Question 1

The amount of sales tax collected by a retail store when making sales is

Accepted Answer

A)  miscellaneous revenue for the store. 
B)  a current liability. 
C)  not recorded because it is a tax paid by the customer. 
D)  recorded as an operating expense. 
A)  miscellaneous revenue for the store. 
B)  a current liability. 
C)  not recorded because it is a tax paid by the customer. 
D)  recorded as an operating expense.

Question 2

If a company's ﬁscal year is the same as the year used for property tax purposes, there should be no prepaid property tax on its year-end ﬁnancial statements but there may be a property tax liability.

Accepted Answer

A) True 
 B)False

Question 3

How should the amount of federal income tax that is withheld from employees' paychecks by the employer be recorded?

Accepted Answer

A)  On the employer's books as a current liability. 
B)  On the employer's books as an asset. 
C)  On the employer's books as revenue. 
D)  It should not be recorded on the employer's books. 
A)  On the employer's books as a current liability. 
B)  On the employer's books as an asset. 
C)  On the employer's books as revenue. 
D)  It should not be recorded on the employer's books.

Question 4

Interest expense on a note payable is only recorded at maturity.

Accepted Answer

A) True 
 B)False

Question 5

You have been asked to compute the amount that will be available at the end of three years as a result of a single sum of $1,000 that is deposited. What is the interest concept that best describes this application?

Accepted Answer

A)  Present value of a single amount. 
B)  Present value of an annuity. 
C)  Future value of a single amount. 
A)  Present value of a single amount. 
B)  Present value of an annuity. 
C)  Future value of a single amount.

Question 6

When a company increases trade payables from one year to the next, what is the effect on cash ﬂows?

Accepted Answer

A)  A decrease in cash caused by paying down our debt to vendors. 
B)  An increase in cash because we have not paid cash for all the inventory and services purchased on credit during the period. 
C)  A decrease to cash because we will have to pay these liabilities in the future. 
D)  An increase to cash because we have received cash from vendors. 
A)  A decrease in cash caused by paying down our debt to vendors. 
B)  An increase in cash because we have not paid cash for all the inventory and services purchased on credit during the period. 
C)  A decrease to cash because we will have to pay these liabilities in the future. 
D)  An increase to cash because we have received cash from vendors.

Question 7

At the beginning of Year 1, Mesa Corporation placed $10,000 in a savings account at 9%.
A. Assuming no withdrawals, complete the following tabulation (round to the nearest dollar).
B. Give the required journal entry at the end of Year 10 to record only the year 10 earnings: $$\begin{array} { | l | l | l | } 
\hline \text { Year-end } & \text { Balance in the Savings Account } & \text { Total Interest Earned to Date } \
\hline 3 & & \
\hline 9 & & \
\hline 10 & & \
\hline
\end{array}$$

Accepted Answer

Please review the following information:

Question 8

A quick ratio that is high when compared to an industry average might mean the company may have excessive inventory levels or slow moving inventory items.

Accepted Answer

A) True 
 B)False

Question 9

In 20X3, P Co reported an increase in trade receivables of $303 million, and an increase in inventory of $284 million. They also experienced an increase in short-term borrowings of $3,921 million and an increase in trade payables of $253 million. Calculate the net cash effect of these changes.

Accepted Answer

A)  $3,587 million decrease 
B)  $4,761 million increase 
C)  $3,587 million increase 
D)  $4,761 million decrease 
A)  $3,587 million decrease 
B)  $4,761 million increase 
C)  $3,587 million increase 
D)  $4,761 million decrease

Question 10

Big Top Electronics Inc. offers a two-year warranty on its products. The estimated liability is 4% of sales in the year of sale and 6% in the second year. Sales for 20X0 and 20X1 were: $2,500,000 and $2,800,000, respectively. They incurred no warranty costs in 20X0 but in 20X1 they spent $175,000 on repairs related to the warranties from 20X0 and 20X1. 
-Big Top's warranty liability as at the end of the 20X1 year is

Accepted Answer

A)  $380,000 
B)  $355,000 
C)  $75,000 
D)  $280,000 
A)  $380,000 
B)  $355,000 
C)  $75,000 
D)  $280,000

Question 11

Under IFRS, a provision is

Accepted Answer

A)  a liability of uncertain timing or amount. 
B)  a special fund set aside to pay long-term debt. 
C)  deferred revenue. 
D)  an allowance for future dividends to be paid. 
A)  a liability of uncertain timing or amount. 
B)  a special fund set aside to pay long-term debt. 
C)  deferred revenue. 
D)  an allowance for future dividends to be paid.

