Question 1

Which of the following transactions would increase an asset and increase a liability?

Accepted Answer

A) payment of an account payable 
B) borrowing money from a bank 
C) an owner investment of cash into the business 
D) purchasing office equipment for cash 
A) payment of an account payable 
B) borrowing money from a bank 
C) an owner investment of cash into the business 
D) purchasing office equipment for cash

Question 2

Table 1-3
Ace Builders had the following transactions in June: earned $4,000 "on account" that will be collected in cash next month; collected $3,000 from a customer that was owed from a previous month; incurred $500 of repair expense and paid cash to the repairman; paid $1,200 cash to a supplier that it owed from the previous month; paid out $800 in cash withdrawals to the owner.
-For Ace Builders, how much was the net income or net loss in June?

Accepted Answer

A) $6,500 net income 
B) $3,500 net income 
C) $5,300 net income 
D) $2,500 net loss 
A) $6,500 net income 
B) $3,500 net income 
C) $5,300 net income 
D) $2,500 net loss

Question 3

The payment of an account payable would:

Accepted Answer

A) increase owner's equity. 
B) decrease owner's equity. 
C) have no effect on total assets. 
D) have no effect on owner's equity. 
A) increase owner's equity. 
B) decrease owner's equity. 
C) have no effect on total assets. 
D) have no effect on owner's equity.

Question 4

Match between columns
                        Premises: ________ Owner's withdrawals
________ Beginning owner's equity
________ Equipment
________ Accounts receivable
________ Service revenue
________ Utilities expense
________ Cash
________ Accounts payable

Accepted Answer

The Answer of income statement and statement of owner's equity is...

Question 5

Some rules of conduct apply to accountants in public practice and not to those employed in industry.

Accepted Answer

A) True 
 B)False

Question 6

Receiving cash from a customer in payment of an account receivable would:

Accepted Answer

A) decrease total assets and increase owner's equity. 
B) increase owner's equity and increase liabilities. 
C) increase total assets and decrease liabilities. 
D) have no effect on total assets or owner's equity. 
A) decrease total assets and increase owner's equity. 
B) increase owner's equity and increase liabilities. 
C) increase total assets and decrease liabilities. 
D) have no effect on total assets or owner's equity.

Question 7

GAAP stands for:

Accepted Answer

A) generally accepted auditing practices. 
B) generally accrued auditing procedures. 
C) generally accepted accounting principles. 
D) generally accrued accounting principles. 
A) generally accepted auditing practices. 
B) generally accrued auditing procedures. 
C) generally accepted accounting principles. 
D) generally accrued accounting principles.

Question 8

Which of the following statements is true?

Accepted Answer

A) The value of a dollar changes over time. 
B) German accountants record transactions in dollars. 
C) The stable-monetary-unit concept requires adjustments to the accounting records for the effects of inflation. 
D) High inflation rates indicate a dollar's purchasing power is stable. 
A) The value of a dollar changes over time. 
B) German accountants record transactions in dollars. 
C) The stable-monetary-unit concept requires adjustments to the accounting records for the effects of inflation. 
D) High inflation rates indicate a dollar's purchasing power is stable.

Question 9

Match between columns
                        Premises: ________ Pay for interest on bank loan.
________ Paid salaries of employees.
________ Owner withdraws cash from the business for personal use.
________ Owner invested cash into the entity.
________ Collected cash on account and from cash customers.
________ Borrowed money from the bank.
________ Paid utilities for the current period.
________ Purchased equipment for cash.

Accepted Answer

The Answer of financing activity and investing activity and operating is...

Question 10

ASPE is included in the CPA Canada Handbook while IFRS is included in the International Handbook.

Accepted Answer

A) True 
 B)False

Question 11

A business receives its bill for utilities for the current month that it plans to pay next month when the payment is due. This transaction causes:

Accepted Answer

A) an increase in both assets and owner's equity. 
B) a decrease in both owner's equity and liabilities. 
C) an increase in both assets and liabilities. 
D) an increase in liabilities and a decrease in owner's equity. 
A) an increase in both assets and owner's equity. 
B) a decrease in both owner's equity and liabilities. 
C) an increase in both assets and liabilities. 
D) an increase in liabilities and a decrease in owner's equity.

Question 12

Audits conducted by external accountants express an opinion:

Accepted Answer

A) that evaluates the effectiveness of management. 
B) that taxing authorities use to ensure that the correct amount of tax owing has been calculated. 
C) that gives investors confidence their investment is not at risk. 
D) on whether or not the financial statements fairly reflect the economic events that occurred during the accounting period. 
A) that evaluates the effectiveness of management. 
B) that taxing authorities use to ensure that the correct amount of tax owing has been calculated. 
C) that gives investors confidence their investment is not at risk. 
D) on whether or not the financial statements fairly reflect the economic events that occurred during the accounting period.

