accounting ch 1-3

The main objective of the financial statements is to provide useful information to

• government in deciding if the company is respecting tax laws

• increase the value of the company

• investors and creditors that is useful when they are making decisions about the business

• management that is useful when they are making decisions about the business

Which of the following characteristics are related to corporations as opposed to partnerships and proprietorships?

• Limited legal liability, limited life, income taxes on profit paid by the organization

• More than one owner, income taxes on profit paid by the owners, unlimited legal liability

• Income taxes paid by the organization, limited legal liability, indefinite life

• Simple to form, unlimited legal liability, limited life

Which of the following statements about International Financial Reporting Standards (IFRS) is correct?

• All Canadian enterprises must use IFRS

• All Canadian publicly accountable enterprises must use IFRS

• Canadian private enterprises are not allowed to use FIRS. They must use ASPE

• Under IFRS, companies that operate in more than one country must produce separate financial statements for each of those countries

Which of the following statements about the going concern assumption is correct?

• The going concern assumption is the assumption that the economic entity will continue to operate in the future.

• The financial statements must report whether or not a company is a going concern

• The going concern assumption is not followed under ASPE

• Under the going concern assumption, all of the business's assets must be reported at their fair value

Which of the following items is not reported on the statement of owner's equity?

• Investment by the owner

• Revenues

• Profit

• Drawings

As at December 31, after its first year of operations, Stoneland Company has assets of $8,500; revenues of $6,000; expenses of $3,500; owner's capital of $5,000; and drawings of $500. What are the liabilities for Stoneland Company as at December 31

• $2,500

• $1,500

• $3,500

• $500

Which of the following best describes when an event should be recognized in the accounting records?

• Where there is uncertainty about a future event occurring or not, it should not be recognized

• Accountants use tradition to determine which events to recognize

• An event should be recognized in the accounting records if there is a change in assets, liabilities,, or owner's equity and the change can be measured in monetary terms.

• An event should be recognized in the accounting records if it involves an interaction bewteen the company and another external entity

Genesis Company buys a $10,000 machine on credit. Initially, this transaction will only affect the;

• income statement

• income statement, statement of owner's equity, and balance sheet

• balance sheet

• income statement and statement of owner's equity

Which of the following statements about the income statement and balance sheet is correct?

• The income statement and the balance sheet both show information for a specified time period

• The income statement shows information at a specific point in time; the balance sheet shows information for a specified time period

• The income statement and the balance sheet show information as at a specific point in time

• The income statement shows information for a specified time period; the balance sheet shows information as at a specific point in time.

Bing Company pays $700 for store rent for the month. The basic analysis of this transaction on the accounting records is:

• the asset Cash is decreased by $700 and the liability Rent Payable is increased by $700

• the asset cash is increased by $700 and the liability Rent Payable is decreased by $700

• the asset Cash is decreased by $700 and the expense Rent Expense is increased by $700

• the asset Cash is increased by $700 and the expense Rent Expense is increased by $700