Question 1

Counter-balancing inventory errors have no effect of the statement of comprehensive income.

Accepted Answer

A) True 
 B)False

Question 2

The cash surrender value of an insurance policy should be classified on the balance sheet under the caption:

Accepted Answer

A) capital assets. 
B) other assets. 
C) current assets. 
D) investments and funds. 
A) capital assets. 
B) other assets. 
C) current assets. 
D) investments and funds.

Question 3

The close family of a company's president owns a small (insignificant) amount of the company's shares.The president's family is deemed to be related parties and these holdings should be disclosed.

Accepted Answer

A) True 
 B)False

Question 4

The following balance sheet for XYZ Corporation has a number of format,classification,and terminology deficiencies.Assume that all of the figures are correct.
 Balance Sheet
Year Ended December 31, Year 3

Required:
List 10 deficiencies in the above statement.

Accepted Answer

(1) Heading incomplete and incorrect-com

Question 5

Which of the following must a company NOT disclose with regards to any financial instruments which it may possess?

Accepted Answer

A) Amortized cost. 
B) Accounting policy used for reporting purposes. 
C) The fair value of each class of financial asset or liability. 
D) The nature and extent of risks arising from the instruments. 
A) Amortized cost. 
B) Accounting policy used for reporting purposes. 
C) The fair value of each class of financial asset or liability. 
D) The nature and extent of risks arising from the instruments.

Question 6

A restriction on Retained Earnings is usually the result of a contractual or legal obligation and is intended to limit the amount of dividends paid.

Accepted Answer

A) True 
 B)False

Question 7

A corporation had the following assets and liabilities:   What is the amount of working capital and the working capital ratio? $$\begin{array} { | l | c | c | } 
\hline & \text { Working Capital } & \text { Working Capital } \
\hline & \underline { \text { Amount } } & \underline { \text { Ratio } } \
\hline 1 & \$ 6,400 & 1.10 \
\hline 2 & \$ 1,000 & 1.30 \
\hline 3 & \$ 1,000 & 1.06 \
\hline 4 & \$ 9,000 & 1.30 \
\hline
\end{array}$$

Accepted Answer

A) Choice 1 
B) Choice 2 
C) Choice 3 
D) Choice 4 
A) Choice 1 
B) Choice 2 
C) Choice 3 
D) Choice 4

Question 8

Accounts receivable are reported at:

Accepted Answer

A) Cost. 
B) Current value. 
C) Fair market value. 
D) Net realizable value. 
A) Cost. 
B) Current value. 
C) Fair market value. 
D) Net realizable value.

Question 9

A corporation was organized on January 1.At that time,10,000 shares of common were sold and issued at $10.00 per share cash.$20,000 of the proceeds was used to purchase equipment.The corporation had promised to pay $2.00 per share in dividends during the year if income exceeded $40,000.As it turned out,income was $60,000 however,due to a severe cash shortage the corporation declared a scrip dividend (resulting in a current liability) rather than an immediate cash dividend. If no other transaction occurred which would affect retained earnings,the corporation should report on December 31,retained earnings of:

Accepted Answer

A) $160,000 
B) $40,000 
C) $60,000 
D) $20,000 
A) $160,000 
B) $40,000 
C) $60,000 
D) $20,000

Question 10

The balance sheet and cash flow statement represent the assets,liabilities,owners' equity,and cash flows at a specific point in time; whereas,the income statement encompasses a specific period of time.

Accepted Answer

A) True 
 B)False

Question 11

Ambo Inc.earned $200,000 for the current year.This means

Accepted Answer

A) Ambo's total assets increased $200,000 during the year 
B) Ambo's earnings increased Ambo's net assets $200,000 during the year 
C) Ambo's cash increased $200,000 during the year 
D) Ambo's retained earnings must be $200,000 more at December 31 than it was at January 1 
A) Ambo's total assets increased $200,000 during the year 
B) Ambo's earnings increased Ambo's net assets $200,000 during the year 
C) Ambo's cash increased $200,000 during the year 
D) Ambo's retained earnings must be $200,000 more at December 31 than it was at January 1

Question 12

Which of the following would NOT appear under the Equity section of a Balance Sheet prepared under ASPE?

Accepted Answer

A) Share Capital. 
B) Retained Earnings. 
C) Accumulated Other Comprehensive Income. 
D) Contributed Capital. 
A) Share Capital. 
B) Retained Earnings. 
C) Accumulated Other Comprehensive Income. 
D) Contributed Capital.

Question 13

Contingent gains are never disclosed in the notes to the financial statements,no matter how likely.

Accepted Answer

A) True 
 B)False

Question 14

Under ASPE,a change in accounting policy may be voluntary or compulsory.

Accepted Answer

A) True 
 B)False

Question 15

Bonds payable due in six months and for which an adequate bond sinking fund exists is not a current liability because:

Accepted Answer

A) the sinking fund is a current asset. 
B) of the length of the operating cycle. 
C) they are due within six months. 
D) the bonds will be settled with an asset that is not a current asset. 
A) the sinking fund is a current asset. 
B) of the length of the operating cycle. 
C) they are due within six months. 
D) the bonds will be settled with an asset that is not a current asset.

Question 16

A long-term bond payable is reported on the balance sheet at its maturity amount plus any unamortized premium or minus any unamortized discount.

