Deck 2: Accounting and Financial Statements

Question 1

-Cost of sales is _________________________ .

Answer 1

$ 177,000.

Question 2

-Gross profit is _________________________.

Answer 2

$ 173,000.

Question 3

-Total expenses are _________________________ .

Answer 3

$ 135,000.

Question 4

-Profit before taxes is _________________________ .

Question 5

-Profit for the year is _________________________ .

Question 6

-The cash flow is _________________________ .

Question 7

-Total current assets are _________________________ .

Question 8

-Total non-current assets are_________________________ .

Question 9

-Total assets are _________________________ .

Question 10

-Total current liabilities are_________________________ .

Question 11

-Long-term borrowings are _________________________ .

Question 12

-Total liabilities amount to _________________________ .

Question 13

-Total equity is _________________________ .

Question 14

-Total equity and liabilities is _________________________ .

Question 15

-Purchases are _________________________ .

Question 16

-Total operating expenses are _________________________ .

Question 17

-Profit before taxes is _________________________ .

Question 18

-Profit for the year is _________________________ .

Question 19

-Total current assets are_________________________ .

Question 20

-Total non-current assets are _________________________ .

Question 21

-Total assets are _________________________ .

Question 22

-Total current liabilities are _________________________ .

Question 23

-Long-term borrowings are _________________________ .

Question 24

-Total liabilities are _________________________ .

Question 25

-Total equity is _________________________ .

Question 26

-Total cash flow is_________________________ .

Question 27

-Total current assets are _________________________ .

Question 28

-Total non-current assets are _________________________ .

Question 29

-Total assets are _________________________ .

Question 30

-Total current liabilities are _________________________ .

Question 31

-Total liabilities are _________________________ .

Question 32

-Total equity is _________________________ .

Question 33

-Total equity and liabilities is _________________________ .

Question 34

-Cost of sales is _________________________ .

Question 35

-Gross profit is _________________________ .

Question 36

-Total operating expenses is _________________________ .

Question 37

-Profit before taxes is _________________________ .

Question 38

-Profit for the year is _________________________ .

Question 39

-Cash flow from operations is _________________________ .

Question 40

-The statement of income

Question 41

-The statement of retained earnings.

Question 42

-The statement of financial position.

Question 43

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%
-Calculate the internal depreciation for the five-year period using the straight-line method.

Question 44

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%
-Calculate the internal depreciation for the 5-year period using the sum-of-the digits method.

Question 45

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%
-Calculate the capital cost allowance for the 5-year period.

Question 46

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%
-Calculate the annual future income taxes payable.

Question 47

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%
-Calculate the cumulate future income taxes payable.

Question 48

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What activities does bookkeeping include?

A) Collecting, classifying and reporting transactions that take place in the business.
B) Recording business transactions in journals.
C) Collecting, classifying and reporting the activities that take place in the business.
D) Ensuring that all transactions are reported in accordance with accepted accounting principles.

Question 49

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-How is the gross profit of a business calculated?

A) Gross profit is the difference between revenues and cost of sales.
B) Gross profit is the excess of revenues over the sum of cost of sales and operating expenses.
C) Gross profit is the sum of revenue and cost of sales.
D) Gross profit is the difference between revenues and cost of sales..

Question 50

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What are debits and credits?

A) A debit is an increase in an asset or a decrease in a liability, and a credit is an increase in a liability and a decrease in an asset
B) A debit is an increase in a liability or a decrease in an asset, and a credit is an increase in an asset or a decrease in a liability
C) A debit is an increase in shareholders' equity, and a credit is a decrease in shareholders' equity
D) A debit is an increase in revenue or a decrease in expenses and a credit is a decrease in revenue and an increase in expenses entry

Question 51

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What are journals used for in the accounting cycle?

A) as the books of final entry
B) as the books used to record the days to day activities of a business
C) as the books of original entry
D) as the source of accounting information to prepare a trial balance

Question 52

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What statements are included in the statement of earnings?

A) The statements of comprehensive income and other comprehensive income
B) The statement of income and the statement of retained earnings
C) The statements of income and other comprehensive income
D) The statement of income and the statement of comprehensive income

Question 53

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What is the accounting equation?

A) A=E+L
B) E=A+L
C) A=L-E
D) A=E-L

Question 54

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-Which of the following is an example of a debit transaction?

A) a decrease in the inventory account
B) an increase in the revenue account
C) an increase in the trade receivables account
D) an increase in the trade payables account

Question 55

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-How is gross profit calculated?

A) income before taxes less operating expenses
B) revenue less cost of sales
C) profit before taxes less cost of sales
D) operating income less operating expenses

Question 56

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-How is profit for the year calculated?

A) by deducting operating expenses from profit before taxes
B) by deducting cost of sales from profit before taxes
C) by deducting cost of sales from revenue
D) by deducting income tax expense from profit before taxes

Question 57

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What are dividends deducted from to show the net change in retained earnings?

