Question 1

An increase in ________ represents a cash inflow from operating activities.

Accepted Answer

A)  Inventory 
B)  Accounts receivable 
C)  Accrued salaries 
D)  Prepaid rent 
E)  An organization 
A)  Inventory 
B)  Accounts receivable 
C)  Accrued salaries 
D)  Prepaid rent 
E)  An organization

Question 2

If a business acquired a $250,000 loan to buy a new warehouse, it would be recorded on a Cash Flow statement as

Accepted Answer

A)  An increase in the cash flow from financing activities 
B)  An increase in cash flow from investing activities 
C)  A decrease in cash flow from operating activities 
D)  A decrease in cash flow from financing activities 
E)  A decrease in cash flow from investing activities 
A)  An increase in the cash flow from financing activities 
B)  An increase in cash flow from investing activities 
C)  A decrease in cash flow from operating activities 
D)  A decrease in cash flow from financing activities 
E)  A decrease in cash flow from investing activities

Question 3

A patent is an example of a(n)

Accepted Answer

A)  Current asset 
B)  Current liability 
C)  Intangible asset 
D)  Long term liability 
A)  Current asset 
B)  Current liability 
C)  Intangible asset 
D)  Long term liability

Question 4

RAJ Inc. has secured an electronic link with its established customers and can offer Just In Time delivery to their retail locations. The JIT delivery expenses appear on the income statement included in

Accepted Answer

A)  Cost of Goods Sold 
B)  Distribution Expenses 
C)  Amortization Expenses 
D)  Selling Expenses 
E)  Administration Expenses 
A)  Cost of Goods Sold 
B)  Distribution Expenses 
C)  Amortization Expenses 
D)  Selling Expenses 
E)  Administration Expenses

Question 5

An asset was purchased midway into the fiscal year for $844,200. It was used to by the company for 17 months before being sold for $870,000. If the CCA class rate is 25%, the CCA recaptured is $315,994 and the Company's tax rate is 40%, how much corporate income tax will the company pay?

Accepted Answer

A)  $10,320 
B)  $126,000 
C)  $131,557 
D)  $136,320 
E)  $139,290 
A)  $10,320 
B)  $126,000 
C)  $131,557 
D)  $136,320 
E)  $139,290

Question 6

Fandango Co. Ltd. acquired a $45,000 piece of heavy equipment. If they paid for the machine with a bank loan, the change in the balance sheet would be

Accepted Answer

A)  Assets increase by $45,000 and long-term liabilities decrease by $45,000 
B)  Only long-term liabilities increase by $45,000 
C)  Assets and long-term liabilities each increase by $45,000 
D)  Long-term liabilities and shareholders equity each increase by $45,000 
E)  Only assets increased by $45,000. 
A)  Assets increase by $45,000 and long-term liabilities decrease by $45,000 
B)  Only long-term liabilities increase by $45,000 
C)  Assets and long-term liabilities each increase by $45,000 
D)  Long-term liabilities and shareholders equity each increase by $45,000 
E)  Only assets increased by $45,000.

Question 7

Adjustments must be made from accrual-based accounting records to be consistent with the Canadian Income Tax Act. One such adjustment is

Accepted Answer

A)  The unfunded portion of pension expenses must be estimated to be tax-deductible 
B)  Cash payouts in support of warranties must be estimated to be tax deductible 
C)  Dividends received from Canadian corporations must be added into taxable income 
D)  Amortization expense that is declared must conform to CCA rate maximums 
E)  Income earned is declared according to the calendar year, not incorporate fiscal year 
A)  The unfunded portion of pension expenses must be estimated to be tax-deductible 
B)  Cash payouts in support of warranties must be estimated to be tax deductible 
C)  Dividends received from Canadian corporations must be added into taxable income 
D)  Amortization expense that is declared must conform to CCA rate maximums 
E)  Income earned is declared according to the calendar year, not incorporate fiscal year

Question 8

Fandango Co. Ltd. uses straight-line amortization. If the book value of a new piece of equipment is $36,000 and is expected to last five years with no salvage value, the monthly amortization expense will be

Accepted Answer

A)  $360 
B)  $600 
C)  $3,000 
D)  $7,200 
E)  $36,000 
A)  $360 
B)  $600 
C)  $3,000 
D)  $7,200 
E)  $36,000

Question 9

A company purchases a high-speed packaging machine for $100,000. The correct entry for the purchase of Equipment in the fundamental accounting equation is

Accepted Answer

A)  An increase on the left side 
B)  A decrease on the left side 
C)  An increase on the right side 
D)  A decrease on the right side 
E)  Neither side increases or decreases 
A)  An increase on the left side 
B)  A decrease on the left side 
C)  An increase on the right side 
D)  A decrease on the right side 
E)  Neither side increases or decreases