Accepted Answer

A) True 
 B)False

Question 17

Events that occur after the balance sheet date but prior to its issuance are called:

Accepted Answer

A) Prior events. 
B) Post-closing events. 
C) Subsequent events. 
D) Unaudited events. 
A) Prior events. 
B) Post-closing events. 
C) Subsequent events. 
D) Unaudited events.

Question 18

Which of the following need not appear as a stand-alone item on the statement of financial position under IFRS?

Accepted Answer

A) Liabilities forming part of a disposal group (held-for-sale) 
B) Deferred Tax Liabilities 
C) Provisions 
D) Asset Retirement Obligations 
A) Liabilities forming part of a disposal group (held-for-sale) 
B) Deferred Tax Liabilities 
C) Provisions 
D) Asset Retirement Obligations

Question 19

Which of the following would be classified in a different major section of a classified balance sheet from the others?

Accepted Answer

A) Share investment in Associate firm 
B) Stock dividend distributable 
C) Share capital 
D) Shares subscribed 
A) Share investment in Associate firm 
B) Stock dividend distributable 
C) Share capital 
D) Shares subscribed

Question 20

Which of the following should not be considered as a current asset in the balance sheet?

Accepted Answer

A) The cash surrender value of a life insurance policy carried by a corporation, the beneficiary, on its president. 
B) Marketable securities purchased with cash as a short-term investment. 
C) Instalment notes receivable due within 12 months in accordance with normal trade practice. 
D) Prepaid taxes which cover assessments of the following operating cycle of the business. 
A) The cash surrender value of a life insurance policy carried by a corporation, the beneficiary, on its president. 
B) Marketable securities purchased with cash as a short-term investment. 
C) Instalment notes receivable due within 12 months in accordance with normal trade practice. 
D) Prepaid taxes which cover assessments of the following operating cycle of the business.

Counter-balancing inventory errors have no effect of the statement of comprehensive income.

The cash surrender value of an insurance policy should be classified on the balance sheet under the caption:

The close family of a company's president owns a small (insignificant) amount of the company's shares.The president's family is deemed to be related parties and these holdings should be disclosed.

The following balance sheet for XYZ Corporation has a number of format,classification,and terminology deficiencies.Assume that all of the figures are correct. Balance Sheet Year Ended December 31, Year 3 Required: List 10 deficiencies in the above statement.

Which of the following must a company NOT disclose with regards to any financial instruments which it may possess?

A restriction on Retained Earnings is usually the result of a contractual or legal obligation and is intended to limit the amount of dividends paid.

Accounts receivable are reported at:

The balance sheet and cash flow statement represent the assets,liabilities,owners' equity,and cash flows at a specific point in time; whereas,the income statement encompasses a specific period of time.

Ambo Inc.earned $200,000 for the current year.This means

Which of the following would NOT appear under the Equity section of a Balance Sheet prepared under ASPE?

Contingent gains are never disclosed in the notes to the financial statements,no matter how likely.

Under ASPE,a change in accounting policy may be voluntary or compulsory.

Bonds payable due in six months and for which an adequate bond sinking fund exists is not a current liability because:

A long-term bond payable is reported on the balance sheet at its maturity amount plus any unamortized premium or minus any unamortized discount.

Events that occur after the balance sheet date but prior to its issuance are called:

Which of the following need not appear as a stand-alone item on the statement of financial position under IFRS?

Which of the following would be classified in a different major section of a classified balance sheet from the others?

Which of the following should not be considered as a current asset in the balance sheet?

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

Counter-balancing inventory errors have no effect of the statement of comprehensive income.

The cash surrender value of an insurance policy should be classified on the balance sheet under the caption:

The close family of a company's president owns a small (insignificant) amount of the company's shares.The president's family is deemed to be related parties and these holdings should be disclosed.

The following balance sheet for XYZ Corporation has a number of format,classification,and terminology deficiencies.Assume that all of the figures are correct. Balance Sheet Year Ended December 31, Year 3 Required: List 10 deficiencies in the above statement.

Which of the following must a company NOT disclose with regards to any financial instruments which it may possess?

A restriction on Retained Earnings is usually the result of a contractual or legal obligation and is intended to limit the amount of dividends paid.

A corporation had the following assets and liabilities: What is the amount of working capital and the working capital ratio? Working Capital Working Capital 1 \ 6,400 1.10 2 \ 1,000 1.30 3 \ 1,000 1.06 4 \ 9,000 1.30

Accounts receivable are reported at:

The balance sheet and cash flow statement represent the assets,liabilities,owners' equity,and cash flows at a specific point in time; whereas,the income statement encompasses a specific period of time.

Ambo Inc.earned $200,000 for the current year.This means

Which of the following would NOT appear under the Equity section of a Balance Sheet prepared under ASPE?

Contingent gains are never disclosed in the notes to the financial statements,no matter how likely.

Under ASPE,a change in accounting policy may be voluntary or compulsory.

Bonds payable due in six months and for which an adequate bond sinking fund exists is not a current liability because:

A long-term bond payable is reported on the balance sheet at its maturity amount plus any unamortized premium or minus any unamortized discount.

Events that occur after the balance sheet date but prior to its issuance are called:

Which of the following need not appear as a stand-alone item on the statement of financial position under IFRS?

Which of the following would be classified in a different major section of a classified balance sheet from the others?

Which of the following should not be considered as a current asset in the balance sheet?

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