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Financial Accounting 6th Canadian Edition Test Bank

Gain an edge in your exam with Financial Accounting 6th Canadian Edition Test Bank, covering core subjects with a structured learning approach.

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    Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) What is the primary purpose of the statement of financial position? 1) _______ A) To measure the profit of a business up to a particular point in time. B) To report the financial position of the reporting entity at a particular point in time. C) To report the difference between cash inflows and cash outflows for the period. D) To report assets at their current market value at a particular point in time. 2) On January 1, 20X1, two individuals invested $150,000 each to form Hornbeck Corporation. Hornbeck had total revenues of $15,000 during 20X1 and $40,000 during 20X2. Total expenses for the same periods were $8,000 and $22,000, respectively. Cash dividends paid out to shareholders totaled $6,000 in 20X1 and $12,000 in 20X2. What was the ending balance in Hornbeck's retained earnings account at the end of 20X1 and 20X2? 2) _______ A) $1,000 and $6,000 respectively. B) $1,000 and $7,000, respectively. C) $301,000 and $306,000 respectively. D) $7,000 and $19,000 respectively. 3) The BAT Corporation had revenues of $110,000, expenses of $85,000, and an income tax rate of 20 percent in 20X2. What would profit after taxes be? 3) _______ A) $20,000. B) $25,000. C) $5,000. D) $15,000. 4) Brown Corporation reported the following amounts at the end of the first year of operations, December 31, 20X1: Share capital $20,000; Sales revenue $95,000; Total assets $85,000, No dividends, and Total liabilities $35,000. What would shareholders' equity and total expenses be? 4) _______ A) Shareholders' equity, $60,000 and expenses $75,000. B) Shareholders' equity, $50,000 and expenses $65,000. C) Shareholders' equity, $80,000 and expenses $40,000. D) Shareholders' equity, $80,000 and expenses $85,000. 5) Which of the following would not be considered an internal user of accounting data? 5) _______ A) A creditor of a company. B) The controller of a company. C) The president of a company. D) A salesperson of a company. 6) If total liabilities increased by $25,000 and shareholders' equity increased by $5,000 during a period, then total assets must change by what amount and direction during that same period? 6) _______ A) $25,000 increase. B) $20,000 increase. C) $20,000 decrease. D) $30,000 increase. 7) Which of the following activities involves raising the necessary funds to support the business? 7) _______ A) Marketing. B) Financing. C) Investing. D) Operating. 8) Buying assets needed to operate a business is an example of a(n) 8) _______ A) investing activity. B) purchasing activity. C) financing activity. D) operating activity. 9) The common characteristic possessed by all assets is 9) _______

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    A) tangible nature. B) future economic benefit. C) long life. D) great monetary value. 10) Expenses are incurred 10) ______ A) to generate revenues. B) to produce assets. C) to produce liabilities. D) only on rare occasions. 11) The financial statement that summarizes the changes in contributed capital and retained earnings for a specific period of time is the 11) ______ A) statement of earnings. B) statement of cash flows. C) statement of financial position. D) statement of changes in equity. 12) Retained earnings at the end of the period is equal to 12) ______ A) net earnings for the period B) retained earnings at the beginning of the period plus net earnings minus liabilities. C) assets plus liabilities. D) retained earnings at the beginning of the period plus net earnings minus dividends. 13) What form does financial accounting information provided by an entity to decision makers generally take? 13) ______ A) Various forecasts and performance reports. B) Comparisons between the company and its competitors. C) An analysis of changes in the price of a corporation's shares. D) Financial statements. 14) If the retained earnings account increases from the beginning of the year to the end of the year, then 14) ______ A) a loss is less than dividends. B) additional investments are less than reported losses. C) profit is greater than dividends. D) dividends were paid. 15) Shareholders' equity can be described as claims of 15) ______ A) debtors on total assets. B) creditors on total assets. C) owners on total assets. D) customers on total assets. 16) Which financial statement would indicate whether the company relies more on debt or shareholders' equity to finance its assets? 16) ______ A) Statement of earnings. B) Statement of financial position. C) Statement of changes in equity. D) Statement of cash flows. 17) The statement of financial position and statement of changes in equity are related because 17) ______ A) both contain information for the corporation. B) the ending amount on the statement of changes in equity is reported on the statement of financial position. C) the ending amount on the statement of changes in equity is transferred to the statement of cash flows. D) the total assets on the statement of financial position is reported on the statement of changes in equity.

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    18) Carrington Company owes you $500 on account due within 15 days. Which of the following amounts on its statement of financial position would help you to determine the likelihood that you will be paid in full and on time? 18) ______ A) Cash and trade receivables. B) Cash and property and equipment. C) Contributed capital and retained earnings. D) Cash and inventory. 19) The statement of cash flows and the statement of financial position are interrelated because 19) ______ A) both disclose the corporation's profit. B) the ending amount of cash on the statement of cash flows must agree with the amount in the statement of changes in equity. C) the ending amount of cash on the statement of cash flows must agree with the amount on the statement of earnings. D) the ending amount of cash on t he statement of cash flows must agree with the amount in the statement of financial position. 20) Which of the following are the two primary components of shareholders' equity? 20) ______ A) Long - term debt and retained earnings. B) Non - current assets and liabilities C) Short term debt and retained earnings D) Contributed capital and Retained earnings. 21) The statement of changes in equity is dependent on the results from 21) ______ A) the statement of financial position. B) the statement of cash flows. C) the statement of earnings. D) a company's share capital. 22) The primary purpose of the statement of cash flows is to report 22) ______ A) a company's investing transactions. B) information about cash receipts and cash payments of a company. C) the net increase or decrease in cash. D) a company's financing transactions. 23) Kamil's Car Repair Shop Ltd. started the year with total assets of $70,000 and total liabilities of $40,000. During the year, the business recorded $100,000 in car repair revenues, $65,000 in expenses, and dividends of $5,000. Shareholders' equity at the end of the year was 23) ______ A) $65,000. B) $70,000. C) $75,000. D) $60,000. 24) The most significant expense for a merchandising company is 24) ______ A) cost of goods sold B) income taxes C) equipment maintenance D) salaries expense 25) On the statement of financial position, assets may be presented 25) ______ A) in order of liquidity B) in alphabetical order C) in order of reverse liquidity D) either in order of liquidity or in order of reverse liquidity 26) Retained earnings are 26) ______

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    A) equal to cash. B) the shareholders' claim on total assets. C) the amount of profit kept in the corporation for future use. D) equal to revenues. 27) What are business liabilities? 27) ______ A) The increases in assets that result from profitable operations. B) Debts or obligations resulting from past business events. C) Amounts it expects to collect in the future from customers. D) The amounts that owners have invested in the business. 28) Why would Parker Bank, in deciding whether to make a loan to Davis Company, be interested in the amount of liabilities, Davis has on its statement of financial position? 28) ______ A) Existing liabilities give an indication of how profitable Davis has been in the past. B) If Davis already has many other obligations, it might not be able to repay the loan. C) The liabilities represent resources that could be used to repay the loan. D) Parker would be interested in the amount of Davis's assets but not the amount of liabilities. 29) What are the two categories of shareholders' equity usually found on the statement of financial position of a corporation? 29) ______ A) Share capital and property, plant, and equipment. B) Contributed capital and retained earnings. C) Retained earnings and notes payable. D) Share capital and long - term liabilities. 30) Jameson & Johnson Inc., recorded $250,000 of depreciation expense in December 20X6. The most likely effect on the company's accounting equation is 30) ______ A) no effect on assets. B) a decrease in assets of $250,000. C) an increase in assets of $250,000. D) an increase in liabilities of $250,000. 31) Allentown Corporation has on its statement of financial position the following amounts:Total assets of $3,500,000Total liabilities of $500,000Contributed capital of $1,000,000.What is the amount of retained earnings that should appear on Allentown's statement of financial position? 31) ______ A) $2,000,000. B) $5,000,000. C) $3,000,000. D) $4,000,000. 32) Which financial statement for a business would you look at to determine the company's performance during an accounting period? 32) ______ A) Statement of financial position. B) Statement of changes in equity. C) Statement of cash flows. D) Statement of earnings. 33) Which of the following is not a principal type of business activity? 33) ______ A) Operating B) Delivering C) Financing D) Investing 34) How do most businesses earn revenues? 34) ______ A) By borrowing money from a bank. B) When they collect trade receivables. C) Through sales of goods or services to customers. D) By selling shares to shareholders.

