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%
-What term refers to assets that are permanent and are to be used over an extended period of years?
A) intangible assets
B) non-current assets
C) intellectual capital
D) current assets

Accepted Answer

Non-current assets are assets that are intended for use over a long period of time, typically more than one year, which includes assets like property, plant, and equipment. This term best fits the description of assets that are permanent and used over an extended period of years.

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 term refers to a debt that a business must pay within one year?
A) current assets
B) long-term borrowings
C) prepaid expenses
D) current liabilities

Accepted Answer

Current liabilities are debts or obligations that a business must pay within one year, which includes short-term borrowings, accounts payable, and other similar obligations.

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%
-What term refers to debts that are NOT due for at least one year?
A) retained liabilities
B) capital stock
C) current liabilities
D) long-term borrowings

Accepted Answer

Long-term borrowings refer to debts that are not due for payment within the next year. These are contrasted with current liabilities, which are due within a year.

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%
-How is profit for the year calculated?
A) by deducting liabilities from assets
B) by deducting income tax expense from profit before taxes
C) by deducting cost of sales from sales revenue
D) by deducting assets from liabilities

Accepted Answer

Profit for the year is calculated by deducting income tax expense from profit before taxes.

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%
-What sections are included in the statement of changes in equity?
A) contributed surplus and non-current assets
B) current assets and non-current assets
C) retained earnings and intangible assets
D) share capital and retained earnings

Accepted Answer

The statement of changes in equity typically includes sections for share capital and retained earnings, reflecting changes in equity from transactions with owners (like issuing new shares) and the company's profit or loss activities, respectively.

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 of the following is a tax-deductible expense?
A) accumulated amortization
B) depreciation
C) accrued expenses
D) freight-out

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%
-Which of the following sections is part of the statement of income?
A) administrative expenses
B) future income taxes payable
C) long-term assets
D) retained earnings

Accepted Answer

Administrative expenses are part of the statement of income as they represent the costs associated with the general operation of a business.

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 included in equity?
A) current assets
B) revenue
C) deferred revenue
D) retained earnings

Accepted Answer

Retained earnings are included in equity as they represent the portion of a business's profits that have been kept or retained in the business rather than paid out to shareholders as dividends. This increases the equity of the company.

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 statement must an NFP organization prepare?
A) a statement of comprehensive income
B) a statement of financial position
C) a statement of retained earnings
D) a statement of assets

Accepted Answer

NFP (Not-for-Profit) organizations must prepare a statement of financial position, which is equivalent to a balance sheet for for-profit entities. This statement provides a snapshot of the organization's assets, liabilities, and net assets at a specific point in time.

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 is the accounting equation of an NFP organization?
A) Assets = Liabilities + Owners' Equity
B) Assets = Liabilities + Net Assets
C) Net Assets = Liabilities + Assets
D) Contributions = Net Assets - Liabilities

Accepted Answer

The accounting equation for a Not-For-Profit (NFP) organization is Assets = Liabilities + Net Assets. This reflects how the organization's resources are financed through liabilities and the net assets that represent the residual interest in the assets after liabilities are deducted.

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 section includes grants receivable in an NFP organization?
A) current assets
B) capital assets
C) long-term liabilities
D) current liabilities

Accepted Answer

Grants receivable by a not-for-profit (NFP) organization are typically recognized as current assets. This is because they are expected to be received within one year and used for operational purposes, making them a form of receivable similar to accounts receivable.

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 is deducted from an NFP organization's residual amount in its assets to arrive at net assets?
A) all fixed assets
B) all current assets
C) the accumulated depreciation
D) all debts to purchase these assets

Accepted Answer

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

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%
-Which of the following is shown on an NFP organization's statement of operations?
A) revenues
B) assets
C) capital assets (net)
D) grants receivable

Accepted Answer

Revenues are typically shown on an NFP organization's statement of operations, reflecting the income generated during 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%
-Where is the profit for the year transferred?
A) The profit for the year shown on the statement of financial position is transferred to the statement of retained earnings.
B) The profit before taxes is transferred to the statement of cash flows.
C) The profit for the year shown on the statement of changes in equity is transferred to the statement of income.
D) The profit for the year shown on the statement of income is transferred to the statement of changes in equity.

Accepted Answer

The profit for the year shown on the statement of income is transferred to the statement of changes in equity, where it affects retained earnings.

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 refers to the categories used to record accounting transactions?
A) trial balance
B) statement of income
C) chart of accounts
D) statement of financial position

Accepted Answer

The term "chart of accounts" refers to the categories used to record accounting transactions. It is a list of all the accounts in the general ledger of a company, organized by account type.

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 is the name for the books of original entry?
A) journals
B) T accounts
C) trial balance accounts
D) ledgers

Accepted Answer

Journals are the books of original entry where transactions are first recorded before they are posted to ledgers.

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%
-Which of the following ensures that the debits equal the credits?
A) sales journal
B) trial balance
C) journal entries
D) statement of income

Accepted Answer

The trial balance ensures that the debits equal the credits in the accounting records. It is a list of all the accounts in the general ledger and their balances, ensuring that total debits equal total credits.

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 is the broad set of rules or guidelines that accountants must follow when preparing financial statements?
A) IFRS
B) ROPA
C) ACCP
D) GPA

Accepted Answer

IFRS (International Financial Reporting Standards) is the broad set of rules or guidelines that accountants must follow when preparing financial statements. These standards are designed to bring consistency to accounting language, practices, and statements globally.

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 is the last line on the statement of income?
A) contribution margin
B) gross profit
C) profit for the year
D) profit before taxes

Accepted Answer

The last line on the statement of income is typically the "profit for the year," which is calculated after accounting for all revenues, costs, expenses, and taxes.

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 is the first level of profitability shown on the statement of income?
A) profit for the year
B) profit before taxes
C) operating income
D) gross profit

Accepted Answer

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

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 term refers to assets that are permanent and are to be used over an extended period of years?

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 a debt that a business must pay within one 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% -What term refers to debts that are NOT due for at least one 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% -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 sections are included in 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 of the following is a tax-deductible expense?

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 sections is part of the 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% -Which of the following is included 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 must an NFP organization prepare?

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 of an NFP organization?

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 section includes grants receivable in an NFP organization?

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 deducted from an NFP organization's residual amount in its assets to arrive at net assets?

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 shown on an NFP organization's statement of operations?

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% -Where is the profit for the year transferred?

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 categories used to record accounting transactions?

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 name for the books of original entry?

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 ensures that the debits equal the 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 is the broad set of rules or guidelines that accountants must follow when preparing 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 the last line on the 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 is the first level of profitability shown on the statement of income?