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 are the two basic types of accounting methods?

Accepted Answer

The two basic types of accounting methods are the cash method and the accrual method. The cash method recognizes revenue and expenses only when money changes hands, while the accrual method recognizes revenue when it is earned and expenses when they are incurred, regardless of when the cash transaction occurs.

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 the scrap/salvage value deducted from to calculate depreciation?

Accepted Answer

The scrap/salvage value is deducted from the purchase price of the asset to calculate depreciation.

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 is the name of the statement of income for an NFP organization?

Accepted Answer

The statement of income for a Not-for-Profit (NFP) organization is referred to as the "statement of operations." This statement is similar to an income statement for a for-profit entity, detailing revenues, expenses, and the resulting net income or loss.

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%
-Accounting involves collecting, classifying, and recording information that arises from the multitude of transactions taking place in a business.

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%
-Financial statements include reports such as the statement of financial position and the statement of income.

Accepted Answer

Financial statements indeed include reports such as the statement of financial position (balance sheet) and the statement of income (income statement), among others, to provide a comprehensive overview of a company's financial health.

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%
-Bookkeeping is considered the language of business.

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%
-Bookkeeping begins with the preparation of a chart of accounts.

Accepted Answer

A chart of accounts is a foundational tool in bookkeeping that organizes all financial transactions into categories, making it easier to record and track financial activities.

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%
-Chart of accounts is a set of categories by which accounting transactions are recorded.

Accepted Answer

The chart of accounts is indeed a set of categories used to organize and record financial transactions in a systematic way, allowing for easier reporting and analysis of a company's financial data.

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%
-Double-entry bookkeeping is a system for posting financial transactions in order to reduce the level of financial fraud as much as possible.

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%
-The accounting equation is expressed as follows: A = E + L.

Accepted Answer

The accounting equation is Assets (A) = Equity (E) + Liabilities (L), which is a fundamental principle in accounting that ensures the balance sheet is balanced.

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%
-A debit entry is an accounting transaction that is usually recorded on the left side of an account.

Accepted Answer

A debit entry is indeed recorded on the left side of an account in double-entry bookkeeping, which increases asset or expense accounts and decreases liability, equity, or revenue 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%
-In the bookkeeping process, journalizing means recording transactions in ledger accounts.

Accepted Answer

Journalizing refers to the process of recording transactions in the journal, not the ledger. The ledger is used for organizing the information from the journal into specific accounts.

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%
-Usually, transactions are posted from the ledgers onto the journals.

Accepted Answer

Transactions are initially recorded in journals, which are then posted to ledgers, not the other way around.

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%
-The trial balance is a statement that ensures that the general ledger is in balance (debit transactions = credit transactions).

Accepted Answer

The trial balance is indeed a statement used in accounting to ensure that debits and credits in the general ledger are in balance, by listing all the accounts and their balances at a particular time.

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%
-Accounting is the process of recording and summarizing business transactions on a company's financial statements.

Accepted Answer

Accounting involves recording, summarizing, and reporting financial transactions to provide useful information for decision-making.

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%
-The statement of income can be described as a "movie" of a business. It shows the flow of sales revenue and expenses.

Accepted Answer

The statement of income (or income statement) is often described metaphorically as a "movie" because it provides a dynamic view of a business's operations over a period of time, showing how sales revenue and expenses flow through the business to result in net income or loss.

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%
-The statement of changes in equity shows what a business owns and what it owes.

Accepted Answer

The statement of changes in equity shows the changes in the owner's equity over a period, including investments by owners, distributions to owners, and the company's profit or loss, not what a business owns and owes. What a business owns and owes is shown in the balance sheet.

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%
-A statement of financial position shows three things: assets, equity and liabilities.

Accepted Answer

A statement of financial position, commonly referred to as a balance sheet, indeed shows three main things: assets, equity, and liabilities. Assets are what the company owns, liabilities are what it owes, and equity represents the owners' share in the company.

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%
-The statement of cash flows shows the flow of funds in terms of where they come from and where they went.

Accepted Answer

The statement of cash flows is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

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%
-The first level of profitability of the statement of income is the profit for the year.

Accepted Answer

The first level of profitability on the statement of income is typically gross profit, not the profit for the year. Profit for the year (net income) is calculated after accounting for all revenues, costs, expenses, and taxes, not the first level.

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 are the two basic types of accounting methods?

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 scrap/salvage value deducted from to calculate depreciation?

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 of the statement of income for 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% -Financial statements include reports such as the statement of financial position and 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% -Bookkeeping is considered the language of 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% -Bookkeeping begins with the preparation of a chart of accounts.

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% -Chart of accounts is a set of categories by which accounting transactions are recorded.

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% -Double-entry bookkeeping is a system for posting financial transactions in order to reduce the level of financial fraud as much as possible.

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% -The accounting equation is expressed as follows: A = E + L.

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% -A debit entry is an accounting transaction that is usually recorded on the left side of an account.

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 the bookkeeping process, journalizing means recording transactions in ledger accounts.

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% -Usually, transactions are posted from the ledgers onto the journals.

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% -The trial balance is a statement that ensures that the general ledger is in balance (debit transactions = credit 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% -Accounting is the process of recording and summarizing business transactions on a company's 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% -The statement of income can be described as a "movie" of a business. It shows the flow of sales revenue 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% -The statement of changes in equity shows what a business owns and what it owes.

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% -A statement of financial position shows three things: assets, equity and liabilities.

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% -The statement of cash flows shows the flow of funds in terms of where they come from and where they went.

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% -The first level of profitability of the statement of income is the profit for the year.