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    35) A group of individuals formed a new company with an investment of $100,000. The most likely effect of this transaction on the company's accounting equation at the time of the formation is an increase in cash and 35) ______ A) an increase in owners' capital. B) an increase in assets. C) an increase in revenue. D) an increase in liabilities. 36) During 20X2, its second year in operation, Banner Company delivered goods to customers for which customers paid or promised to pay $5,850,000. The amount of cash collected from customers was $5,960,000. The amount of trade receivables at the beginning of 20X2 was $1,200,000. What is the amount of sales revenue that Banner should report on its statement of earnings for 20X2? 36) ______ A) $4,760,000. B) $5,850,000. C) $4,650,000. D) $5,960,000. 37) During 20X2, its second year in operation, Banner Company delivered goods to customers for which customers paid or promised to pay $5,850,000. Assume all sales were on account and the amount of cash collected from customers was $5,960,000. The amount of trade receivables at the beginning of 20X2 was $1,200,000. Based on this information, what is the amount of trade receivables that Banner would report at the end of 20X2? 37) ______ A) $5,850,000. B) $1,310,000. C) $110,000. D) $1,090,000. 38) What is the amount of revenue recognized in the statement of earnings by a company that sells goods to customers? 38) ______ A) The amount of cash collected plus the beginning amount of trade receivables. B) Total sales minus beginning amount of trade receivables. C) The cash collected from customers during the current period. D) Total sales, both cash and credit sales, for the period. 39) The statement of cash flows and the statement of financial position are interrelated because 39) ______ A) the ending amount of cash on the statement of cash flows must agree with the amount in the statement of financial position. B) both disclose the corporation's profit. C) the ending amount of cash on the statement of cash flows must agree with the amount in the statement of changes in equity. D) the ending amount of cash on the statement of cash flows must agree with the amount on the statement of earnings. 40) On January 1, 20X1, Taylor Corporation had retained earnings of $6,500,000. During 20X1, Taylor had profit of $1,050,000 and dividends of $450,000. What is the amount of Taylor's retained earnings at the end of 20X1? 40) ______ A) $7,100,000. B) $6,050,000. C) $7,550,000. D) $6,950,000. 41) What are the categories of cash flows that appear on a statement of cash flows? 41) ______ A) Cash flows from operating, production, and internal activities. B) Cash flows from financing, production, and growth activities. C) Cash flows from investing, financing, and service activities. D) Cash flows from operating, investing, and financing activities. 42) Borrowing money is an example of a(n) 42) ______ A) investing activity. B) operating activity.

