Question 1

A deficit is synonymous with:

Accepted Answer

A)  Negative working capital. 
B)  Debit balance in retained earnings. 
C)  Net loss. 
D)  Cash overdraft. 
A)  Negative working capital. 
B)  Debit balance in retained earnings. 
C)  Net loss. 
D)  Cash overdraft.

Question 2

The Return on Assets (ROA) and Return on Equity (ROE) ratios measure a company's liquidity.

Accepted Answer

A) True 
 B)False

Question 3

Define current assets without using the word "asset."

Accepted Answer

"Current assets" are resources

Question 4

The current asset section of a balance sheet includes:

Accepted Answer

A)  All future income taxes resulting from inter-period income tax allocation. 
B)  Goodwill arising in a business combination accounted for as a purchase. 
C)  Rent receivable. 
D)  A receivable from a customer not collectible for over one year. 
A)  All future income taxes resulting from inter-period income tax allocation. 
B)  Goodwill arising in a business combination accounted for as a purchase. 
C)  Rent receivable. 
D)  A receivable from a customer not collectible for over one year.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

The designation "reserve for bad debts" is an appropriate alternative title for "allowance for doubtful accounts".

Accepted Answer

A) True 
 B)False

Question 7

If the operating cycle of a business is fifteen months, which of the following statement is true?

Accepted Answer

A)  Cash set aside for a purchase of equipment will be shown as a current asset. 
B)  A note receivable that is due one year and two months from the balance sheet date will be shown as a current asset. 
C)  Balance sheets should be prepared more often than income statements. 
D)  A note, that is payable by the business two years from the balance sheet date, will be shown as a current liability. 
A)  Cash set aside for a purchase of equipment will be shown as a current asset. 
B)  A note receivable that is due one year and two months from the balance sheet date will be shown as a current asset. 
C)  Balance sheets should be prepared more often than income statements. 
D)  A note, that is payable by the business two years from the balance sheet date, will be shown as a current liability.

Question 8

All assets having any future benefit to the company will be disclosed on the Balance Sheet.

Accepted Answer

A) True 
 B)False

Question 9

A company reported current assets of $150,000, current liabilities of $100,000 and total assets of $450,000; therefore, the:
(a) Amount of working capital was $_____________________.
(b) Working capital ratio was $_________________________.

Accepted Answer

(a) Working capital,

Question 10

Which of the following should be excluded from long-term liabilities?

Accepted Answer

A)  Obligations payable at some date beyond the operating cycle. 
B)  Most pension obligations. 
C)  Long-term liabilities that mature within the operating cycle and will be paid from a sinking fund. 
D)  Obligations payable at some date within the operating cycle. 
A)  Obligations payable at some date beyond the operating cycle. 
B)  Most pension obligations. 
C)  Long-term liabilities that mature within the operating cycle and will be paid from a sinking fund. 
D)  Obligations payable at some date within the operating cycle.

Question 11

Deferred charges are distinguished from prepaid expenses on the basis of the time over which their benefits will be realized.

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

A corporation had the following account balances on December 31: $$\begin{array} { | l | l | l | l | } 
\hline \text { Assets } & & \text { Equities } & \
\hline \text { Cash } & \$ 10 & \text { Accounts payable } & \$ 2 \
\hline \text { Accounts receivable } & 8 & \text { Wages pay able } & 12 \
\hline \text { Inentory } & 16 & \text { Common shares } & 48 \
\hline \text { Machinery } & 42 & \text { Retained earnings appropriated tor bond } & \
\hline & & \text { Sinking fund } & 8 \
\hline & \$ 76 & \text { Retained earnings unappropriated } & 6 \
\hline & & & \$ 76 \
\hline
\end{array}$$ 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 14

Errors are normally unintentional, but may on occasion be intentional.

Accepted Answer

A) True 
 B)False

Question 15

The purchase of a machine on credit was recorded as a debit to Machinery, a debit to Discount on note payable, and a credit to Notes payable. Under IFRS, at the end of the accounting period, any unamortized debit balance in the discount account should be reported as a(n):

Accepted Answer

A)  asset. 
B)  a direct reduction to the liability - without using a contra account. 
C)  expense. 
D)  liability. 
A)  asset. 
B)  a direct reduction to the liability - without using a contra account. 
C)  expense. 
D)  liability.

