Fundamentals of Financial Accounting 5Th Canadian Edition By Fred Phillips -Test Bank

Chapter 01 - Business Decisions and Financial Accounting True / False Questions Chapter 01 Business Decisions and Financial Accounting 1. Building a new warehouse is an operating activity. TRUE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 2. The payment of dividends is a financing activity. TRUE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 3. Daily activities involved in running a business such as buying supplies and paying wages are operating activities. TRUE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 1-1 Chapter 01 - Business Decisions and Financial Accounting 4. Financing activities include borrowing and obtaining money by issuing shares of ownership (called stock certificates). TRUE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 5. Shareholders are creditors of a company. FALSE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-01 Describe various organizational forms and business decision makers. Topic: 01-10 Shareholders' Equity 6. All corporations acquire financing by issuing shares of ownership (called stock certificates) for sale on public stock exchanges. FALSE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-01 Describe various organizational forms and business decision makers. Topic: 01-04 Corporation 7. You paid $10,000 to buy 1% of the stock in a corporation that has now gone bankrupt. The company owes $10 million dollars to creditors. As a result of the bankruptcy, you will lose $100,000. FALSE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-01 Describe various organizational forms and business decision makers. Topic: 01-04 Corporation 1-2 Chapter 01 - Business Decisions and Financial Accounting 8. The shareholders' equity in a company is the difference between assets and liabilities. TRUE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-10 Shareholders' Equity 9. A company owes $200,000 on a bank loan. If this loan is documented using a formal written debt contract, it will be reported as a liability called Notes Payable. TRUE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-09 Liabilities 10. The accounting decisions that were made when preparing a company's financial statements are explained in the auditor's report. FALSE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-20 Generally Accepted Accounting Principles 11. Under the unit of measure concept, a Canadian company would report the data on the financial statements in Canadian dollars. TRUE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-20 Generally Accepted Accounting Principles 1-3 Chapter 01 - Business Decisions and Financial Accounting 12. 1-4 Chapter 01 - Business Decisions and Financial Accounting ANONYMOUS, INC. BALANCE SHEET SEPTEMBER 30, 2007 Assets Cash $1,568,000 Accounts Receivable 310,500 Inventories 208,200 Property, Plant, and Equipment 391,600 Other Assets 869,400 Total Assets $3,347,700 Liabilities Accounts Payable $1,439,200 Notes Payable ? Total Liabilities ? Shareholders’ Equity Contributed Capital 1,263,600 Retained Earnings 207,100 Total Shareholders’ Equity 1,470,700 Total Liabilities and shareholders’ Equity $3,347,700 Notes Payable would equal $437,800 and Total Liabilities would equal $1,877,000 on the balance sheet. TRUE Blooms: Analyze Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 13. 1-5 Chapter 01 - Business Decisions and Financial Accounting ANONYMOUS,INC BALANCE SHEET SEPTEMBER 30, 2007 Assets Cash $1,568,000 Accounts Receivable 310,500 Inventories 208,200 Property, Plant, and Equipment 391,600 Other Assets 869,400 Total Assets $3,347,700 Liabilities Accounts Payable $1,439,200 Notes Payable ? Total Liabilities ? Shareholders’ Equity Contributed Capital 1,263,600 Retained Earnings 207,100 Total Shareholders’ Equity 1,470,700 Total Liabilities and shareholders’ Equity $3,347,700 The $207,100 shown on the balance sheet has been distributed to shareholders as dividends. FALSE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 14. 1-6 Chapter 01 - Business Decisions and Financial Accounting ANONYMOUS,INC BALANCE SHEET SEPTEMBER 30, 2007 Assets Cash $1,568,000 Accounts Receivable 310,500 Inventories 208,200 Property, Plant, and Equipment 391,600 Other Assets 869,400 Total Assets $3,347,700 Liabilities Accounts Payable $1,439,200 Notes Payable ? Total Liabilities ? Shareholders’ Equity Contributed Capital 1,263,600 Retained Earnings 207,100 Total Shareholders’ Equity 1,470,700 Total Liabilities and shareholders’ Equity $3,347,700 Anonymous, Inc. is owed $310,500 from customers who have purchased goods or services from the company, but have not yet paid for them. TRUE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 1-7 Chapter 01 - Business Decisions and Financial Accounting 15. The total net income from the income statement is always included in the Statement of Retained Earnings. TRUE Blooms: Analyze Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-11 Financial Statements 16. The income statement shows the assets and liabilities of the company at a point in time. FALSE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-12 The Income Statement 17. The income statement primarily shows whether a business made a profit from selling goods or providing services after subtracting the costs of doing business. TRUE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-12 The Income Statement 18. Net income is the amount the company earned after expenses and dividends are subtracted from revenue. FALSE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-12 The Income Statement 