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    C) financing activity. D) delivering activity. 43) On the statement of cash flows, how would a company report the purchase of machinery? 43) ______ A) As cash used in purchasing activities. B) As cash used in investing activities. C) As cash used in operating activities. D) As cash used in financing activities. 44) When would a company report a net loss? 44) ______ A) When its assets decreased during an accounting period. B) When its liabilities increased during an accounting period. C) When its expenses exceeded its revenues for an accounting period. D) When retained earnings decreased due to paying dividends to shareholders. 45) Which of the following is the amount of rent expense reported on the statement of earnings? 45) ______ A) The amount of cash paid for rent in the current period. B) The amount of cash paid for rent for the future period. C) The amount of rent used up in the current period to earn revenue. D) The amount of cash paid for rent in the current period less any unpaid rent at the end of the period. 46) What events cause changes in a corporation's retained earnings? 46) ______ A) Declaration of dividends and issuance of shares to new shareholders. B) Profit issuance of shares, and borrowing from a bank. C) Profit or loss and declaration of dividends. D) Declaration of dividends and purchase of new machinery. 47) The statement of financial position 47) ______ A) presents the revenues and expenses for a specific period of time. B) summarizes the changes in retained earnings for a specific period of time. C) reports the assets, liabilities, and shareholders' equity at a specific date. D) reports the changes in assets, liabilities, and shareholders' equity over a period of time. 48) If you wanted to know how much of its profit a corporation distributed as dividends, which financial statement would you look at? 48) ______ A) Statement of earnings. B) Statement of cash flows. C) Statement of changes in equity. D) Statement of financial position. 49) Why is the operating activities section often believed to be the most important part of a statement of cash flows? 49) ______ A) It gives the most information about how operations have been financed. B) It shows the net increase or decrease in cash during the period. C) It indicates a company's ability to generate cash from sales to meet current cash needs. D) It shows the dividends that have been paid to shareholders. 50) If you wanted to know what accounting rules a company follows related to its inventory, where would you look? 50) ______ A) The statement of financial position. B) The statement of earnings.

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    C) The headings to the financial statements. D) The notes to the financial statements. 51) During 20X1, Burton Company delivered products to customers for which customers promised to pay $3,820,000. The company collected $3,670,000 in cash from customers during the year. Indicate which of these amounts will appear on the statement of earnings and which on the statement of cash flows. 51) ______ A) $3,820,000 appears on the statement of cash flows, and $3,670,000 appears on the statement of earnings. B) $3,670,000 appears on the statement of cash flows, and $3,820,000 appears on the statement of earnings. C) $3,820,000 appears on both the statement of earnings and the statement of cash flows. D) $3,670,000 appears on both the statement of earnings and the statement of cash flows. 52) At the beginning of 20X2, Rodriguez Corporation had assets of $820,000 and liabilities of $340,000. During the year, assets increased by $40,000 and liabilities decreased by $8,000. What was total shareholders' equity at the end of 20X2? 52) ______ A) $528,000. B) $480,000. C) $432,000. D) $1,208,000. 53) What term is used for probable future economic benefits owned by an entity, and obtained as the result of past transactions? 53) ______ A) Retained earnings. B) Revenues. C) Assets. D) Liabilities. 54) What results from the purchase of goods or services on credit and from borrowing? 54) ______ A) Share capital. B) Assets. C) Revenues. D) Liabilities. 55) How are the differing claims of creditors and investors recognized by a corporation? 55) ______ A) The claims of both creditors and investors are liabilities, but only the claims of investors are long term. B) The claims of creditors are liabilities; the claims of investors are recorded as shareholders' equity. C) The claims of creditors are liabilities; those of investors are assets. D) The claims of creditors and investors are essentially equivalent. 56) In what order are assets are listed on a statement of financial position? 56) ______ A) Dollar amount (largest first). B) Importance to the operation of the business. C) Ease of conversion to cash. D) Date of acquisition (earliest first). 57) In what order, would the assets of Any Company be listed on their statement of financial position? 57) ______ A) Cash, Trade Receivables, Inventory, Plant and Equipment. B) Cash, Trade Receivables, Plant and Equipment, Inventory. C) Cash, Trade Receivables, Marketable Securities, Inventory. D) Cash, Inventory, Trade Receivables, Plant and Equipment. 58) The ending retained earnings balance of the Brown Hat restaurant chain increased by $4. 3

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    billion from the beginnin g of the year. The compan y had declared a dividend of $1.5 billion. What was the profit earned during the year? 58) ___ ___ A) $3.0 billion. B) $2.8 billion. C) $5.8 billion. D) There is no way to determine net income as not enough information was given. 59) What section of the statement of cash flows do bankers consider to be the most important? 59) ______ A) Financing. B) Operating. C) Investing. D) All the sections are equally important. 60) Which of the following statements is TRUE? 60) ______ A) The SEC is the most influential Canadian regulator of the flow of financial information provided by publicly traded companies in Canada. B) The Accounting Standards Board is a government body. C) Publicly traded enterprises must use IFRS for external reporting purposes. D) Publicly traded enterprises must use the accounting standards prescribed for private enterprises for external reporting. 61) Which of the following activities would cause investors to overpay for the acquisition of a company from its current owners? 61) ______ A) Understated assets and overstated revenues. B) Understated trade payables and overstated inventory. C) Understated assets and overstated expenses. D) Understated revenues and overstated expenses. 62) Which of the following statements is true about the price earnings (P/E) ratio? 62) ______ A) It is a ratio of importance to creditors. B) A high P/E ratio indicates investors have little confidence in the future profit potential of the company.

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    C) The P/E ratio increases as profit increases. D) The P/E ratio could be used to approximate the value investors would be willing to pay for the company's acquisition from existing owners. 63) Which government regulatory agency has the legal authority to prescribe financial reporting requirements for corporations that sell their securities in Canadian stock exchanges in the province of Ontario? 63) ______ A) OSC. B) CRA. C) CICA. D) AcSB. 64) Under IFRS, income includes increases in economic bene fi ts from 64) ______ A) increases in owners' equity related to owners' contributions B) increases in liabilities not related to owners' contributions C) All increases related to owners' contributions. D) enhancements of assets not related to owners' contributions 65) Which securities regulator in the province of Ontario has broad powers to determine measurement rules for financial statements of publicly traded companies on the Toronto Stock Exchange? 65) ______ A) The Ontario Securities Commission. B) The Canada Revenue Agency. C) The Supreme Court. D) The Federal Accounting Office. 66) Financial statements are prepared for the user. Which of the following best describes the responsibility for the preparation of financial statements? 66) ______ A) It is the responsibility of standard setters. B) It is the responsibility of management. C) It is the responsibility of external auditors. D) It is the responsibility of shareholders. 67) With whom does primary responsibility for the information in a corporation's financial statements rest? 67) ______ A) The managers of the corporation. B) The public accountant who audited the financial statements. C) The shareholders of the corporation. D) The Ontario Securities Commission. 68) What is an examination of the financial statements of a business to ensure that they conform with international financial reporting standards called? 68) ______ A) A certification. B) A verification. C) An audit. D) A validation. 69) What is the purpose of an audit? 69) ______ A) To establish that a corporation's shares are a sound investment. B) To lend credibility to an entity's financial statements. C) To prove the accuracy of an entity's financial statements. D) To endorse the quality of leadership that managers provide for a corporation. 70) Why do the managers of a corporation hire independent auditors? 70) ______ A) To handle some personnel issues and problems. B) To lobby the AcSB for changes in generally accepted accounting principles. C) To audit and report on the fairness of financial statement presentation. D) To guarantee annual and quarterly financial statements.

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    71) Why is the auditor's role in performing audits, important to our society? 71) ______ A) Auditors provide direct financial advice to potential investors. B) An audit of financial statements helps investors and others to know that they can rely on the information presented in the financial statements. C) Auditors issue reports on the accuracy of each financial transaction. D) Auditors have the primary responsibility for the information contained in financial statements. 72) What is one of the disadvantages of a corporation, when compared to a partnership? 72) ______ A) The corporation provides continuity of life. B) The shareholders have limited liability. C) The shareholders are treated as a separate legal entity from the corporation. D) The corporation and its shareholders are potentially subject to double taxation. 73) Which of the following statements is true about a sole proprietorship? 73) ______ A) The owner and the business are separate legal entities but not separate accounting entities. B) Most large businesses in this country are organized as sole proprietorships. C) The owner and the business are separate accounting entities but not separate legal entities. D) The owner and the business are separate legal entities and separate accounting entities. 74) For a business organized as a general partnership, which statement is true? 74) ______ A) Formation of a partnership requires getting a charter from the province of incorporation. B) A partnership is not considered to be a separate accounting entity. C) Each partner is potentially responsible for the debts of the business. D) The owners and the business are separate legal entities. 75) For what reason might a group of people establishing a business prefer to set it up as a corporation rather than a partnership? 75) ______ A) To avoid complex reporting procedure for government agencies B) To have limited liability. C) Because of ease of formation. D) To avoid double taxation. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 76) Accounting is a system that collects and processes financial information about an organization and reports that information to decision makers. 76) ______ 77) External users of accounting information include the managers who plan, organize, and run a business. 77) ______ 78) In accounting and reporting for a business entity, the accounting and reporting for the business must be kept separate from other economic affairs of its owners. 78) ______ 79) Accounting communicates financial information about a business to both internal and external users. 79) ______

