company must be kept separate and distinct from the owner(s) and from all other economic entities is known as

If total liabilities decreased by $134,000 during a period of time and shareholders' equity increased by $103,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total assets is a(n)

The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is called a(n)

High standards of ethics are not required for preparers of financial information.

Companies present summarized financial information in the form of financial statements for both internal and external use.

Cost of goods sold is a(n)

A proprietorship is usually operated by the owner.

If total liabilities increased by $18,000 and shareholders' equity increased by $21,000 during a period of time, then total assets must change by what amount and direction (increase or decrease) during that same period?

Which one of the following statements is false?

A partnership is a business organized as a separate legal entity.

Allocating and recording the cost of using property, plant & equipment over its useful life is called

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

A company's policy toward dividends and growth could best be determined by examining the

Which of the following uses accounting information to determine whether a company's net income will result in a share price increase?

Liabilities of a company are owed to

The statement of changes in equity would not show

Expenses are the cost of assets consumed or services used in the process of generating revenue.

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters