us
pl
A
e
, Financial Accounting 5ce
Chapter 1 – The Financial Statements
TEST BANK for Financial Accounting, 5th Canadian
Edition by Walter T. Harrison Jr., Charles T.
Horngren
All Chapters Fully Covered| Verified Questions & 100% Correct
Answers for Exam Preparations| A+ PASS GUARANTEED
Chapter 1 The Financial Statements
1.1 Explain why accounting is the language of business
1) Which of the following persons or groups have the ultimate control of a corporation?
A) the chief executive officer
B) the board of directors
C) the audit committee
D) the shareholders
Answer: D
Diff: 2 Type: MC
L.O.: L.O. 1-1
2) Financial statements are:
A) reports issued by outside consultants who are hired to analyze key operations of the business
B) reports created by management that states it is responsible for the acts of the corporation
C) standard documents that tell us how well a business is performing and where it stands in financial
Fr
terms
D) standard documents issued by outside consultants who are hired to analyze key operations of the
an
business in financial terms
Answer: C
kl
Diff: 1 Type: MC
L.O.: L.O. 1-1
yn
3) The accounting equation can be stated as:
e
A) Assets + Liabilities = Shareholders' equity
B) Assets = Liabilities + Shareholders' equity
A
C) Assets = Liabilities - Shareholders' equity
D) Assets + Shareholders' equity =
pl
Liabilities Answer: B
Diff: 1 Type: MC
us
L.O.: L.O. 1-1
4) The owners' interest in the assets of a corporation is known as:
Pa
A) assets
B) shareholders' equity
© 2015 Pearson Canada Inc. 1-2
ss
, Financial Accounting 5ce
Chapter 1 – The Financial Statements
C) expenses
D) revenues
Answer: B
Diff: 1 Type: MC
L.O.: L.O. 1-1
5) On January 1, 2014, total assets for Liftoff Technologies were $125,000; on December 31, 2014,
total assets were $145,000. On January 1, 2014, total liabilities were $110,000; on December 31,
2014, total liabilities were $115,000. What are the amount of the change and the direction of the
change in Liftoff Technologies shareholders' equity for 2014?
A) decrease of $15,000
B) increase of $15,000
C) increase of $30,000
D) decrease of
$30,000 Answer: B
Diff: 2 Type: MC
L.O.: L.O. 1-1
6) Claims held by the shareholders (owners) of a corporation are referred to as:
A) retained earnings
B) share capital
C) share capital minus retained earnings
D) share capital plus retained earnings
Answer: D
Diff: 3 Type: MC
L.O.: L.O. 1-1
7) Payables are classified as:
A) increases in earnings
Fr
B) assets
C) decreases in earnings
an
D) liabilities
Answer: D
kl
Diff: 1 Type: MC
L.O.: L.O. 1-1
yn
8) Receivables are classified as:
A) increases in earnings
e
B) assets
A
C) decreases in earnings
D) liabilities
pl
Answer: B
Diff: 1 Type: MC
us
L.O.: L.O. 1-1
9) Revenues are:
Pa
A) increases in liabilities resulting from delivering goods or services to customers
B) increases in retained earnings resulting from delivering goods or services to customers
© 2015 Pearson Canada Inc. 1-3
ss
, Financial Accounting 5ce
Chapter 1 – The Financial Statements
C) decreases in assets resulting from delivering goods or services to customers
D) decreases in retained earnings resulting from delivering goods or services to customers
Answer: B
Diff: 2 Type: MC
L.O.: L.O. 1-1
10) If assets increase $120,000 during a given period and liabilities decrease $25,000 during the
same period, shareholders' equity must:
A) increase $95,000
B) decrease $145,000
C) decrease $95,000
D) increase
$145,000 Answer:
D
Diff: 3 Type: MC
L.O.: L.O. 1-1
11) If liabilities increase $120,000 during a given period and shareholders' equity decreases $25,000
during the same period, assets must:
A) decrease $145,000
B) increase $145,000
C) increase $95,000
D) decrease
$95,000 Answer:
C
Diff: 3 Type: MC
L.O.: L.O. 1-1
12) Expenses are:
Fr
A) increases in assets resulting from operations
B) increases in retained earnings resulting from operations
an
C) increases in liabilities resulting from purchasing assets
D) decreases in retained earnings resulting from operations
kl
Answer: D
Diff: 2 Type: MC
yn
L.O.: L.O. 1-1
13) How do revenues for a period relate to the beginning and ending balances in retained earnings?
e
A) Revenues will increase the beginning balance of retained earnings for the period.
A
B) Revenues will decrease the beginning balance of retained earnings for the period.
C) Revenues less expenses will either increase or decrease the beginning balance of retained earnings for
pl
the period.
D) Revenues less expenses will either increase or decrease the ending balance of retained earnings for the
us
period.