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    80) A statement of financial position should be dated for a period (such as "For the year ended December 31, 20X1"), whereas a statement of earnings should be dated at a point in time (such as "At December 31, 20X1"). 80) ______ 81) Expenses are the cost of assets consumed or services used in the process of generating revenue. 81) ______ 82) Financing activities for corporations include borrowing money and selling shares. 82) ______ 83) Total assets are $60,000, total liabilities, $30,000, and share capital is $20,000; therefore, retained earnings is $5,000. 83) ______ 84) Investing activities involve collecting the necessary funds to operate the business. 84) ______ 85) The purchase of equipment is an example of a financing activity. 85) ______ 86) The reasons for a decrease in cash can be determined by examining the statement of earnings. 86) ______ 87) Economic resources that are owned by a business are called shareholders' equity. 87) ______ 88) The accounting model for the statement of financial position is: Assets + Liabilities - Shareholders' Equity. 88) ______ 89) Assets are resources owned by a business that provide current services or benefits to the business. 89) ______ 90) Profit is the excess of total revenues over total expenses incurred to generate revenue during a specific period. 90) ______ 91) The financial statements prepared by a corporation include a statement of financial position, statement of earnings, statement of cash flows, and statement of money. 91) ______ 92) A banker who is considering making a loan to a corporation would be one of the corporation's internal decision makers. 92) ______ 93) Assets are economic resources controlled by the entity as a result of past transactions or events and from which future economic benefits can be obtained. 93) ______ 94) The financial statement that shows an entity's economic resources and its liabilities is the statement of retained earnings. 94) ______ 95) The statement of comprehensive income reports the change in shareholders' equity during a period from business activities other than investments by shareholders or distributions to shareholders. 95) ______ 96) A note payable is a borrowing instrument that generally does not involve the payment of interest. 96) ______ 97) If a corporation does not pay its obligations when they are due, its creditors may be able to force the sale of the business's assets to pay their claims. 97) ______

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    98) When a company ships products to a custome r and bills the customer, the company should recognize revenue as earned. 98) ______ 99) The amount of cash paid by a business for office rent would be reported on the statement of cash flows as a financing activity. 99) ______ 100) Repayment of a bank loan is classified on the statement of cash flows as an operating activity. 100) _____ 101) Liabilities are the entity's legal obligations that result from past business events. 101) _____ 102) International Financial Accounting Standards are produced by the International Accounting Standards Board (IASB), which is an independent standard - setting board consisting of 15 members from twelve countries. 102) _____ 103) Accounting is based on man - made rules that sometimes undergo change. 103) _____ 104) Primary responsibility for the information in the financial statements lies with management. 104) _____ 105) The AcSB is currently the body responsible for establishing accounting standards. 105) _____ 106) The Accounting Standards Board (AcSB) is an agency of the federal government that establishes generally accepted accounting principles for businesses. 106) _____ 107) Generally accepted accounting principles are essentially identical in most developed countries. 107) _____ 108) One of the disadvantages of a corporation when compared to a partnership is the limited liability of the owners. 108) _____ 109) A partnership is an incorporated entity that has more than one owner. 109) _____ 110) Accountants generally must meet educational requirements, pass a rigorous exam, and meet experience requirements before becoming licensed CAs, CGAs, or CMAs. 110) _____ 111) Independent CAs in the public practice of accounting are viewed as employees of their clients. 111) _____ 112) An audit involves the examination of the financial reports (prepared by the management of the company) to ensure that they represent what they claim and conform with IFRS. 112) _____ 113) Many opportunities exist for managers to intentionally prepare misleading financial reports. 113) _____ 114) Failure to comply with professional rules of conduct can result in serious penalties for professional accountants, but not the rescinding of the professional designation of an offending member. 114) _____ 115) High standards of ethics are not required for preparers of financial information. 115) _____ ESSAY. Write your answer in the space provided or on a separate sheet of paper.

