Question 1

In the notes to financial statements, adequate disclosure would typically not include:

Accepted Answer

A)  The accounting methods in use 
B)  Lawsuits pending against the business 
C)  Due dates of major liabilities 
D)  The optimism of the CFO regarding future profits. 
A)  The accounting methods in use 
B)  Lawsuits pending against the business 
C)  Due dates of major liabilities 
D)  The optimism of the CFO regarding future profits.

Question 2

Shown below is a trial balance for Novelty Toys, Limited, on December 31, after adjusting entries: $$\begin{array}{c} { \text { Novelty Toys Limited } } \
{ \text { Trial Balance } } \
 { \text { December } 31,20\_ } \\begin{array} { | l | r | r | }

\hline \text { Cash } & \$ 7,750 & \
\hline \text { Accounts receivable } & 6,375 & \
\hline \text { Office equipment } & 11,250 & \
\hline \text { Accumulated Depreciation } & & \$ 3,000 \
\hline \text { Accounts payable } & & 3,875 \
\hline \text { Share Capital } & & 11,250 \
\hline \text { Retained eamings } & & - 0 \
\hline \text { Dividends } & 3,750 & \
\hline \text { Fees Earned } & & 22,750 \
\hline \text { Salaries expense } & 8,000 & \
\hline \text { Advertising expense } & 1,625 & \
\hline \text { Depreciation expense } & 2,125 & \
\hline & \$ 40,875 & \underline { \$ 40,875 } \
\hline
\end{array}\end{array}$$
-Refer to the above data. The entry to close Salaries Expense account will:

Accepted Answer

A)  Produce a zero balance in that account when posted. 
B)  Include a credit to Income Summary. 
C)  Include a debit to Salaries Expense. 
D)  Include a credit to Share Capital. 
A)  Produce a zero balance in that account when posted. 
B)  Include a credit to Income Summary. 
C)  Include a debit to Salaries Expense. 
D)  Include a credit to Share Capital.

Question 3

A statement of changes in equity shows:

Accepted Answer

A)  The changes in the Cash account occurring during the accounting period. 
B)  The revenue, expense, and dividends of the period. 
C)  The types of assets which have been purchased with the earnings retained during the accounting period. 
D)  The changes in the Retained Earnings account occurring during the accounting period. 
A)  The changes in the Cash account occurring during the accounting period. 
B)  The revenue, expense, and dividends of the period. 
C)  The types of assets which have been purchased with the earnings retained during the accounting period. 
D)  The changes in the Retained Earnings account occurring during the accounting period.

Question 4

Which account appears on the After-Closing Trial Balance?

Accepted Answer

A)  Service Revenue. 
B)  Unearned Revenue. 
C)  Dividends. 
D)  Retained Earnings, Beginning of Year. 
A)  Service Revenue. 
B)  Unearned Revenue. 
C)  Dividends. 
D)  Retained Earnings, Beginning of Year.

Question 5

The income summary account has debits of $85,000 and credits of $75,000. The company had which of the following:

Accepted Answer

A)  Profit of $10,000 
B)  Profit of $160,000 
C)  Loss of $10,000 
D)  Loss of $160,000 
A)  Profit of $10,000 
B)  Profit of $160,000 
C)  Loss of $10,000 
D)  Loss of $160,000

Question 6

Adequate disclosure
(a) Briefly explain what is meant by the principle of adequate disclosure.
(b) How does professional judgment enter into the application of the principle of adequate disclosure?
(c) List 5 types of information that a publicly-held corporation generally would be required to provide according to the concept of adequate disclosure.

Accepted Answer

(a) The principle of adequate disclosure

Question 7

The current ratio is a measure of liquidity.

Accepted Answer

A) True 
 B)False

Question 8

Working capital equals current assets divided by current liabilities.

Accepted Answer

A) True 
 B)False

Question 9

If current assets are $110,000 and current liabilities are $50,000, working capital will be:

Accepted Answer

A)  45.5%. 
B)  2:2. 
C)  $60,000. 
D)  $160,000. 
A)  45.5%. 
B)  2:2. 
C)  $60,000. 
D)  $160,000.

In the notes to financial statements, adequate disclosure would typically not include:

A statement of changes in equity shows:

Which account appears on the After-Closing Trial Balance?

The income summary account has debits of $85,000 and credits of $75,000. The company had which of the following:

The current ratio is a measure of liquidity.

Working capital equals current assets divided by current liabilities.

If current assets are $110,000 and current liabilities are $50,000, working capital will be:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Property, Plant, and Equipment, Intangible Assets and Natural Resources

Liabilities

Shareholders Equity: Capital

Profit and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

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Exam 5: The Accounting Cycle: Reporting Financial Results

In the notes to financial statements, adequate disclosure would typically not include:

A statement of changes in equity shows:

Which account appears on the After-Closing Trial Balance?

The income summary account has debits of $85,000 and credits of $75,000. The company had which of the following:

The current ratio is a measure of liquidity.

Working capital equals current assets divided by current liabilities.

If current assets are $110,000 and current liabilities are $50,000, working capital will be:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Property, Plant, and Equipment, Intangible Assets and Natural Resources

Liabilities

Shareholders Equity: Capital

Profit and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Filters