Question 13

Each financial statement includes a heading giving three pieces of data. Which of the following items is not included in these headings?

Accepted Answer

A) Name of the financial statement 
B) Date or time period covered 
C) Name of the preparer of the statement 
D) Name of the business 
A) Name of the financial statement 
B) Date or time period covered 
C) Name of the preparer of the statement 
D) Name of the business

Question 14

Match between columns
                        Premises: ________ Accounts payable
________ Supplies
________ Capital
________ Wages payable
________ Cash
________ Equipment
________ Accounts receivable

Accepted Answer

The Answer of liability and owner's equity and asset is...

Question 15

For each of the following events, indicate the amount by which liabilities increased or decreased.
a)Owner invested cash of $20,000 and equipment valued at $10,500 into the business.
b)Purchased $600 of supplies on account.
c)Borrowed $10,000 from the bank, issuing a note payable.
d)Performed a service for $1,500 and immediately collected the cash.
e)Paid the employee salaries of $1,200 cash.
f)Purchased equipment for $550 cash.
g)Received monthly rent bill of $1,300, to be paid in the following period.
h)Performed a service on account for $2,300.

Accepted Answer

a)$0
b)$600 increase

Question 16

One way of increasing the equity of a business is to increase a liability.

Accepted Answer

A) True 
 B)False

Question 17

What classifications of Canadian corporations are required to use International Financial Reporting Standards (IFRS)?

Accepted Answer

A) publicly accountable enterprises 
B) all companies 
C) private companies 
D) none 
A) publicly accountable enterprises 
B) all companies 
C) private companies 
D) none

Question 18

On the financial statements, which line item connects the balance sheet to the statement of cash flows?

Accepted Answer

A) Owner's equity (ending balance) 
B) Net income 
C) Total assets 
D) Cash (ending balance) 
A) Owner's equity (ending balance) 
B) Net income 
C) Total assets 
D) Cash (ending balance)

Question 19

A promise by a customer to pay cash in the future is a(n):

Accepted Answer

A) account receivable. 
B) liability. 
C) prepaid asset. 
D) note payable. 
A) account receivable. 
B) liability. 
C) prepaid asset. 
D) note payable.

Question 20

The going-concern assumption states an entity will remain in operation for only the next accounting period.

Accepted Answer

A) True 
 B)False

Which of the following transactions would increase an asset and increase a liability?

The payment of an account payable would:

Some rules of conduct apply to accountants in public practice and not to those employed in industry.

Receiving cash from a customer in payment of an account receivable would:

GAAP stands for:

Which of the following statements is true?

ASPE is included in the CPA Canada Handbook while IFRS is included in the International Handbook.

A business receives its bill for utilities for the current month that it plans to pay next month when the payment is due. This transaction causes:

Audits conducted by external accountants express an opinion:

Each financial statement includes a heading giving three pieces of data. Which of the following items is not included in these headings?

One way of increasing the equity of a business is to increase a liability.

What classifications of Canadian corporations are required to use International Financial Reporting Standards (IFRS)?

On the financial statements, which line item connects the balance sheet to the statement of cash flows?

A promise by a customer to pay cash in the future is a(n):

The going-concern assumption states an entity will remain in operation for only the next accounting period.

Recording Business Transactions

Measuring Business Income: The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations and the Accounting Cycle

Accounting for Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Property, Plant, and Equipment; Goodwill; and Intangibles

Current Liabilities and Payroll

Filters

Exam 1: Accounting and the Business Environment

Which of the following transactions would increase an asset and increase a liability?

The payment of an account payable would:

Some rules of conduct apply to accountants in public practice and not to those employed in industry.

Receiving cash from a customer in payment of an account receivable would:

GAAP stands for:

Which of the following statements is true?

ASPE is included in the CPA Canada Handbook while IFRS is included in the International Handbook.

A business receives its bill for utilities for the current month that it plans to pay next month when the payment is due. This transaction causes:

Audits conducted by external accountants express an opinion:

Each financial statement includes a heading giving three pieces of data. Which of the following items is not included in these headings?

One way of increasing the equity of a business is to increase a liability.

What classifications of Canadian corporations are required to use International Financial Reporting Standards (IFRS)?

On the financial statements, which line item connects the balance sheet to the statement of cash flows?

A promise by a customer to pay cash in the future is a(n):

The going-concern assumption states an entity will remain in operation for only the next accounting period.

Recording Business Transactions

Measuring Business Income: The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations and the Accounting Cycle

Accounting for Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Property, Plant, and Equipment; Goodwill; and Intangibles

Current Liabilities and Payroll

Filters