Question 1

-The statement of retained earnings.

Accepted Answer

The answer of 
-The statement of retained earnings....

Question 2

-The statement of financial position.

Accepted Answer

The answer of 
-The statement of financial position....

Question 3

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.

Accepted Answer

The answer of Cost of the asset$100,000 
Life of the...

Question 4

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.

Accepted Answer

The answer of Cost of the asset$100,000 
Life of the...

Question 5

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.

Accepted Answer

The answer of Cost of the asset$100,000 
Life of the...

Question 6

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.

Accepted Answer

The answer of Cost of the asset$100,000 
Life of the...

Question 7

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.

Accepted Answer

The answer of Cost of the asset$100,000 
Life of the...

Question 8

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.

Accepted Answer

Bookkeeping involves collecting, classifying, and reporting transactions that occur in a business.

Question 9

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..

Accepted Answer

The answer of Cost of the asset$100,000 
Life of the...

Question 10

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

Accepted Answer

A debit increases assets or decreases liabilities, while a credit does the opposite, increasing liabilities or decreasing assets. This is a fundamental principle in accounting.

Question 11

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

Accepted Answer

Journals are used as the books of original entry where all financial transactions are initially recorded before being posted to the ledger accounts.

Question 12

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

Accepted Answer

The statement of earnings typically includes the statement of income, which details the company's revenue and expenses, and the statement of comprehensive income, which includes all other changes in equity not resulting from transactions with owners.

Question 13

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

Accepted Answer

The correct accounting equation is Assets (A) = Liabilities (L) + Equity (E), which is represented by choice A.

Question 14

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

Accepted Answer

DC) An increase in the trade receivables account is a debit transaction because it represents money owed to the company, increasing an asset account. D) An increase in the trade payables account is also a debit transaction because it represents an increase in the company's obligations or liabilities, which is recorded on the credit side, but the question's phrasing implies looking for transactions that would typically involve a debit entry in the double-entry accounting system, and in practice, the increase in liabilities (trade payables) is balanced by a debit in another account (such as an expense or asset account), not a direct debit to the trade payables account itself. This explanation corrects the misinterpretation in the initial response.

Question 15

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

Accepted Answer

Gross profit is calculated by subtracting the cost of sales (or cost of goods sold) from the revenue. It measures how efficiently a company uses its labor and supplies in the production process.

Question 16

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

Accepted Answer

Profit for the year is calculated by deducting income tax expense from profit before taxes. This is because profit before taxes represents the company's earnings before accounting for income tax expenses. Subtracting the income tax expense gives the net profit or net income for the year.

Question 17

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

Accepted Answer

Dividends are deducted from the profit for the year (after all expenses, including taxes, have been accounted for) to show the net change in retained earnings.

Question 18

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

Accepted Answer

Prepaid expenses are considered current assets because they represent goods or services that have been paid for by the company but have not yet been consumed or used. These are expected to provide benefits within one year or within the operating cycle, whichever is longer.

Question 19

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

Accepted Answer

Marketable securities are considered liquid assets and are therefore classified as current assets on a company's balance sheet. They are easily convertible into cash within a year.

Question 20

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

Accepted Answer

Accrued expenses are considered a current liability because they represent amounts owed for goods or services received but not yet paid for within the current accounting period or within one year.

Quiz 2: Accounting and Financial Statements

-The statement of retained earnings.

-The statement of financial position.

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.

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.

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.

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.

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.

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?

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?