Question 1

Straight-line depreciation = (cost + residual value)÷ estimated useful life.

Accepted Answer

A) True 
 B)False

Question 2

The main objective of IFRS and ASPE is

Accepted Answer

A) To ensure compliance with the income tax act 
B) To protect shareholder investment 
C) To produce financial reporting that is useful for financial statement users 
D) To provide specific guidelines for publicly traded companies

Question 3

Information that has been determined based on the best information available using the correct process and with an adequate explanation provided is an example of which fundamental characteristic?

Accepted Answer

A) neutral 
B) faithful representation 
C) timeliness 
D) verifiability

Question 4

How is cash invested by shareholders in exchange for shares initially recorded in the accounting records?

Accepted Answer

A) as an increase in Retained Earnings,and an increase in Cash 
B) as an increase in Long-Term Investments,and a decrease in Cash 
C) as an increase in Common Shares,and a decrease in Cash 
D) as an increase in Common Shares,and an increase in Cash

Question 5

Dividends are an expense of doing business.

Accepted Answer

A) True 
 B)False

Question 6

All public companies must follow IFRS.

Accepted Answer

A) True 
 B)False

Question 7

Accumulated depreciation is deducted when calculating net income.

Accepted Answer

A) True 
 B)False

Question 8

The enhancing qualitative characteristics that increase the usefulness of financial information include all of the following,except for

Accepted Answer

A) verifiability. 
B) materiality. 
C) understandability. 
D) comparability.

Question 9

The asset that results from the payment of expenses in advance is

Accepted Answer

A) Accounts receivable. 
B) Short-term investments. 
C) Inventory. 
D) Prepaid expense.

Question 10

Carrying Value of an asset is the cost of the asset that has already been expensed.

Accepted Answer

A) True 
 B)False

Question 11

Revenue recognition criteria are necessary to determine when to recognize revenue when using both accrual and cash accounting methods.

Accepted Answer

A) True 
 B)False

Question 12

If the company had a loan outstanding,which of the following would be used to record accrued interest at the end of the accounting period?

Accepted Answer

A) increase Interest Expense,decrease Cash 
B) increase Interest Expense,increase Interest Payable 
C) decrease Interest Payable,increase Interest Income 
D) decrease Interest Payable,decrease Cash

Question 13

On Oct.1,2020,Othello,Inc.signed a 1-year $75,000 note payable from First National Bank.The loan plus 6% interest is to be paid on Sept.30,2021.Othello's year -end is December 31.In its 2020 financial statements Othello will record interest expense of

Accepted Answer

A) $375. 
B) $1,125. 
C) $4,500. 
D) $75,000.

Question 14

The objective of both IFRS and ASPE is to allow financial reporting that is useful to the financial statement users.

Accepted Answer

A) True 
 B)False

Question 15

The accounting template approach has several limitations.These limitations include all of the following,except for

Accepted Answer

A) printing out reports can be challenging. 
B) mainly only suitable for very small businesses. 
C) inability to properly quantify revenues and expenses. 
D) theoretically incorrect treatment of accounting information. 
E) all of the above

Question 16

A company sold merchandise for cash.What is the effect of this sale?

Accepted Answer

A) increase in revenue,increase in COGS,decrease in inventory 
B) increase in revenue,decrease in COGS,increase in inventory 
C) increase in revenue,increase in COGS,increase in inventory 
D) increase in revenue,decrease in COGS,decrease in inventory

Question 17

The issuance of common shares with a value of $9,000 to purchase land will increase the common share account.

Accepted Answer

A) True 
 B)False

Question 18

The purchase of a three-year insurance policy should be reflected on the Statement of Financial Position under current assets.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following transactions would decrease the cash from operating activities?

Accepted Answer

A) the payment of dividends 
B) the sale of goods on account 
C) the purchase of goods on account 
D) the payment of wages

Question 20

When the board of directors declares a $500 dividend,which of the following would be included in recording the transaction?

Accepted Answer

A) increase in Retained Earnings,increase in Dividends Declared 
B) decrease in Cash,decrease in Dividends Payable 
C) increase in Dividends Declared,increase in Dividends Payable 
D) decrease in Dividends Payable,increase in Cash

Exam 2: Analyzing Transaction and Their Effect on Financial Statement

Straight-line depreciation = (cost + residual value)÷ estimated useful life.

The main objective of IFRS and ASPE is

Information that has been determined based on the best information available using the correct process and with an adequate explanation provided is an example of which fundamental characteristic?

How is cash invested by shareholders in exchange for shares initially recorded in the accounting records?

Dividends are an expense of doing business.

All public companies must follow IFRS.

Accumulated depreciation is deducted when calculating net income.

The enhancing qualitative characteristics that increase the usefulness of financial information include all of the following,except for

The asset that results from the payment of expenses in advance is

Carrying Value of an asset is the cost of the asset that has already been expensed.

Revenue recognition criteria are necessary to determine when to recognize revenue when using both accrual and cash accounting methods.

If the company had a loan outstanding,which of the following would be used to record accrued interest at the end of the accounting period?

On Oct.1,2020,Othello,Inc.signed a 1-year $75,000 note payable from First National Bank.The loan plus 6% interest is to be paid on Sept.30,2021.Othello's year -end is December 31.In its 2020 financial statements Othello will record interest expense of

The objective of both IFRS and ASPE is to allow financial reporting that is useful to the financial statement users.

The accounting template approach has several limitations.These limitations include all of the following,except for

A company sold merchandise for cash.What is the effect of this sale?

The issuance of common shares with a value of $9,000 to purchase land will increase the common share account.

The purchase of a three-year insurance policy should be reflected on the Statement of Financial Position under current assets.

Which of the following transactions would decrease the cash from operating activities?

When the board of directors declares a $500 dividend,which of the following would be included in recording the transaction?