Exam (elaborations)

Exam (elaborations) Introduction to Accounting - Accounting Principles TEST BANK ALL CHAPTERS QUESTIONS AND ANSWER

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Course
Introduction to Accounting

Institution
Introduction To Accounting

Book
Accounting Principles IFRS Version

Test Bank question and answers for J. Weygandt, et. al. - Accounting Principles (2009, Wiley )

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Uploaded on January 11, 2024
Number of pages 631
Written in 2023/2024
Type Exam (elaborations)
Contains Questions & answers

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CHAPTER 1

ACCOUNTING IN ACTION

TRUE-FALSE STATEMENTS

1. Accounting is the information system that identifies, records, and communicates the economic events of an organizat

Answer: True

2. A working knowledge of accounting can be useful to doctors or lawyers.
Answer: True

3. The main objective of financial statements is to provide useful information to management.
Answer: False

4. Sales managers are an example of an external user of accounting information.
Answer: False

5. Creditors are an example of an internal user of accounting information.
Answer: False

6. Accounting information is used only by external users with a direct financial interest in a company.
Answer: False

7. In a proprietorship, there may be two or more owners.
Answer: False

8. One of the disadvantages of a proprietorship is that there is unlimited liability for the owner.
Answer: True

9. Under the proprietorship form of business organization, no legal distinction is made between the business as an econ
Answer: True

10. A partnership must have at least two people in the partnership.
Answer: True

11. In a partnership, all of the partners will generally have unlimited liability for the debts of the partnerships.
Answer: True

12. A corporation may only be formed under federal legislation.
Answer: False
13. A corporation is only subject to the federal laws of corporations.

,Answer: False

14. A corporation may be formed under either provincial legislation or federal legislation.
Answer: True

15. A corporation’s ownership is divided into transferable shares.
Answer: True

16. One of the main advantages of a corporation is limited liability for the shareholders of the corporation.
Answer: True

17. Owners of a corporation are responsible for reporting the business profits on their personal income taxes.
Answer: False

18. An advantage of the corporation is that the shares of the corporation are easily transferable.
Answer: True

19. Ethics are critical in the preparation of accounting information.
Answer: True

20. Only the accountants should be concerned with ethics when the financial statements are being prepared.
Answer: False

21. In a situation with an ethical consideration, there is only one ethical course of action which can be followed.
Answer: False

22. A private company is one that issues shares to the public.
Answer: False

23. GAAP stands for Generally Accepted Accounting Principles.
Answer: True

24. In Canada, the main standard setting board is the Accounting Standards Board.
Answer: True

25. Corporations incorporated under provincial legislation report under ASPE and corporations incorporated under fede
Answer: False

26. Publicly traded corporations can choose to report under either ASPE or IFRS.
Answer: False
27. Both IFRS and ASPE are considered “principles-based” as opposed to “rules-based” standards.
Answer: True

28. The going concern assumption is the assumption that a company will continue to operate in the foreseeable future.
Answer: True

,29. The going concern assumption is the assumption that a company will NOT be successful in the foreseeable future.
Answer: False

30. The reporting entity concept requires that an entity’s business activities be combined with the activities of its owner
Answer: False

31. Recognition is the process of recording a transaction in the accounting records.
Answer: True

32. Measurement is the process of determining the amount that should be recognized.
Answer: True

33. Fair value measurements are always more relevant to users of the financial statements.
Answer: False

34. The cost and fair value of an asset are the same at the time of acquisition and in all subsequent periods.
Answer: False

35. The monetary unit concept assumes that all transactions will take place in Canadian dollars.
Answer: False

36. The monetary unit concept prevents some relevant information from being recorded in the accounting records.
Answer: True

37. Assets are present obligations, arising from past events, to make a future payment or to provide services.
Answer: False

38. Liabilities are the resources controlled by a business that are expected to provide future economic benefits.
Answer: False

39. Accounts payable is the asset created when a company sells services or products to customers who promise to pay c
Answer: False
40. An obligation to pay cash to a supplier in the future is called accounts payable.
Answer: True

41. The owner’s claim on the assets of the company is known as owner’s equity.
Answer: True

42. Owner’s claims to total business assets take precedence over the claims of creditors because owners invest assets in

Answer: False

43. Expenses are the costs of assets that are consumed or services used in ordinary business activities.
Answer: True

, 44. A balance sheet presents the revenues and expenses, and the resulting profit or loss for a specific period of time.
Answer: False

45. Profit results when a company’s expenses are higher than its revenues.
Answer: False

46. A balance sheet reports the assets, liabilities, and owner’s equity at a specific date.
Answer: True

47. An Income statement will give the answer to the question – “where did all the cash get used during this month?”
Answer: False

48. A cash flow statement is organized into three categories: operating, financing, and investing activities of the compan
Answer: True

49. Revenues decrease owner’s equity and expenses increase owner’s equity.
Answer: False

50. A balance sheet can also be called a statement of financial position.
Answer: True

51. An accounting transaction occurs when assets, liabilities, or owner’s equity items change as the result of some econo
Answer: True

52. Purchasing supplies on credit will result in an increase in assets and an increase in liabilities.
Answer: True

53. The annual report is a document that includes both financial and non-financial information.
Answer: True
MULTIPLE CHOICE QUESTIONS

54. An external user could be
a) production manager.
b) marketing manager.
c) Canada Revenue Agency.
d) the human resource director.
Answer: c

55. An external user would NOT include
a) a creditor of the company.
b) Canada Revenue Agency.
c) human resources personnel.
d) the company’s bank.
Answer: c

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