1-8 Chapter 01 - Business Decisions and Financial Accounting 19. Expenses are shown on the income statement only in the time period in which they are paid. FALSE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-12 The Income Statement 20. In the Statement of Cash Flows, cash inflows are positive numbers while cash outflows are negative. TRUE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 21. Cash at the end of the year is the sum of cash at the beginning of the year and the net change in cash during the year. TRUE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 22. Cash flow from investing activities includes money received from a company's shareholders. FALSE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 1-9 Chapter 01 - Business Decisions and Financial Accounting 23. The balance sheets at the beginning and end of a time period are linked by the income statement, the statement of cash flows, and the statement of retained earnings for the time period. TRUE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-11 Financial Statements 24. Shareholders in a corporation are personally liable for the company's obligations. FALSE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-01 Describe various organizational forms and business decision makers. Topic: 01-04 Corporation 25. Notes to the financial statements (also known as footnotes) immediately follow the four individual financial statements, and include descriptions of accounting decisions made when preparing the financial statements. TRUE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-16 Notes to the Financial Statements 26. Just like footnotes in some articles and books, notes to the financial statements (also known as footnotes) report extra information that is not relevant to the financial statements. FALSE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-16 Notes to the Financial Statements 1-10 Chapter 01 - Business Decisions and Financial Accounting 27. Investors analyze the income statement to identify trends in a company's net income, which can provide clues about the company's future earnings. TRUE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-12 The Income Statement 28. When a company goes bankrupt, assets are divided equally between creditors and investors. FALSE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-03 Explain how financial statements are used by decision makers. Topic: 01-19 Useful Financial Information 29. Statement of retained earnings is prepared before the income statement. FALSE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-11 Financial Statements 30. Questionable ethical practices can make it harder for a company to attract lenders and investors in the future. TRUE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-21 Ethical Conduct 1-11 Chapter 01 - Business Decisions and Financial Accounting 31. Managerial accounting reports include detailed financial plans and continually updated reports about the operating performance of the company. TRUE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-01 Describe various organizational forms and business decision makers. Topic: 01-06 Accounting For Business Decisions 32. External financial statement users are not given access to detailed internal records of the company, so they rely extensively on the financial statements. TRUE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-01 Describe various organizational forms and business decision makers. Topic: 01-06 Accounting For Business Decisions 33. The separate entity assumption requires that a business's financial reports include only the activities of the business and its shareholders. FALSE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-20 Generally Accepted Accounting Principles 34. Resources owed to banks and other creditors must equate to total assets. FALSE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-07 The Basic Accounting Equation 1-12 Chapter 01 - Business Decisions and Financial Accounting 35. Within shareholders equity, the contributed capital and retained earnings accounts must balance each other out. FALSE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-07 The Basic Accounting Equation 36. Private enterprises in Canada are required by law to follow ASPE, if they earn a profit. FALSE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-20 Generally Accepted Accounting Principles 37. According to the cost principle of accounting, assets are initially reported on the balance sheet based on their original cost to the company. TRUE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 38. It is not possible for a receivable to ever be considered a liability. TRUE Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 1-13 Chapter 01 - Business Decisions and Financial Accounting 39. Under IFRS it is possible for a payable to be recorded as an asset. FALSE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-20 Generally Accepted Accounting Principles 40. Under modern accounting standards, it is more important for larger companies to behave ethically, than it is for smaller ones. FALSE Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-21 Ethical Conduct Multiple Choice Questions 41. Which of the following would not represent a financing activity? A. Paying dividends to shareholders. B. An investment of financial capital by the owners. C. Borrowing money from a bank to finance the purchase of new equipment. D. Collecting cash from customers. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 1-14 Chapter 01 - Business Decisions and Financial Accounting 42. Investing activities: A. involve day to day events like selling goods and services, which occur when running a business. B. involve the buying or selling of land, buildings, equipment, and other longer-term investments. C. only involve financial exchanges. D. buying the company's office supplies. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 43. Public corporations: A. are businesses owned by two or more people, each of whom is personally liable for the debts of the business. B. are businesses whose stock is bought and sold on a stock exchange. C. are businesses whose stock is bought and sold privately. D. are setup for non-profit purposes. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-01 Describe various organizational forms and business decision makers. Topic: 01-04 Corporation 44. Which of the following would represent an operating activity? A. Purchasing equipment with money borrowed from creditors. B. An investment of financial capital by the owners. C. Buying the company's office supplies. D. Repaying a loan the company had taken out. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 1-15 Chapter 01 - Business Decisions and Financial Accounting 45. The separate entity assumption means: A. a company's financial statements reflect only the business activities of that company and not that of the shareholders. B. each shareholders' activities must be revealed in the financial statements. C. each separate owner's finances must be revealed in the financial statements. D. each separate entity that has a claim on a company's assets must be shown in the financial statements. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-20 Generally Accepted Accounting Principles 46. Which of the following are the disadvantages of setting a corporation? A. Legal fees can be high and separate tax returns have to be filed for owners and the business. B. Owners are legally responsible for the liabilities of the corporation. C. Owners must be involved in day to day running of the business. D. The business and owners are considered as separate legal entities. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-01 Describe various organizational forms and business decision makers. Topic: 01-04 Corporation 47. Which of the following is one reason a new start up could have a negative investing cash flow? A. Company needs cash to buy to purchase new equipment/plant and expand business. B. Company is having problems generating profits. C. Company needs to pay dividends to its shareholders. D. Company has borrowed money from banks/investors and is having problems paying them back. Blooms: Analyze Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 1-16 Chapter 01 - Business Decisions and Financial Accounting 48. Creditors are: A. people or organizations who owe money to a business. B. people or organizations to whom a business owes money. C. shareholders of a business. D. customers of a business. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-01 Describe various organizational forms and business decision makers. Topic: 01-06 Accounting For Business Decisions 49. An entity that is holding assets for another party and has legal authority and duty to make decisions regarding financial matters concerning that party is: A. fiduciary. B. accountant. C. attorney. D. manager. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-19 Useful Financial Information 50. The three main types of business activities measured by financial statements are: A. selling goods, selling services, and obtaining financing. B. operating activities, investing activities, and financing activities. C. hiring, producing, and advertising. D. generating revenues, paying expenses, and incurring dividends. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-17 Relationships among the Financial Statements 1-17 Chapter 01 - Business Decisions and Financial Accounting 51. Financing that individuals or institutions have provided to a company is: A. always classified as liabilities. B. classified as liabilities when provided by creditors and shareholders' equity when provided by owners. C. always classified as shareholders' equity. D. classified as shareholders' equity when provided by creditors and liabilities when provided by owners. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 52. Financial statements are most commonly prepared: A. semi-monthly. B. monthly, quarterly and annually. C. whenever management feels like it. D. weekly. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-11 Financial Statements 53. Which of the following is true? A. Companies are allowed to choose their fiscal year-end date. B. Companies must end their fiscal year on March 31, June 30, September 30, or December 31. C. Companies can select any date except a holiday to end their fiscal year. D. Companies must end their fiscal year on December 31. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-11 Financial Statements 1-18 Chapter 01 - Business Decisions and Financial Accounting 54. Assets: A. represent the amounts earned by a company. B. must equal the liabilities of a company. C. must equal the shareholders' equity of the company. D. represent the resources controlled by a company. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-08 Assets 55. Which of the following are the three basic elements of the balance sheet? A. Assets, liabilities, and retained earnings. B. Assets, liabilities, and contributed capital. C. Assets, liabilities, and revenues. D. Assets, liabilities, and shareholders' equity. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 56. The Don't Bite Me pest control company has 10,000 gallons of insecticide supplies on hand that cost $300,000; a bill from the vendor for $100,000 of these supplies has not yet been paid. The company expects to earn $800,000 for its services when it uses the insecticide supplies. The company would report: A. $300,000 in assets under supplies and no accounts payable. B. $200,000 in assets under supplies and no accounts payable. C. $300,000 in assets under supplies and $100,000 in liabilities under accounts payable. D. $800,000 in assets under supplies and $100,000 in liabilities under accounts payable. Blooms: Apply Accessibility: Keyboard Navigation Difficulty: Hard Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 1-19 Chapter 01 - Business Decisions and Financial Accounting 57. The Publish or Perish Printing Company paid a dividend to shareholders. This will be reported on the: A. audit report. B. income statement. C. balance sheet. D. statement of retained earnings. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 58. Which of the following is not true? A. Assets = Liabilities + Shareholders' Equity B. Liabilities = Assets - Shareholders' Equity C. Shareholders' Equity + Liabilities - Assets = 0 D. Liabilities - Shareholders' Equity = Assets Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-07 The Basic Accounting Equation 59. Which of the following would affect shareholders' equity? A. A company borrows $100 million and buys $100 million in equipment. B. A company pays $100 million to shareholders as a dividend. C. A company sells $100 million in assets for $100 million cash. D. A company receives payment for $100 million in accounts receivable. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 1-20 Chapter 01 - Business Decisions and Financial Accounting 60. At the end of last year, the company's assets totalled $860,000 and its liabilities totalled $740,000. During the current year, the company's total assets increased by $58,000 and its total liabilities increased by $24,000. At the end of the current year: A. shareholders' equity was $154,000. B. shareholders' equity was $120,000. C. shareholders' equity was $34,000. D. shareholders' equity was $178,000. Blooms: Apply Accessibility: Keyboard Navigation Difficulty: Hard Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 61. A company's balance sheet contained the following information: Contributed Capital $12,000 Total Assets $176,000 Accounts Payable $64,000 Retained Earnings $28,000 Assuming Notes Payable is the only other item on the balance sheet: A. Notes Payable must equal $200,000. B. Notes Payable must equal $8,000. C. Notes Payable must equal $72,000. D. Notes Payable must equal $344,000. Blooms: Apply Accessibility: Keyboard Navigation Difficulty: Hard Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 1-21 Chapter 01 - Business Decisions and Financial Accounting 62. During its first year of operations, Widgets Incorporated reported sales revenue of $386,000 but collected only $303,000 from customers. The amount to be reported as accounts receivable at the end of the year is: A. $689,000. B. $386,000. C. $303,000. D. $83,000. Blooms: Apply Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 63. If XYZ Company had $12 million in revenue and net income of $3 million then its: A. expenses must have been $15 million. B. expenses must have been $9 million. C. assets must have been $12 million. D. assets must have been $3 million. Blooms: Apply Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-12 The Income Statement 64. The Whackem-Smackem Software Company sold $11 million of computer games in its first year of operations. The company received payments of $7.5 million for these computer games. The company's income statement would report: A. sales revenue of $7.5 million. B. accounts receivable of $3.5 million. C. expenses of $3.5 million. D. sales revenue of $11 million. Blooms: Apply Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-12 The Income Statement 1-22 Chapter 01 - Business Decisions and Financial Accounting 65. Dividends are reported on the: A. Income statement. B. Balance sheet. C. Statement of retained earnings. D. Income statement and balance sheet. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-13 The Statement of Retained Earnings 66. Which of the following would not affect a company's net income? A. A change in the company's income taxes. B. Changing the selling price of a company's product. C. Paying a dividend to shareholders. D. Advertising a new product. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-12 The Income Statement 67. Which of the following would be reported on the income statement for 2005? A. Supplies that were purchased and used in 2004 but paid for in 2005. B. Dividends that were paid in 2005. C. Supplies that were purchased and used in 2005 but paid for in 2004. D. All of the choices are correct. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-12 The Income Statement 68. Find the missing data. 1-23 Chapter 01 - Business Decisions and Financial Accounting CINNAMON AND SPICE, INC. Income Statement For the Year Ended December 31, 2008 Revenues Sales Revenue $3,810,200 Total Revenues ? Expenses Wages Expense 1,314,900 Advertising and Promotion Expenses 482,200 Other Selling and Administrative Expenses ? Interest Expense 225,600 Income Tax Expense 117,700 Other Expenses 253,700 Total Expenses 3,445,600 Net Income $? A. Total revenues are $3,810,200, other selling and administrative expenses are $1,051,500, and net income is $364,600. B. Total revenues are $2,495,300, other selling and administrative expenses are $1,051,500, and net income is ($950,300). C. Total revenues are $364,600, other selling and administrative expenses are $3,081,000, and net income is $7,255,800. D. Total revenues are $3,810,200, other selling and administrative expenses are $364,600, and net income is $7,255,800. Blooms: Analyze Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-12 The Income Statement 69. Which of the following is not true? 1-24 Chapter 01 - Business Decisions and Financial Accounting HOOPER’S HOPS Statement of Retained Earnings For the Year Ended December 31, 2008 Retained Earnings, January 1, 2008 $167,800 Net Income for 2008 219,100 Dividends for 2008 (36,400) Retained Earnings, December 31, 2008 $350,500 A. Retained earnings of $350,500 will appear on the balance sheet as of December 31, 2008. B. The net income in the statement came from the income statement for the year ended December 31, 2008. C. Dividends are shown in parenthesis because they are payments made by a company to its shareholders as a return on their investment. D. Retained earnings are the amount of distributions made to the shareholders since the company started. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-13 The Statement of Retained Earnings 70. Which of the following statements is true? A. The "net change in cash" reported on the statement of cash flows is also reported on the statement of retained earnings. B. Both the income statement and the statement of cash flows show the results of a company's operating activities. C. The statement of cash flows is for a period of time while the income statement is at a point in time. D. The statement of cash flows is at a point of time while the income statement is for a period of time. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-11 Financial Statements 1-25 Chapter 01 - Business Decisions and Financial Accounting 71. GIL’S FISHING EQUIPMENT, INC. Statement of Cash Flows For the Year Ended December 31,2008 Cash flows from operating activities Cash collected from customers A Cash paid to suppliers and employees B Cash paid for other operating activities C Net cash flow from operating activities Cash flows from investing activities Cash paid to purchase equipment and other assets D Cash received from selling equipment and other assets E Net cash flow from investing activities Cash flows from financing activities Cash paid on notes payable F Cash paid for dividends G Net cash flow from financing activities Net change in cash during the year Cash at beginning of year Cash at end of year In the statement of cash flows which letters represent cash outflows? A. B, C, D, F and G. B. A, E and G. C. B, C, E and F. D. A, E, F and G. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 1-26 Chapter 01 - Business Decisions and Financial Accounting 72. GIL’S FISHING EQUIPMENT, INC. Statement of Cash Flows For the Year Ended December 31,2008 Cash flows from operating activities Cash collected from customers A Cash paid to suppliers and employees B Cash paid for other operating activities C Net cash flow from operating activities Cash flows from investing activities Cash paid to purchase equipment and other assets D Cash received from selling equipment and other assets E Net cash flow from investing activities Cash flows from financing activities Cash paid on notes payable F Cash paid for dividends G Net cash flow from financing activities Net change in cash during the year Cash at beginning of year Cash at end of year In the statement of cash flows which letters represent cash inflows? A. B, C, D, F and G. B. A, E and G. C. B, C, E and F. D. A and E. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 1-27 Chapter 01 - Business Decisions and Financial Accounting 73. Assets are listed on the balance sheet in order of: A. date acquired. B. liquidity. C. estimated replacement date. D. value. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 74. In the statement of cash flows, the company's payment of a $1,900 electric bill would be classified as: A. an operating cash outflow. B. a financing cash outflow. C. an investing cash inflow. D. an operating cash inflow. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 75. In Canada, Generally Accepted Accounting Principles (GAAP) are established: A. by the Chartered Professional Accountants of Canada (CPA Canada) B. by the Public Company Accounting Oversight Board. C. by the Financial Accounting Standards Board. D. by the International Accounting Standards Board Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-20 Generally Accepted Accounting Principles 1-28 Chapter 01 - Business Decisions and Financial Accounting 76. The purpose of a statement of retained earnings is to: A. estimate the current value of a company's assets. B. report how the profits of a company have been distributed to shareholders or retained in the business. C. show where the money is flowing into and out of a company. D. explain the specific revenues and expenses arising during the period. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-13 The Statement of Retained Earnings 77. Which of the following is a publicly accountable profit-oriented enterprise? A. A publicly traded corporation B. A crown corporation C. A sole proprietorship D. A partnership Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-01 Describe various organizational forms and business decision makers. Learning Objective: Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-04 Corporation 78. In which of the following business organization the owners could only lose the money they invested in the business? A. A Crown corporation. B. A sole proprietorship. C. A corporation. D. A partnership. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-01 Describe various organizational forms and business decision makers. Topic: 01-04 Corporation 1-29 Chapter 01 - Business Decisions and Financial Accounting 79. If a company uses $50,000 of its cash to buy an asset then: A. assets and liabilities will be unchanged. B. assets will rise $50,000 as will liabilities. C. assets will rise $50,000 as will shareholders' equity. D. assets will fall $50,000 and liabilities will rise $50,000. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 80. During 2007, a company's assets rise $56,000 and its liabilities rise $38,000. If no dividend is paid and no further capital is contributed, shareholders' equity would: A. rise $56,000. B. rise $18,000. C. fall $38,000. D. fall $94,000. Blooms: Apply Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 81. Which of the following is not an expense? A. Wages of employees. B. Interest incurred on a loan the company had taken out. C. Dividends. D. Corporate income tax. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-12 The Income Statement 1-30 Chapter 01 - Business Decisions and Financial Accounting 82. Which of the following is incorrect about the notes to the financial statements: A. explain what accounting policies were used to prepare the financial statements. B. provide additional information about what is included in the financial statements. C. provide additional information about financial matters that are not included in the financial statements. D. certify to the fact that the statements have been audited. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-16 Notes to the Financial Statements 83. Every financial statement should have "who, what, and when" in its heading. These are: A. the name of the person preparing the statement, the type of financial statement, and when the financial statement was reported to the Stock Exchange. B. the name of the person preparing the statement, the name of the company, and the date the statement was prepared. C. the name of the company, the type of financial statement, and the time period from which the data were taken. D. the name of the company, the purpose of the statement, and when the financial statement was reported to the Canada Revenue Agency. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-11 Financial Statements 84. Notes payable are like accounts payable except that they: A. Charge interest B. Can be outstanding for long periods (more than one year) C. Are documented using formal documents called notes D. All of the above Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 1-31 Chapter 01 - Business Decisions and Financial Accounting 85. On the balance sheet, inventories are reported as: A. a liability, because goods in inventory are tying up a company's money without earning income. B. an asset, because goods in inventories are owned by the company. C. an expense, because goods in inventory have been paid for but not yet sold. D. a revenue, because goods in inventory will be sold in the future. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-14 The Balance Sheet 86. The WC Company borrowed $26,500 from a bank during 2007. A. This would be listed as ($26,500) under investing activities on the statement of cash flows. B. This would be listed as ($26,500) under operating activities on the statement of cash flows. C. This would be listed as $26,500 under investing activities on the statement of cash flows. D. This would be listed as $26,500 under financing activities on the statement of cash flows. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows 87. Which of the following is not an alternative term used for the income statement? A. Statement of Income. B. Statement of Financial Position. C. Statement of Earnings. D. Profit and Loss Statement. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-12 The Income Statement 1-32 Chapter 01 - Business Decisions and Financial Accounting 88. A investor might look at a company's financial statements to determine if the: A. company is likely to have the resources to repay its debts. B. company's stock is likely to fall, signalling a good time to sell. C. company's stock is likely to rise, signalling a good time to buy. D. company is likely to pay a good dividend. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-03 Explain how financial statements are used by decision makers. Topic: 01-18 Using Financial Statements 89. An creditor might look at a company's financial statements to determine if the company's: A. earnings are rising or falling. B. stock is likely to fall, signalling a good time to sell. C. stock is likely to rise, signalling a good time to buy. D. company has enough assets to cover its liabilities. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-03 Explain how financial statements are used by decision makers. Topic: 01-18 Using Financial Statements 90. What would a financial statement user learn from reading the auditors' report? A. Whether the financial statements present a fair picture of the company's financial results. B. Whether the financial statements are prepared by the auditors. C. Whether the financial statements are prepared in accordance with GAAP. D. Whether the financial statements are accurate picture of the company's financial results. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-03 Explain how financial statements are used by decision makers. Topic: 01-19 Useful Financial Information 1-33 Chapter 01 - Business Decisions and Financial Accounting 91. In which of the following business organization is the business considered separate from the owners: A. A state-owned entity. B. A sole proprietorship. C. A corporation. D. A partnership. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-01 Describe various organizational forms and business decision makers. Topic: 01-04 Corporation 92. Internal financial statement users include: A. investors interested in the company. B. creditors of the company. C. management of the company. D. stock exchanges. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-01 Describe various organizational forms and business decision makers. Topic: 01-06 Accounting For Business Decisions 93. Investors are often interested in the amount of net income distributed as dividends. In which section of the financial statements would investors look to find this amount? A. Statement of retained earnings. B. Balance sheet. C. Notes to the financial statements. D. Income statement. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-13 The Statement of Retained Earnings 1-34 Chapter 01 - Business Decisions and Financial Accounting 94. A company's quarterly income statements show that in the last three quarters both sales revenue and net income have been growing. Which of the following statements is not true? A. Creditors are likely to conclude that the risk of lending to the company is falling and be willing to accept a lower interest rate on loans. B. Investors are likely to conclude that the stock price is likely to rise, making the company more attractive as a potential investment. C. Investors are likely to conclude that the company will be better able to pay dividends in the future, making it more attractive as a potential investment. D. Creditors are likely to conclude that the risk of lending to the company is rising and higher interest rate is needed. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-03 Explain how financial statements are used by decision makers. Topic: 01-12 The Income Statement 95. Investors and creditors look at the balance sheet to see whether the company: A. is profitable. B. owns enough assets to pay what it owes to creditors. C. has had a positive cash flow from operations. D. is paying sufficient dividends to shareholders. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Learning Objective: 01-03 Explain how financial statements are used by decision makers. Topic: 01-18 Using Financial Statements 96. Generally Accepted Accounting Principles (GAAP) in Canada were established by: A. an Italian monk in 1494. B. the Canadian Parliament. C. CPA Canada D. IFRS. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-20 Generally Accepted Accounting Principles 1-35 Chapter 01 - Business Decisions and Financial Accounting 97. To determine whether Generally Accepted Accounting Principles were followed in the preparation of financial statements, an examination of: A. tax documents would be examined by the Canada Revenue Agency. B. the annual report would be examined by the Toronto Stock Exchange. C. the financial statements and related documents would be examined by an independent auditor. D. the financial statements and related documents would be examined by CPA Canada. Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-20 Generally Accepted Accounting Principles 1-36 Chapter 01 - Business Decisions and Financial Accounting 98. Which of the following statements is false? A. When choosing between a company that pays steady dividends and one that retains its earnings to support future growth, investors will always choose the company that pays steady dividends. B. Companies can develop reputations for honest financial reporting even when conveying bad news. C. Trends in a company's net income from year to year can provide clues about its future earnings, which can help investors to decide whether to buy stock in the company. D. Information in the notes to the financial statements can influence a user's interpretation of balance sheet and income statement information. Blooms: Create Blooms: Understand Accessibility: Keyboard Navigation Difficulty: Hard Learning Objective: 01-03 Explain how financial statements are used by decision makers. Topic: 01-19 Useful Financial Information 99. Which of the following Is not required to use IFRS? A. Private enterprise B. Publically traded company C. Crown corporation D. All businesses are required to use IFRS Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-20 Generally Accepted Accounting Principles 1-37 Chapter 01 - Business Decisions and Financial Accounting 100. Which of the following are the two fundamental characteristics financial information must possess to be judged useful to decision makers? A. Relevance and faithful representation B. Truthful and clarity C. Complete and relevant D. Elaborate and faithful representation Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-20 Generally Accepted Accounting Principles 101. When is the financial information relevant? A. If it makes a difference in decision making. B. Meets the requirement of Toronto Stock Exchange. C. If it fully depicts the economic substance of business activities. D. If it allows management the discretion when to release it to investors and general public. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-19 Useful Financial Information 102. When is the financial information a faithful representation? A. If it fully depicts the economic substance of business activities B. If it allows management to be faithful to its shareholders C. Meets the requirements of the stock exchanges D. If it makes a difference in decision making Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-20 Generally Accepted Accounting Principles 1-38 Chapter 01 - Business Decisions and Financial Accounting 103. Which one of the following does not enhance the usefulness of financial information? A. timeliness B. Verifiability C. Integrity D. Comparability Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-20 Generally Accepted Accounting Principles 104. Which of the following is an external user? A. Investor B. Management C. Employees D. President of the company Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-03 Explain how financial statements are used by decision makers. Topic: 01-18 Using Financial Statements 105. Which of the following are assumptions of accounting? A. Unit of measure, separate entity B. Cost, revenue recognition, matching, full disclosure C. Cost-benefit, materiality, industry practices D. Unit of measure, industry practices Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-20 Generally Accepted Accounting Principles 1-39 Chapter 01 - Business Decisions and Financial Accounting 106. Which of the following are the principles of accounting? A. Unit of measure, cost-benefit, materiality, industry practices B. Unit of measure, separate entity, going concern, time period C. Cost, revenue recognition, expense recognition, full disclosure D. Cost-benefit, materiality, industry practices Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-20 Generally Accepted Accounting Principles 107. Which of the following are elements to be measure and reported? A. Assets, liabilities, shareholders equity, revenues, expenses, dividends B. Unit of measure, separate entity, going concern, time period C. Cost, revenue recognition, matching, full disclosure D. Cost-benefit, materiality, industry practices Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-19 Useful Financial Information 108. To make sure that managers have followed GAAP rules in producing financial statements, all public companies must: A. Hire independent auditors to scrutinize their financial records. B. Hire independent detectives to scrutinize the background of all their accountants. C. let the government regulators scrutinize their financial records. D. let their shareholders check their financial records. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-20 Generally Accepted Accounting Principles 1-40 Chapter 01 - Business Decisions and Financial Accounting 109. Auditors while examining the financial records must follow: A. International Financial Reporting Standards B. Canadian Auditing standards C. Canadian Accounting standards for auditing D. International Auditing standards Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-20 Generally Accepted Accounting Principles 110. The effects of net income and its distribution on the financial position of the company is reported in: A. Balance sheet B. Income statement C. Statement of retained earnings D. Statement of cash flows Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-13 The Statement of Retained Earnings 111. Which of the following enhance the usefulness of financial information with reference to financial statements? A. Comparability to prior periods and other companies, verifiability, timeliness, and understandability. B. Integrity, relevance, faithfulness and comparability to prior periods and other companies. C. Clarity, integrity, relevance and faithfulness. D. Verifiability, relevance and faithfulness. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-19 Useful Financial Information 1-41 Chapter 01 - Business Decisions and Financial Accounting 112. CPA Canada: A. has primary responsibility for setting the underlying rules of accounting in Canada. B. is an entity that regulates issuance of securities in Ontario. C. an independent body to develop and establish standards and guidance than govern financial accounting and reporting in Canada. D. is an examination of a company's financial statements by an independent auditor. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-19 Useful Financial Information 113. The AcSB: A. has primary responsibility for setting the underlying rules of accounting in Canada. B. is an entity that regulates issuance of securities in Ontario. C. An independent body supported by CPA Canada to develop and establish standards and guidelines that govern financial accounting and reporting in Canada. D. is an examination of a company's financial statements by an independent auditor. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Medium Learning Objective: 01-04 Describe factors that contribute to useful financial information. Topic: 01-19 Useful Financial Information 114. A company is involved in financing activities when these: A. activities are directly related to running the core business to earn profits. B. activities involve buying and selling productive resources with long lives (such as buildings, land, equipment, and tools). C. activities involve borrowing from banks, repaying bank loans, receiving contributions from shareholders, or paying dividends to shareholders. D. activities involve buying and selling resources such as purchasing investments and lending to others. Blooms: Remember Accessibility: Keyboard Navigation Difficulty: Easy Learning Objective: 01-02 Describe the purpose; structure; and content of the four basic financial statements. Topic: 01-15 The Statement of Cash Flows fundamental accounting principles - test bank, basic accounting test bank pdf, basic accounting principles test, fundamental accounting bpa, fundamental accounting principles answer key, accounting fundamentals practice test,