Question 12

Liquidity ratios measure a company's

Accepted Answer

A)  operating cycle. 
B)  revenue-producing ability. 
C)  short-term debt paying ability. 
D)  long-range solvency. 
A)  operating cycle. 
B)  revenue-producing ability. 
C)  short-term debt paying ability. 
D)  long-range solvency.

Question 13

An employee receives a bi-weekly gross salary of $2,000. Income tax is $218, CPP is $99, EI is $36, and union dues are $50. What is the amount of the employee's take home pay (net pay) on a bi- weekly basis?

Accepted Answer

A)  $1,597 
B)  $1,732 
C)  $1,782 
D)  $2,000 
A)  $1,597 
B)  $1,732 
C)  $1,782 
D)  $2,000

Question 14

All the following transactions lead to temporary timing differences except:

Accepted Answer

A)  the use of estimated warranty costs for calculating warranty expense 
B)  the use of straight-line amortization for accounting purposes 
C)  the recognition of dividend income for dividends received from another Canadian company 
D)  The use of provisions for gift card sales 
A)  the use of estimated warranty costs for calculating warranty expense 
B)  the use of straight-line amortization for accounting purposes 
C)  the recognition of dividend income for dividends received from another Canadian company 
D)  The use of provisions for gift card sales

Question 15

The "trade payables" account should generally be used only for trade payables (obligations owed to suppliers in the normal course of business) which relate to the purchase of goods and services.

Accepted Answer

A) True 
 B)False

Question 16

Kristen deposits $5,000 in the bank today. She will be earning 6% interest annually on her deposit. How much money will she have in the bank at the end of 5 years? (Round to the nearest dollar.)

Accepted Answer

A)  $3,736 
B)  $6,691 
C)  $21,062 
D)  $28,186 
A)  $3,736 
B)  $6,691 
C)  $21,062 
D)  $28,186

Question 17

If a company intends to reﬁnance a liability that is due within one year, that liability should not be classiﬁed as a current liability.

Accepted Answer

A) True 
 B)False

Question 18

In 20X3, Toys 4 U reported inventory of $1,902 million and trade payables of $1,415 million. In 20X2, the company reported inventory of $2,464 million and trade payables of $1,280 million. What was the effect on the 20X3 cash flow from operating activities?

Accepted Answer

A)  A decrease in cash of $697 million. 
B)  An increase in cash of $697 million. 
C)  A decrease in cash of $427 million. 
D)  An increase in cash of $427 million. 
A)  A decrease in cash of $697 million. 
B)  An increase in cash of $697 million. 
C)  A decrease in cash of $427 million. 
D)  An increase in cash of $427 million.

Question 19

Mountain Gear Corporation has the following selected accounts after posting adjusting entries: $$\begin{array} { | l | r | } 
\hline \text { Accounts Payable } & \$ 79,000 \
\hline \text { Notes Payable, 3-month } & 90,000 \
\hline \text { Accumulated Amortization-Equipment } & 14,000 \
\hline \text { Notes Payable, 5-year, 4\% } & 30,000 \
\hline \text { Employee Benefits Expense } & 6,000 \
\hline \text { Interest Payable } & 1,500 \
\hline \text { Mortgage Payable } & 250,000 \
\hline \text { Provincial Sales Tax Payable } & 39,500 \
\hline
\end{array}$$ Required: 
1. Prepare the current liability section of Mountain Gear Corporation's statement of ?nancial position, assuming $15,000 of the 5-year note is payable next year. 
2. Comment on Mountain Gear's liquidity, assuming total current assets are $450 ,000.

Accepted Answer

1. \[\begin{array} { | l | r | } 
\hline

Question 20

If any portion of a long-term debt is to be paid in the next year, the entire debt should be classiﬁed as a current liability.

Accepted Answer

A) True 
 B)False

The amount of sales tax collected by a retail store when making sales is

If a company's ﬁscal year is the same as the year used for property tax purposes, there should be no prepaid property tax on its year-end ﬁnancial statements but there may be a property tax liability.