Question 16

A company reported the following account balances on the balance sheets for year 1 and year 2 (in 000's): $$\begin{array} { | l | l | l | l | l | l | } 
\hline \text { Current Assets } & \text { Year 1 } & \text { Year 2 } & \text { Current Liabilies } & \text { Year 1 } & \text { Year 2 } \
\hline \text { Cash } & \$ 60 & \$ 120 & \text { Accounts payable } & \$ 60 & \$ 100 \
\hline \text { Accounts receivable } & 80 & 80 & \text { Wages payable } & 40 & 40 \
\hline \text { Prepaid ins urance } & 40 & - 0 - & \text { Interest payable } & 30 & 20 \
\hline \text { Inventory } & 20 & 76 & \text { Notes payable } & 10 & 80 \
\hline
\end{array}$$ The increase or decrease in working capital for year 2 is (in 000's):

Accepted Answer

A)  $24 increase. 
B)  $24 decrease. 
C)  $42 increase. 
D)  $42 decrease. 
A)  $24 increase. 
B)  $24 decrease. 
C)  $42 increase. 
D)  $42 decrease.

Question 17

Only unrealized changes in the fair values of certain assets or liabilities are included in Accumulated Other Comprehensive Income.

Accepted Answer

A) True 
 B)False

Question 18

Deferred charges:

Accepted Answer

A)  are current assets. 
B)  are expenses incurred but not yet paid. 
C)  are items such as the prepayment of rent on an office. 
D)  involve a longer period of time than do prepaid expenses. 
A)  are current assets. 
B)  are expenses incurred but not yet paid. 
C)  are items such as the prepayment of rent on an office. 
D)  involve a longer period of time than do prepaid expenses.

Question 19

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.

Question 20

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.

A deficit is synonymous with:

The Return on Assets (ROA) and Return on Equity (ROE) ratios measure a company's liquidity.

Define current assets without using the word "asset."

The current asset section of a balance sheet includes:

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

The designation "reserve for bad debts" is an appropriate alternative title for "allowance for doubtful accounts".

If the operating cycle of a business is fifteen months, which of the following statement is true?

All assets having any future benefit to the company will be disclosed on the Balance Sheet.

A company reported current assets of $150,000, current liabilities of $100,000 and total assets of $450,000; therefore, the: (a) Amount of working capital was $_. (b) Working capital ratio was $_____.

Which of the following should be excluded from long-term liabilities?

Deferred charges are distinguished from prepaid expenses on the basis of the time over which their benefits will be realized.

Errors are normally unintentional, but may on occasion be intentional.

The purchase of a machine on credit was recorded as a debit to Machinery, a debit to Discount on note payable, and a credit to Notes payable. Under IFRS, at the end of the accounting period, any unamortized debit balance in the discount account should be reported as a(n):

Only unrealized changes in the fair values of certain assets or liabilities are included in Accumulated Other Comprehensive Income.

Deferred charges:

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

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

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

The Statement of Cash Flows

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters

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

A deficit is synonymous with:

The Return on Assets (ROA) and Return on Equity (ROE) ratios measure a company's liquidity.

Define current assets without using the word "asset."

The current asset section of a balance sheet includes:

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

The designation "reserve for bad debts" is an appropriate alternative title for "allowance for doubtful accounts".

If the operating cycle of a business is fifteen months, which of the following statement is true?

All assets having any future benefit to the company will be disclosed on the Balance Sheet.

A company reported current assets of $150,000, current liabilities of $100,000 and total assets of $450,000; therefore, the: (a) Amount of working capital was $_____________________. (b) Working capital ratio was $_________________________.

Which of the following should be excluded from long-term liabilities?

Deferred charges are distinguished from prepaid expenses on the basis of the time over which their benefits will be realized.

Errors are normally unintentional, but may on occasion be intentional.

The purchase of a machine on credit was recorded as a debit to Machinery, a debit to Discount on note payable, and a credit to Notes payable. Under IFRS, at the end of the accounting period, any unamortized debit balance in the discount account should be reported as a(n):

Only unrealized changes in the fair values of certain assets or liabilities are included in Accumulated Other Comprehensive Income.

Deferred charges:

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

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

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

The Statement of Cash Flows

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters

A company reported current assets of $150,000, current liabilities of $100,000 and total assets of $450,000; therefore, the: (a) Amount of working capital was $_. (b) Working capital ratio was $_____.