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    116) Identify which of the following accounts appear on a statement of financial position.(a) Service revenue(b) Cash(c) Common shares(d) Accounts payable(e) Rent expense(f) Supplies(g) Land 117) For the items listed below, fill in the appropriate code letter to indicate whether the item is an asset, liability, or shareholders' equity item. Code Asset A Liability L Shareholders' Equity SE ________ 1. Rent expense ________ 7. Trade receivables ________ 2. Office equipment ________ 8. Retained earnings ________ 3. Trade payables ________ 9. Service revenue ________ 4. Common shares ________ 10. Bank loan payable ________ 5. Insurance expense ________ 11. Dividends ________ 6. Cash ________ 12. Unearned revenue 118) Classify each of these items as an asset (A), liability (L), or shareholders' equity (SE). ________ 1. Rent receivable ________ 6. Cash ________ 2. Salaries payable ________ 7. Mortgage payable ________ 3. Preferred shares ________ 8. Land ________ 4. Office supplies ________ 9. Dividends ________ 5. Retained earnings ________ 10. Office supplies expense 119) Match each definition with its related term or abbreviation by entering the appropriate letter in the space provided.________ 1. OSC________ 2. CICA________ 3. AcSB________ 4. CA________ 5. IFRSTerm or Abbreviation DefinitionA. A system that collects and processes financial information about an organization and reports that information to decision makers.B. Measurement of information about an entity in the monetary unit – dollars or other national currency.C. An unincorporated business owned by two or more persons.D. The organization for which financial data are to be collected (separate and distinct from its owners).E. An incorporated entity that issues shares as evidence of ownership.F. Initial recording of financial statement elements at acquisition cost.G. An examination of the financial reports to assure that they represent what they claim and conform with international financial reporting standards.H. Chartered Accountant.I. An unincorporated business owned by one person.J. A report that describes the auditors' opinion of the fairness of the financial statement presentations and the evidence gathered to support that opinion.K. Ontario Securities Commission.L. Accounting Standards Board.M. Company that can be bought and sold by investors on established stock exchanges.N. International financial reporting standardsO. Canadian Institute of Chartered Accountants. 120) Using the income statement model and the statement of financial position model, fill - in the missing amounts for each independent case below. Assume the amounts given are at the end of the first full year of operations of the company. Case Total Revenue Total Assets Total Expenses Total Liabilities Profit (Loss) Shareholders' Equity A $500,000 $300,000 $425,000 $110,000 $ $ B 75,000 $ $ 70,000 15,000 55,000 C $ 145,000 70,000 $ (10,000) 90,000