A) profit for the year
B) expenses
C) profit before taxes
D) revenue

Question 58

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-Which of the following is a current asset?

A) goodwill
B) prepaid expenses
C) accrued liabilities
D) deferred revenue

Question 59

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What part of the balance sheet contains marketable securities?

A) the revenue accounts
B) the current liability accounts
C) the current asset accounts
D) the non-current asset accounts

Question 60

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-Which of the following is a current liability?

A) marketable securities
B) prepaid expenses
C) mortgage debt
D) accrued expenses

Question 61

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What term refers to payments made for services that have NOT yet been received?

A) accrued liabilities
B) prepaid expenses
C) accrued expenses
D) prepaid liabilities

Question 62

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What type of asset is goodwill?

A) a fixed asset
B) a current asset
C) an intangible asset
D) a prepaid asset

Question 63

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What do retained earnings represent?

A) the net profit generated by a business less the dividends declared
B) a non-current liability
C) the earnings paid to shareholders
D) a current liability

Question 64

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What does capital cost allowance represent?

A) an amount used to calculate the book value of capital assets
B) an amount used to calculate the residual value of fixed assets
C) Canada Revenue Agency's equivalent of accumulated depreciation
D) Canada Revenue Agency's equivalent of depreciation

Question 65

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What differences between accounting income and taxable income can lead to a future income tax liability?

A) revenue and accumulated earnings
B) accumulated depreciation and depreciation
C) CCA and accumulated depreciation
D) CCA and depreciation

Question 66

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What is one of the adjustments required to calculate a company's cash flow?

A) adding accumulated depreciation to profit for the year
B) adding depreciation to profit for the year
C) adding depreciation to profit before taxes
D) adding profit from operations to interest income

Question 67

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What is the opposite of a prepaid expense?

A) intangible asset
B) accounts receivable
C) capital asset
D) accrued liability

Question 68

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-An entrepreneur invests $100,000 cash in a business. What is the effect on the financial statements?

A) Current liabilities increase and current assets increase.
B) Current liabilities decrease and current assets decrease.
C) Current assets decrease and equity decreases.
D) Current assets increase and equity increases.

Question 69

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-An entrepreneur borrows $50,000 from the bank for his business, to be repaid in one year. What is the effect on the financial statements?

A) Current assets increase and shareholder's equity increase.
B) Current assets decrease and current liabilities increase.
C) Current assets increase and current liabilities increase.
D) Current assets increase and long-term liabilities increase.

Question 70

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-An entrepreneur purchases advertising on credit. What is the effect on the financial statements?

A) Expenses decrease and accounts payable increase.
B) Expenses increase and accounts payable decrease.
C) Expenses decrease and accounts payable decrease.
D) Expenses increase and accounts payable increase.

Question 71

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-An entrepreneur buys office furniture to be paid for in 30 days. What is the effect on the financial statements?

A) Capital assets increase and long-term debt increases.
B) Capital assets increase and current liabilities increase.
C) Current assets increase and cash decreases.
D) Current assets increase and current liabilities increase.

Question 72

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-An entrepreneur collects $13,000 cash for services previously rendered. What is the effect on the financial statements?

A) Current assets increase and revenue increases.
B) Current assets increase and current liabilities increase.
C) Current assets decrease and revenue increases.
D) Current assets increase and current assets decrease.

Question 73

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-An entrepreneur pays $3,000 in cash for salaries. What is the effect on the financial statements?

A) Current assets decrease and expenses increase.
B) Revenues decrease and current assets decrease.
C) Expenses increase and current assets increase.
D) Current liabilities increase and expenses increase.

Question 74

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-An entrepreneur repays a $10,000 bank loan. What is the effect on the financial statements?

A) Current assets decrease and expenses increase.
B) Current assets increase and current liabilities decrease.
C) Current assets decrease and expenses decrease.
D) Current assets decrease and current liabilities decrease.

Question 75

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-An entrepreneur pays $13,000 in cash for merchandise that was previously purchased on credit. What is the effect on the financial statements?

A) Current assets decrease and current liabilities increase.
B) Current liabilities decrease and expenses increases.
C) Current assets decrease and current liabilities decrease.
D) Current liabilities decrease and long-term debt increases.

Question 76

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-Which of the following is an administrative expense?

A) the cost of merchandise
B) depreciation
C) dividends
D) office salaries

Question 77

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What account is found on the statement of income?

A) taxes payable
B) accumulated amortization
C) bank loan
D) salaries

Question 78

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-What account is found on the statement of financial position?

A) finance costs
B) office salaries
C) depreciation
D) cash

Question 79

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-Which of the following is included in the statement of changes in equity?

A) bank loans
B) dividends payable
C) income taxes
D) profit for the year

Question 80

Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%

-Which of the following is a current liability?

A) trade receivables
B) prepaid expenses
C) preferred shares
D) short-term borrowings