Answer: D
Diff: 2 Type: MC
Pa
L.O.: L.O. 1-1
© 2015 Pearson Canada Inc. 1-4
ss
pl
A
e
, Financial Accounting 5ce
Chapter 1 – The Financial Statements
TEST BANK for Financial Accounting, 5th Canadian
Edition by Walter T. Harrison Jr., Charles T.
Horngren
All Chapters Fully Covered| Verified Questions & 100% Correct
Answers for Exam Preparations| A+ PASS GUARANTEED
Chapter 1 The Financial Statements
1.1 Explain why accounting is the language of business
1) Which of the following persons or groups have the ultimate control of a corporation?
A) the chief executive officer
B) the board of directors
C) the audit committee
D) the shareholders
Answer: D
Diff: 2 Type: MC
L.O.: L.O. 1-1
2) Financial statements are:
A) reports issued by outside consultants who are hired to analyze key operations of the business
B) reports created by management that states it is responsible for the acts of the corporation
C) standard documents that tell us how well a business is performing and where it stands in financial
Fr
terms
D) standard documents issued by outside consultants who are hired to analyze key operations of the
an
business in financial terms
Answer: C
kl
Diff: 1 Type: MC
L.O.: L.O. 1-1
yn
3) The accounting equation can be stated as:
e
A) Assets + Liabilities = Shareholders' equity
B) Assets = Liabilities + Shareholders' equity
A
C) Assets = Liabilities - Shareholders' equity
D) Assets + Shareholders' equity =
pl
Liabilities Answer: B
Diff: 1 Type: MC
us
L.O.: L.O. 1-1
4) The owners' interest in the assets of a corporation is known as:
Pa
A) assets
B) shareholders' equity
© 2015 Pearson Canada Inc. 1-2
ss
, Financial Accounting 5ce
Chapter 1 – The Financial Statements
C) expenses
D) revenues
Answer: B
Diff: 1 Type: MC
L.O.: L.O. 1-1
5) On January 1, 2014, total assets for Liftoff Technologies were $125,000; on December 31, 2014,
total assets were $145,000. On January 1, 2014, total liabilities were $110,000; on December 31,
2014, total liabilities were $115,000. What are the amount of the change and the direction of the
change in Liftoff Technologies shareholders' equity for 2014?
A) decrease of $15,000
B) increase of $15,000
C) increase of $30,000
D) decrease of
$30,000 Answer: B
Diff: 2 Type: MC
L.O.: L.O. 1-1
6) Claims held by the shareholders (owners) of a corporation are referred to as:
A) retained earnings
B) share capital
C) share capital minus retained earnings
D) share capital plus retained earnings
Answer: D
Diff: 3 Type: MC
L.O.: L.O. 1-1
7) Payables are classified as:
A) increases in earnings
Fr
B) assets
C) decreases in earnings
an
D) liabilities
Answer: D
kl
Diff: 1 Type: MC
L.O.: L.O. 1-1
yn
8) Receivables are classified as:
A) increases in earnings
e
B) assets
A
C) decreases in earnings
D) liabilities
pl
Answer: B
Diff: 1 Type: MC
us
L.O.: L.O. 1-1
9) Revenues are:
Pa
A) increases in liabilities resulting from delivering goods or services to customers
B) increases in retained earnings resulting from delivering goods or services to customers
© 2015 Pearson Canada Inc. 1-3
ss
, Financial Accounting 5ce
Chapter 1 – The Financial Statements
C) decreases in assets resulting from delivering goods or services to customers
D) decreases in retained earnings resulting from delivering goods or services to customers
Answer: B
Diff: 2 Type: MC
L.O.: L.O. 1-1
10) If assets increase $120,000 during a given period and liabilities decrease $25,000 during the
same period, shareholders' equity must:
A) increase $95,000
B) decrease $145,000
C) decrease $95,000
D) increase
$145,000 Answer:
D
Diff: 3 Type: MC
L.O.: L.O. 1-1
11) If liabilities increase $120,000 during a given period and shareholders' equity decreases $25,000
during the same period, assets must:
A) decrease $145,000
B) increase $145,000
C) increase $95,000
D) decrease
$95,000 Answer:
C
Diff: 3 Type: MC
L.O.: L.O. 1-1
12) Expenses are:
Fr
A) increases in assets resulting from operations
B) increases in retained earnings resulting from operations
an
C) increases in liabilities resulting from purchasing assets
D) decreases in retained earnings resulting from operations
kl
Answer: D
Diff: 2 Type: MC
yn
L.O.: L.O. 1-1
13) How do revenues for a period relate to the beginning and ending balances in retained earnings?
e
A) Revenues will increase the beginning balance of retained earnings for the period.
A
B) Revenues will decrease the beginning balance of retained earnings for the period.
C) Revenues less expenses will either increase or decrease the beginning balance of retained earnings for
pl
the period.
D) Revenues less expenses will either increase or decrease the ending balance of retained earnings for the
us
period.
Answer: D
Diff: 2 Type: MC
Pa
L.O.: L.O. 1-1
© 2015 Pearson Canada Inc. 1-4
ss