Question 10

The Matching Principle used in accounting is consistent with

Accepted Answer

A)  Cash based accounting practices 
B)  The timing of cash inflows and outflows 
C)  Calendar based accounting practices 
D)  Accrual based accounting practices 
E)  Standard credit and collections practices 
A)  Cash based accounting practices 
B)  The timing of cash inflows and outflows 
C)  Calendar based accounting practices 
D)  Accrual based accounting practices 
E)  Standard credit and collections practices

Question 11

Long Ltd. received cash from various activities as follows: $50,000 from interest earned on bonds it had purchased from IBM; $200,000 from a sale of inventory to GM; and $1,000,000 from a sale of its own shares to Manulife. How would these items appear on the cash flow statement?

Accepted Answer

A)  Operating activities $50,000; investing activities $200,000; financing activities $1,000,000. 
B)  Operating activities $200,000; investing activities $1,000,000; financing activities $50,000. 
C)  Operating activities $1,000,000; investing activities $50,000; financing activities $200,000. 
D)  Operating activities $(50,000); investing activities $(200,000); financing activities $(1,000,000). 
E)  Operating activities $200,000; investing activities $0; financing activities $1,050,000. 
A)  Operating activities $50,000; investing activities $200,000; financing activities $1,000,000. 
B)  Operating activities $200,000; investing activities $1,000,000; financing activities $50,000. 
C)  Operating activities $1,000,000; investing activities $50,000; financing activities $200,000. 
D)  Operating activities $(50,000); investing activities $(200,000); financing activities $(1,000,000). 
E)  Operating activities $200,000; investing activities $0; financing activities $1,050,000.

Question 12

Which of the following represents the best description of accumulated depreciation?

Accepted Answer

A)  Accumulated depreciation is a non-cash expenditure on the cash flow statement. 
B)  Accumulated depreciation is a contra asset on the balance sheet. 
C)  Accumulated depreciation is an expense on the income statement. 
D)  Accumulated depreciation is an allocation of costs over the life of the asset. 
E)  Accumulated depreciation is an expense that is not permitted under IFRS. 
A)  Accumulated depreciation is a non-cash expenditure on the cash flow statement. 
B)  Accumulated depreciation is a contra asset on the balance sheet. 
C)  Accumulated depreciation is an expense on the income statement. 
D)  Accumulated depreciation is an allocation of costs over the life of the asset. 
E)  Accumulated depreciation is an expense that is not permitted under IFRS.

Question 13

A Terminal Loss occurs when the selling price of a company's asset is

Accepted Answer

A)  Equal to the undepreciated capital cost (UC
C)  
B)  Higher than the undepreciated capital cost (UC
C)  
C)  Less than the undepreciated capital costs (UC
C)  
D)  Higher than the book value of the asset 
E)  Less than book value, but higher than the undepreciated capital costs (UC
C)  
A)  Equal to the undepreciated capital cost (UC
C)  
B)  Higher than the undepreciated capital cost (UC
C)  
C)  Less than the undepreciated capital costs (UC
C)  
D)  Higher than the book value of the asset 
E)  Less than book value, but higher than the undepreciated capital costs (UC
C)

Question 14

The Board of Directors for JKJ Manufacturing Inc., set aside $1 million of retained earnings for capital project allocations. This has the effect of

Accepted Answer

A)  Restricting the claim of shareholders on the Company's assets 
B)  Limiting the potential for the distribution of profits as dividends 
C)  Maintaining a $1 million cash reserve for the company 
D)  Moving $1 million of Retained Earnings to Capital Assets on the Balance Sheet 
E)  Limiting the company's growth potential 
A)  Restricting the claim of shareholders on the Company's assets 
B)  Limiting the potential for the distribution of profits as dividends 
C)  Maintaining a $1 million cash reserve for the company 
D)  Moving $1 million of Retained Earnings to Capital Assets on the Balance Sheet 
E)  Limiting the company's growth potential

Question 15

Midday Ltd. received cash of $4,000 from a sale to Sirius Ltd., $50,000 from a sale of a used machine to Foolish Inc., and $70,000 dividends on shares it owns in of Gong Ltd. How would these items appear on the cash flow statement?

Accepted Answer

A)  Operating activities $4,000; investing activities $50,000; financing activities $70,000. 
B)  Operating activities $70,000; investing activities $4,000; financing activities $50,000. 
C)  Operating activities $50,000; investing activities $70,000; financing activities $4,000. 
D)  Operating activities $(4,000); investing activities $(50,000); financing activities $(70,000). 
E)  Operating activities $(70,000); investing activities $(4,000); financing activities $(50,000). 
A)  Operating activities $4,000; investing activities $50,000; financing activities $70,000. 
B)  Operating activities $70,000; investing activities $4,000; financing activities $50,000. 
C)  Operating activities $50,000; investing activities $70,000; financing activities $4,000. 
D)  Operating activities $(4,000); investing activities $(50,000); financing activities $(70,000). 
E)  Operating activities $(70,000); investing activities $(4,000); financing activities $(50,000).