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    D 250,000 375,000 200,000 60,000 $ $ E $ $ 64,000 88,000 3,000 65,000 121) Plants Supreme, Inc., a small retail store which sells house plants, started business on January 1, 20X1. At the end of January, 20X1, the following information was available: Sales of plants for cash $50,000 Sales of plants for credit 3,000 Cost of plants which were sold and paid for during January 30,000 Cash expenditures during January: Salaries $4,500 Telephone 100 Office Supplies (all used) 100 Electricity 200 Rent on the store for January, 20X1 800 (will not be paid until February, 20X1) A. Using the above information, prepare the income statement for Plants Supreme for the month ended January 31, 20X1.B. What is the amount of cash flows provided by operating activities to be presented on the statement of cash flows? 122) Calculate the missing amount in each category of the accounting equation. Assets Liabilities Shareholders' Equity (a) $360,000 $ __?__ $98,000 (b) $178,000 $73,000 $ __?__ (c) $ __?__ $302,000 $310,000 123) Rockaway Corporation's shareholders' equity equals one - fifth of the company's total assets. The company's liabilities are $125,000. What is the amount of the company's shareholders' equity? 124) Lopez Corporation began operations at the start of 20X3. During the year, it made cash and credit sales totaling $974,000 and collected $860,000 in cash from its customers. It purchased inventory costing $508,000, paid $25,000 for dividends and the cost of goods sold was $445,000. The corporation incurred the following expenses: Salary expense $180,000 Interest expense 15,000 Insurance expense 10,000 Supplies expense 18,000 Income tax expense 65,000 Required:1. Prepare an income statement showing revenues, expenses, pretax profit, income tax expense, and profit for the year ended December 31, 20X3.2. Based on the above information, what is the amount of trade receivables on the statement of financial position prepared at the end of 20X3?3. Based on the above information, what is the amount of retained earnings on the statement of financial position prepared at the end of 20X3? 125) Delft Corporation was established on December 31, 20X1, by a group of investors who invested a total of $100,000 for shares of the new corporation. During the month of January, 20X2, Delft provided services to customers for which the total revenue was $40,000. Of this amount, $4,500 had not been collected by the end of January. Delft recorded salary expense of $17,000, of which 90% had been paid by the end of the month; rent expense of $3,000, which had been paid on January 1, 20X2; and other expenses of $8 ,500, which had been paid by check. On January 31, 20X2, Delft

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    purchas ed a van by paying cash of $25,000. There were no other events that affected cash.Required:1. In which section of the statement of cash flows would the amount of cash paid for salaries be reported?2. In which section of the statement of cash flows would the amount of cash paid for the van be reported?3. By how much did Delft's cash increase or decrease during January?4. If the amount of cash was $100,000 at the beginning of January, how much cash did Delft have at the end of the month?5. What was Delft's profit or loss (after income tax expense) for the month of January? The income tax rate was 25%.6. Explain why the net increase or decrease in cash for a business generally will be different than the profit, or net loss, for the same period. 126) Pool Supply, Inc., reported the following items for the year ended December 31, 20X3: Wages and salary expense $825,000 Cost of goods sold 1,400,000 Rent expense 490,000 Sales revenue 3,417,000 Interest expense 50,000 Income tax expense 161,000 Trade receivables 25,000 Required: Prepare an income statement for the year. 127) Empire Stores, Ltd., reported the following amounts on its statement of financial position on December 31, 20X2: Inventory $710,000 Notes payable 160,000 Cash 300,000 Share capital 900,000 Net property, plant and equipment 425,000 Trade receivables 88,000 Trade payables 131,000 Retained earnings ? Required: 1. What is the amount of Empire's total assets at the end of 20X2?2. Identify the items listed above that are liabilities.3. What is the amount of Empire's retained earnings at the end of 20X2?4. Prepare a statement of financial position for Empire Stores as of December 31, 20X2.5. Empire Stores wishes to purchase merchandise from your company on account. The amount of the purchases would probably be about $5,000 per month, and the terms would require Empire to make payment in full within 30 days. Would you recommend that your company grant credit to Empire under these terms? Explain the reasoning for your response. 128) During 20X2, Wilmont Company performed services for which customers promised to pay $286,000. Of this amount, $270,000 had been collected by year end. Wilmont paid $125,000 in cash for employee wages and owed the employees $5,000 at the end of the year for work that had been done but had not paid for. Wilmont paid interest expense of $1,700 and $80,000 for other service expenses. The income tax rate was 25%, and income taxes had not yet been paid at the end of the year. Wilmont declared and paid dividends of $6,000. There were no other events that affected cash.Required:1. What was the amount of the increase or decrease in cash during the year?2. Prepare an income statement for Wilmont for the year. 129) Alfred Company manufactures men's clothing. During 20X2, the company reported the following items that affected cash. Indicate whether each of these items is a cash flow from operating activities (O), investing activities (I), or financing activities (F). Description Classification

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