Question 1

Define liability without using the word "liability".

Accepted Answer

A "liability" is an obligation of an ent

Question 2

Marketable securities held to finance future construction of additional plants should be classified on a balance sheet as:

Accepted Answer

A) Current assets. 
B) Property, plant, and equipment. 
C) Intangible assets. 
D) Long-term investments. 
A) Current assets. 
B) Property, plant, and equipment. 
C) Intangible assets. 
D) Long-term investments.

Question 3

A balance sheet is not particularly useful for determining the current market value of the assets of an entity.

Accepted Answer

A) True 
 B)False

Question 4

A statement of compliance and summary of significant accounting policies are often among the first notes to be disclosed in annual report.

Accepted Answer

A) True 
 B)False

Question 5

A company reported current assets of $40,000 and current liabilities of $80,000,therefore,the:
(a) Amount of working capital was $_____________________.
(b) Working capital ratio was $_________________________.

Accepted Answer

(a) Working capital,

Question 6

A corporation had the following account balances on December 31:   The maximum amount of cash dividends that could be declared on this date is:

Accepted Answer

A) $6 
B) $10 
C) $14 
D) $76 
A) $6 
B) $10 
C) $14 
D) $76

Question 7

A loss contingency which is remote and cannot be reasonably estimated:

Accepted Answer

A) Must be disclosed in a note to the financial statements. 
B) May be disclosed in a note to the financial statements. 
C) Must be reported in the body of the financial statements. 
D) Is permitted to be reported in the body of the financial statements. 
A) Must be disclosed in a note to the financial statements. 
B) May be disclosed in a note to the financial statements. 
C) Must be reported in the body of the financial statements. 
D) Is permitted to be reported in the body of the financial statements.

Question 8

Interest-bearing investments with a maturity within six months of the balance sheet date are effectively cash equivalents.

Accepted Answer

A) True 
 B)False

Question 9

The following information relates to a manufacturing firm for the current year.The corporation president is interested in knowing how much cash was provided by earnings.She has heard that net operating cash flow can be different from earnings.   Receipt of dividends from investments (this amount is included in net income) 20,000
(a) Compute net operating cash flow using the indirect method.
(b) Given your answer in (a),which measure is a better one for use in evaluating this company,net income or net operating cash flow?

Accepted Answer

(a) $10,000 + $50,000 - $30,000 + $60,00

Question 10

The current ratio for a firm is 3.68.If the firm then purchases supplies on account,the current ratio will:

Accepted Answer

A) Decrease 
B) Increase 
C) Be unaffected 
D) Insufficient information 
A) Decrease 
B) Increase 
C) Be unaffected 
D) Insufficient information

Question 11

In general,financial instruments should be classified according to their form,regardless of the instrument's substance.

Accepted Answer

A) True 
 B)False

Question 12

The records of a corporation for year 3 reflected the following correct pre-tax amounts: cash dividends declared and paid,$16,000; retained earnings,January 1,year 3,$120,000,correction of accounting error,$10,000 debit; income before income taxes and before extraordinary item,$60,000.The average income tax rate of 40 percent applies to all items except the dividends.
The December 31,year 3 (ending) balance of retained earnings was $________________.

Accepted Answer

The answer of The records of a corporation for year...

Question 13

Corrections of errors made in prior periods as well as the cumulative effect of retrospective changes in accounting policy are both shown as an after-tax adjustment to opening retained earnings.

Accepted Answer

A) True 
 B)False

Question 14

Current liabilities are short-term liabilities whose liquidation is reasonably expected to require the use of current assets or the creation of other current liabilities.

Accepted Answer

A) True 
 B)False

Question 15

Monetary assets should be disclosed at their fair value on the Balance Sheet.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following MAY NOT appear on a company's statement of financial position?

Accepted Answer

A) Accounts receivable 
B) Prepaid insurance 
C) Equipment under long-term capital leases 
D) Short-term investment in common stock 
A) Accounts receivable 
B) Prepaid insurance 
C) Equipment under long-term capital leases 
D) Short-term investment in common stock

Question 17

If the current ratio for a company is 2.5,this means that:

Accepted Answer

A) the company is able to pay all its debts immediately 
B) its current income is 250% of its previous income 
C) if the company had $100 of current liabilities, it also has $250 of current assets 
D) its debt is 2.5 times the industry average 
A) the company is able to pay all its debts immediately 
B) its current income is 250% of its previous income 
C) if the company had $100 of current liabilities, it also has $250 of current assets 
D) its debt is 2.5 times the industry average

Question 18

A gain contingency can be accrued when

Accepted Answer

A) it is certain that a dispute will be settled in the company's favour. 
B) it is probable that a future asset will be accrued by the company. 
C) the amount of the gain can be reasonably estimated, and it is likely that a company will have a future claim to an asset. 
D) Gain contingencies are not accrued. 
A) it is certain that a dispute will be settled in the company's favour. 
B) it is probable that a future asset will be accrued by the company. 
C) the amount of the gain can be reasonably estimated, and it is likely that a company will have a future claim to an asset. 
D) Gain contingencies are not accrued.