How should the amount of federal income tax that is withheld from employees' paychecks by the employer be recorded?

Interest expense on a note payable is only recorded at maturity.

You have been asked to compute the amount that will be available at the end of three years as a result of a single sum of $1,000 that is deposited. What is the interest concept that best describes this application?

When a company increases trade payables from one year to the next, what is the effect on cash ﬂows?

A quick ratio that is high when compared to an industry average might mean the company may have excessive inventory levels or slow moving inventory items.

In 20X3, P Co reported an increase in trade receivables of $303 million, and an increase in inventory of $284 million. They also experienced an increase in short-term borrowings of $3,921 million and an increase in trade payables of $253 million. Calculate the net cash effect of these changes.

Under IFRS, a provision is

Liquidity ratios measure a company's

An employee receives a bi-weekly gross salary of $2,000. Income tax is $218, CPP is $99, EI is $36, and union dues are $50. What is the amount of the employee's take home pay (net pay) on a bi- weekly basis?

All the following transactions lead to temporary timing differences except:

The "trade payables" account should generally be used only for trade payables (obligations owed to suppliers in the normal course of business) which relate to the purchase of goods and services.

Kristen deposits $5,000 in the bank today. She will be earning 6% interest annually on her deposit. How much money will she have in the bank at the end of 5 years? (Round to the nearest dollar.)

If a company intends to reﬁnance a liability that is due within one year, that liability should not be classiﬁed as a current liability.

In 20X3, Toys 4 U reported inventory of $1,902 million and trade payables of $1,415 million. In 20X2, the company reported inventory of $2,464 million and trade payables of $1,280 million. What was the effect on the 20X3 cash flow from operating activities?

If any portion of a long-term debt is to be paid in the next year, the entire debt should be classiﬁed as a current liability.

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, Financial Statements, and Financial Results

Fraud, Internal Control, and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables, Bad Debt Expense, and Interest Revenue

Liabilities

Stockholders Equity

Statement Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 9: Long-Lived Tangible and Intangible Assets

The amount of sales tax collected by a retail store when making sales is

If a company's ﬁscal year is the same as the year used for property tax purposes, there should be no prepaid property tax on its year-end ﬁnancial statements but there may be a property tax liability.

How should the amount of federal income tax that is withheld from employees' paychecks by the employer be recorded?

Interest expense on a note payable is only recorded at maturity.

You have been asked to compute the amount that will be available at the end of three years as a result of a single sum of $1,000 that is deposited. What is the interest concept that best describes this application?

When a company increases trade payables from one year to the next, what is the effect on cash ﬂows?

A quick ratio that is high when compared to an industry average might mean the company may have excessive inventory levels or slow moving inventory items.

In 20X3, P Co reported an increase in trade receivables of $303 million, and an increase in inventory of $284 million. They also experienced an increase in short-term borrowings of $3,921 million and an increase in trade payables of $253 million. Calculate the net cash effect of these changes.

Under IFRS, a provision is

Liquidity ratios measure a company's

An employee receives a bi-weekly gross salary of $2,000. Income tax is $218, CPP is $99, EI is $36, and union dues are $50. What is the amount of the employee's take home pay (net pay) on a bi- weekly basis?

All the following transactions lead to temporary timing differences except:

The "trade payables" account should generally be used only for trade payables (obligations owed to suppliers in the normal course of business) which relate to the purchase of goods and services.

Kristen deposits $5,000 in the bank today. She will be earning 6% interest annually on her deposit. How much money will she have in the bank at the end of 5 years? (Round to the nearest dollar.)

If a company intends to reﬁnance a liability that is due within one year, that liability should not be classiﬁed as a current liability.

In 20X3, Toys 4 U reported inventory of $1,902 million and trade payables of $1,415 million. In 20X2, the company reported inventory of $2,464 million and trade payables of $1,280 million. What was the effect on the 20X3 cash flow from operating activities?

If any portion of a long-term debt is to be paid in the next year, the entire debt should be classiﬁed as a current liability.

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, Financial Statements, and Financial Results

Fraud, Internal Control, and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables, Bad Debt Expense, and Interest Revenue

Liabilities

Stockholders Equity

Statement Cash Flows

Measuring and Evaluating Financial Performance

Filters