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Exam 1: Business Decisions and Financial Accounting

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Question 1

Multiple Choice

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Which of the following enhance the usefulness of financial information with reference to financial statements?

A) Comparability to prior periods and other companies,verifiability,timeliness,and understandability.
B) Integrity,relevance,faithfulness and comparability to prior periods and other companies.
C) Clarity,integrity,relevance and faithfulness.
D) Verifiability,relevance and faithfulness.

E) B) and C)
F) All of the above

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Question 2

True/False

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Questionable ethical practices can make it harder for a company to attract lenders and investors in the future.

A) True
B) False

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Question 3

Multiple Choice

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Which of the following are the three basic elements of the balance sheet?

The Publish or Perish Printing Company paid a dividend to shareholders.This will be reported on the:

Under IFRS it is possible for a payable to be recorded as an asset.

Match the characteristic of the company with the description of the type of company.

A company owes $200,000 on a bank loan.If this loan is documented using a formal written debt contract,it will be reported as a liability called Notes Payable.

The income statement shows the assets and liabilities of the company at a point in time.

Assets are listed on the balance sheet in order of:

To ensure that decisions are made in a professional and ethical manner,CPA Canada requires that all its members adhere to:

Which of the following would not affect a company's net income?

An entity that is holding assets for another party and has legal authority and duty to make decisions regarding financial matters concerning that party is:

Public corporations:

Which of the following would affect shareholders' equity?

It is not possible for a receivable to ever be considered a liability.

Find the missing data. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ CINNAMON AND SPICE, INC. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Income Statement $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ For the Year Ended December 31, 2008 $\begin{array}{l}\begin{array}{|c|r|}\hline\text { Revenues }&\\ \hline \text { Sales Revenue } & \$ 3,810,200 \\\hline \text { Total Revenues } & ? \\\hline & \\\hline \text { Expenses } & ? \\\hline \text { Wages Expense } & 1,314,900 \\\hline \text { Advertising and Promotion Expenses } & 482,200 \\\hline \begin{array}{c}\text { Other Selling and Administrative } \\\text { Expenses }\end{array} & ? \\\hline \text { Interest Expense } & 225,600 \\\hline \text { Income Tax Expense } & 117,700 \\\hline \text { Other Expenses } & 253,700 \\\hline \text { Total Expenses } & \underline{3,445,600} \\\hline & \$?\\\hline\end{array}\end{array}$

Investors analyze the income statement to identify trends in a company's net income,which can provide clues about the company's future earnings.

External financial statement users are not given access to detailed internal records of the company,so they rely extensively on the financial statements.

Which of the following is not true?

Under the unit of measure concept,a Canadian company would report the data on the financial statements in Canadian dollars.