Question 1

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%
-Given the following information, what is the closing cash balance?
Opening cash balance $37,000
Cash flow from operations $137,500
Cash flow from financing activities $25,500
Cash flow used in investing activities $125,000

Accepted Answer

The closing cash balance is calculated by adding the opening cash balance to the cash flow from operations and cash flow from financing activities, then subtracting the cash flow used in investing activities. Therefore, $37,000 + $137,500 + $25,500 - $125,000 = $75,000.

Question 2

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 included in the share capital segment of the statement of changes in equity?

Accepted Answer

The share capital segment of the statement of changes in equity includes transactions that directly affect the share capital, such as the dividend reinvestment and share purchase plan. This is because these plans often involve issuing new shares or buying back existing shares, directly impacting the company's share capital.

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%
-Which statement contains assets, liabilities, and equity?

Accepted Answer

The statement of financial position (also known as the balance sheet) contains assets, liabilities, and equity. It provides a snapshot of an entity's financial condition at a specific point in time.

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%
-Which statement contains revenues and expenses?

Accepted Answer

The statement of income (or profit and loss statement) contains revenues and expenses, showing the company's financial performance over a specific period.

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%
-Which statement contains retained earnings (beginning of year); profit for the year, dividends paid, and retained earnings (end of year)?

Accepted Answer

The statement of changes in equity contains information about retained earnings at the beginning of the year, profit for the year, dividends paid, and retained earnings at the end of the year. It shows how the equity of the company has changed over the reporting period.

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%
-Which statement contains operating activities, investing activities, and financing activities?

Accepted Answer

The statement of cash flows is the financial statement that includes operating activities, investing activities, and financing activities. It provides information on how a company's operations are running, where its money is coming from, and how it is being spent over a period.

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%
-In what order are the following items listed on the statement of financial position?
(1) current assets
(2) property, plant, and equipment
(3) intangible assets

Accepted Answer

Property, plant, and equipment is listed before intangible assets on the statement of financial position.

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%
-Which of the following is NOT a current asset?

Accepted Answer

Office equipment is not a current asset because it is classified as a fixed asset or long-term asset due to its useful life being greater than one year. Current assets are assets that are expected to be converted into cash or used up within one year or one operating cycle, whichever is longer.

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%
-Which of the following is an example of a capital asset?

Accepted Answer

Land is considered a capital asset because it is a significant long-term asset that is not intended for sale in the regular course of business.

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%
-Which of the following is a long-term debt?

Accepted Answer

A mortgage is considered a long-term debt because it is typically paid off over several years or decades, unlike the other options which are short-term liabilities.

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%
-Which of the following is a current liability?

Accepted Answer

Trade and other payables are considered current liabilities because they are obligations that a company needs to pay off within a year or within its operating cycle, whichever is longer.

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 item is shown in the equity section of the statement of financial position?

Accepted Answer

Common shares are shown in the equity section of the statement of financial position as they represent ownership in the company.

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 correct date line for a statement of financial position?

Accepted Answer

The correct date line for a statement of financial position is "as at" a specific date, reflecting the financial status of an entity at a point in time, not over a period.

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%
-What is the correct date line for a statement of income?

Accepted Answer

The correct dateline for a statement of income is "for the year ended June 30, 2013," as it indicates the period over which the income is measured, which is typically a year.

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%
-What term is defined as "resources that a business owns to produce goods and services"?

Accepted Answer

Assets are defined as resources owned by a business that are used to produce goods and services.

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%
-What term refers to the debts of a business?

Accepted Answer

Liabilities refer to the debts or financial obligations of a business. This includes loans, accounts payable, mortgages, deferred revenues, bonds, warranties, and accrued expenses.

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 term refers to funds provided in a business by its shareholders?

Accepted Answer

Equity refers to the funds provided to a business by its shareholders, representing the owners' interest in the company.

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%
-What term refers to the amount a business earns from the sale of its products and services?

Accepted Answer

Revenue refers to the total amount of money a business earns from the sale of its products or services, before any expenses are subtracted.

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 term refers to the costs incurred in making or producing goods that are sold?

Accepted Answer

Cost of sales refers to the direct costs attributable to the production of the goods sold by a company. This includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good.

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%
-What term refers to assets that are expected to be converted into cash within one year?

Accepted Answer

Current assets are assets that are expected to be converted into cash within one year or within the operating cycle of the business, whichever is longer. Examples include cash, accounts receivable, and inventory.

Quiz 2: Accounting and Financial Statements

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 included in the share capital segment of the statement of changes in equity?

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 statement contains assets, liabilities, and equity?

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 statement contains revenues and expenses?

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 statement contains retained earnings (beginning of year) ; profit for the year, dividends paid, and retained earnings (end of year) ?

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 statement contains operating activities, investing activities, and financing activities?

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 NOT 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% -Which of the following is an example of a capital 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% -Which of the following is a long-term debt?

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?

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 item is shown in the equity section of 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% -What is the correct date line for a 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% -What is the correct date line for a statement of income?

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 is defined as "resources that a business owns to produce goods and services"?

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 the debts of a business?

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 funds provided in a business by its shareholders?

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 the amount a business earns from the sale of its products and services?

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 the costs incurred in making or producing goods that are sold?

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 assets that are expected to be converted into cash within one year?