Question 19

During the current year,a corporation purchased a parcel of land located in downtown Winnipeg.The company is not currently operating in Manitoba.However,the management expects to be operating at that location within twenty years.If the company does not buy the land now,it would be unable to find suitable land when needed later.The land should be classified on the current balance sheet under the caption:

Accepted Answer

A) Capital assets. 
B) Other assets. 
C) Deferred charges. 
D) Investments. 
E) Current assets. 
A) Capital assets. 
B) Other assets. 
C) Deferred charges. 
D) Investments. 
E) Current assets.

Question 20

Appropriated retained earnings are those earnings that have been set aside for a specific purpose (other than the payment of dividends).

Accepted Answer

A) True 
 B)False

Define liability without using the word "liability".

Marketable securities held to finance future construction of additional plants should be classified on a balance sheet as:

A balance sheet is not particularly useful for determining the current market value of the assets of an entity.

A statement of compliance and summary of significant accounting policies are often among the first notes to be disclosed in annual report.

A company reported current assets of $40,000 and current liabilities of $80,000,therefore,the: (a) Amount of working capital was $_. (b) Working capital ratio was $_____.

A corporation had the following account balances on December 31: The maximum amount of cash dividends that could be declared on this date is:

A loss contingency which is remote and cannot be reasonably estimated:

Interest-bearing investments with a maturity within six months of the balance sheet date are effectively cash equivalents.

The current ratio for a firm is 3.68.If the firm then purchases supplies on account,the current ratio will:

In general,financial instruments should be classified according to their form,regardless of the instrument's substance.

Corrections of errors made in prior periods as well as the cumulative effect of retrospective changes in accounting policy are both shown as an after-tax adjustment to opening retained earnings.

Current liabilities are short-term liabilities whose liquidation is reasonably expected to require the use of current assets or the creation of other current liabilities.

Monetary assets should be disclosed at their fair value on the Balance Sheet.

Which of the following MAY NOT appear on a company's statement of financial position?

If the current ratio for a company is 2.5,this means that:

A gain contingency can be accrued when

Appropriated retained earnings are those earnings that have been set aside for a specific purpose (other than the payment of dividends).

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Property,Plant,and Equipment; Intangibles; and Goodwill

Depreciation,Amortization,and Impairment

Financial Instruments: Investments in Debt and Equity Securities

Filters

Exam 4: Statements of Financial Position and Changes in Equity; Disclosure Notes

Define liability without using the word "liability".

Marketable securities held to finance future construction of additional plants should be classified on a balance sheet as:

A balance sheet is not particularly useful for determining the current market value of the assets of an entity.

A statement of compliance and summary of significant accounting policies are often among the first notes to be disclosed in annual report.

A company reported current assets of $40,000 and current liabilities of $80,000,therefore,the: (a) Amount of working capital was $_____________________. (b) Working capital ratio was $_________________________.

A corporation had the following account balances on December 31: The maximum amount of cash dividends that could be declared on this date is:

A loss contingency which is remote and cannot be reasonably estimated:

Interest-bearing investments with a maturity within six months of the balance sheet date are effectively cash equivalents.

The current ratio for a firm is 3.68.If the firm then purchases supplies on account,the current ratio will:

In general,financial instruments should be classified according to their form,regardless of the instrument's substance.

Corrections of errors made in prior periods as well as the cumulative effect of retrospective changes in accounting policy are both shown as an after-tax adjustment to opening retained earnings.

Current liabilities are short-term liabilities whose liquidation is reasonably expected to require the use of current assets or the creation of other current liabilities.

Monetary assets should be disclosed at their fair value on the Balance Sheet.

Which of the following MAY NOT appear on a company's statement of financial position?

If the current ratio for a company is 2.5,this means that:

A gain contingency can be accrued when

Appropriated retained earnings are those earnings that have been set aside for a specific purpose (other than the payment of dividends).

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Property,Plant,and Equipment; Intangibles; and Goodwill

Depreciation,Amortization,and Impairment

Financial Instruments: Investments in Debt and Equity Securities

Filters

A company reported current assets of $40,000 and current liabilities of $80,000,therefore,the: (a) Amount of working capital was $_. (b) Working capital ratio was $_____.