Question 16

Allison Controls Ltd. follows a policy of paying cash for everything it buys. At the end of 2011 Allison had a balance in its machine account of $90,000 and the associated accumulated depreciation account of $45,000. Similar amounts at the end of 2010 were $100,000 and $50,000 respectively. During 2011 Allison sold a machine for $10,000. It had cost $25,000 and had accumulated depreciation of $10,000 at the time of the sale. How would these amounts appear on the income and cash flow statements?

Accepted Answer

A)  A loss of $5,000 on the income statement and a net cash outflow of $5,000 on the cash flow statement. 
B)  A loss of $10,000 on the income statement and a net cash outflow of $15,000 on the cash flow statement. 
C)  A loss of $15,000 on the income statement and a net cash outflow of $25,000 on the cash flow statement. 
D)  A loss of $20,000 on the income statement and a net cash outflow of $10,000 on the cash flow statement. 
E)  A loss of $30,000 on the income statement and a net cash outflow of $20,000 on the cash flow statement. 
A)  A loss of $5,000 on the income statement and a net cash outflow of $5,000 on the cash flow statement. 
B)  A loss of $10,000 on the income statement and a net cash outflow of $15,000 on the cash flow statement. 
C)  A loss of $15,000 on the income statement and a net cash outflow of $25,000 on the cash flow statement. 
D)  A loss of $20,000 on the income statement and a net cash outflow of $10,000 on the cash flow statement. 
E)  A loss of $30,000 on the income statement and a net cash outflow of $20,000 on the cash flow statement.

Question 17

Picton Furniture's Dining Department sold 372 units at an average price of $1,278 each. Sales expenses accounted for $125,000, Distribution expenses totaled $24,500 and Administration expenses totaled $13,500. It costs Picton an average of $695 to manufacture each unit. What was Picton's gross profit?

Accepted Answer

A)  $475,416 
B)  $187,416 
C)  $312,416 
D)  $133,540 
E)  $216,876 
A)  $475,416 
B)  $187,416 
C)  $312,416 
D)  $133,540 
E)  $216,876

Question 18

JKJ Manufacturing Inc.'s Income Statement for the year reported Sales Revenue of $44,350,000. Cost of Goods Sold was 35% of Sales Revenue. Sales, Administration and Distribution expenses were $19,750,000. Interest charges amounted to $1,200,000. There were no differences between accounting income and taxable income. If the federal tax rate is 20.5% and the provincial rate is 16%, what is JKJ Manufacturing Inc.'s taxes payable?

Accepted Answer

A)  $2,875,287.50 
B)  $6,027,975 
C)  $1,614,887.50 
D)  $1,260,400 
E)  $3,313,287.50 
A)  $2,875,287.50 
B)  $6,027,975 
C)  $1,614,887.50 
D)  $1,260,400 
E)  $3,313,287.50

Question 19

If losses are to be carried forward the amount is

Accepted Answer

A)  Multiplied by the expected future tax rate and is entered as a liability 
B)  Entered in its entirety as a deferred tax liability 
C)  Entered in its entirety as a prepaid tax under current assets 
D)  Entered in its entirety as an extraordinary gain 
E)  Multiplied by the expected future tax rate and entered as an asset 
A)  Multiplied by the expected future tax rate and is entered as a liability 
B)  Entered in its entirety as a deferred tax liability 
C)  Entered in its entirety as a prepaid tax under current assets 
D)  Entered in its entirety as an extraordinary gain 
E)  Multiplied by the expected future tax rate and entered as an asset

Question 20

The federal plus provincial income tax brackets [rounded to thousands and inclusive] are as follows: Up to $20,000 is 15%, $21000-$50000 is 25%, $51,000 to $90,000 is 32%, $91,000 up to $130,000 is 36%, and over $130,000 is 41%. Kenneth Sloan's annual income is $110,000 after deductions, what is his tax payable?

Accepted Answer

A)  $28,400 
B)  $30,500 
C)  $35,200 
D)  $37,700 
E)  $39,600 
A)  $28,400 
B)  $30,500 
C)  $35,200 
D)  $37,700 
E)  $39,600

An increase in ________ represents a cash inflow from operating activities.

If a business acquired a $250,000 loan to buy a new warehouse, it would be recorded on a Cash Flow statement as

A patent is an example of a(n)

RAJ Inc. has secured an electronic link with its established customers and can offer Just In Time delivery to their retail locations. The JIT delivery expenses appear on the income statement included in

An asset was purchased midway into the fiscal year for $844,200. It was used to by the company for 17 months before being sold for $870,000. If the CCA class rate is 25%, the CCA recaptured is $315,994 and the Company's tax rate is 40%, how much corporate income tax will the company pay?

Fandango Co. Ltd. acquired a $45,000 piece of heavy equipment. If they paid for the machine with a bank loan, the change in the balance sheet would be

Adjustments must be made from accrual-based accounting records to be consistent with the Canadian Income Tax Act. One such adjustment is

Fandango Co. Ltd. uses straight-line amortization. If the book value of a new piece of equipment is $36,000 and is expected to last five years with no salvage value, the monthly amortization expense will be

A company purchases a high-speed packaging machine for $100,000. The correct entry for the purchase of Equipment in the fundamental accounting equation is

The Matching Principle used in accounting is consistent with

Long Ltd. received cash from various activities as follows: $50,000 from interest earned on bonds it had purchased from IBM; $200,000 from a sale of inventory to GM; and $1,000,000 from a sale of its own shares to Manulife. How would these items appear on the cash flow statement?

Which of the following represents the best description of accumulated depreciation?

A Terminal Loss occurs when the selling price of a company's asset is

The Board of Directors for JKJ Manufacturing Inc., set aside $1 million of retained earnings for capital project allocations. This has the effect of

Midday Ltd. received cash of $4,000 from a sale to Sirius Ltd., $50,000 from a sale of a used machine to Foolish Inc., and $70,000 dividends on shares it owns in of Gong Ltd. How would these items appear on the cash flow statement?

If losses are to be carried forward the amount is

Introduction to Financial Management

Financial Planning and Pro Forma Financial Statements

Analyzing and Interpreting Financial Statements

The Time Value of Money

Making Capital Investment Decisions

Making Capital Investment Decisions: Further Issues

Financing a Business 1: Sources of Funds

Financing a Business 2: Raising Long-Term Funds

The Cost of Capital and the Capital Structure Decision

Developing a Dividend Policy

Managing Working Capital

Measuring and Managing for Shareholder Value

Mergers, Acquisitions, and the Valuation of Shares

Filters

Exam 2: Accounting - the Language of Business

An increase in ________ represents a cash inflow from operating activities.

If a business acquired a $250,000 loan to buy a new warehouse, it would be recorded on a Cash Flow statement as

A patent is an example of a(n)

RAJ Inc. has secured an electronic link with its established customers and can offer Just In Time delivery to their retail locations. The JIT delivery expenses appear on the income statement included in

An asset was purchased midway into the fiscal year for $844,200. It was used to by the company for 17 months before being sold for $870,000. If the CCA class rate is 25%, the CCA recaptured is $315,994 and the Company's tax rate is 40%, how much corporate income tax will the company pay?

Fandango Co. Ltd. acquired a $45,000 piece of heavy equipment. If they paid for the machine with a bank loan, the change in the balance sheet would be

Adjustments must be made from accrual-based accounting records to be consistent with the Canadian Income Tax Act. One such adjustment is

Fandango Co. Ltd. uses straight-line amortization. If the book value of a new piece of equipment is $36,000 and is expected to last five years with no salvage value, the monthly amortization expense will be

A company purchases a high-speed packaging machine for $100,000. The correct entry for the purchase of Equipment in the fundamental accounting equation is

The Matching Principle used in accounting is consistent with

Long Ltd. received cash from various activities as follows: $50,000 from interest earned on bonds it had purchased from IBM; $200,000 from a sale of inventory to GM; and $1,000,000 from a sale of its own shares to Manulife. How would these items appear on the cash flow statement?

Which of the following represents the best description of accumulated depreciation?

A Terminal Loss occurs when the selling price of a company's asset is

The Board of Directors for JKJ Manufacturing Inc., set aside $1 million of retained earnings for capital project allocations. This has the effect of

Midday Ltd. received cash of $4,000 from a sale to Sirius Ltd., $50,000 from a sale of a used machine to Foolish Inc., and $70,000 dividends on shares it owns in of Gong Ltd. How would these items appear on the cash flow statement?

If losses are to be carried forward the amount is

Introduction to Financial Management

Financial Planning and Pro Forma Financial Statements

Analyzing and Interpreting Financial Statements

The Time Value of Money

Making Capital Investment Decisions

Making Capital Investment Decisions: Further Issues

Financing a Business 1: Sources of Funds

Financing a Business 2: Raising Long-Term Funds

The Cost of Capital and the Capital Structure Decision

Developing a Dividend Policy

Managing Working Capital

Measuring and Managing for Shareholder Value

Mergers, Acquisitions, and the Valuation of Shares

Filters