WorksheetsAFA100 Quiz 1
Total questions: 40
Worksheet time: 20mins
On January 1, Manitoba Bank lent $100,000 to Saskatchewan Ltd. at an interest rate of 6%. Both the loan and all the interest are to be repaid after two years. At the end of the first year what is the entry required on Manitoba's books? (Dr.=Debit and Cr.=Credit)
no entry is required until the amount becomes due.
Dr. Interest receivable $6,000, Cr. Interest revenue $6,000
Dr. Interest expense $6,000, Cr. Interest payable $6,000
Dr. Interest revenue $6,000, Cr. Interest payable $6,000
The statement of financial position and statement of changes in equity are related because
the ending amount on the statement of changes in equity is transferred to the statement of cash flows.
the ending amount on the statement of changes in equity is reported on the statement of financial position
the total assets on the statement of financial position is reported on the statement of changes in equity.
both contain information for the corporation.
The Pioneer Company has provided the following account balances:
Cash $38,900;
Short-term investments $4,900;
Accounts receivable $6,900;
Supplies $52,500;
Long-term notes receivable $2,900;
Equipment $100,500;
Factory Building $189,000;
Intangible assets $6,900;
Accounts payable $29,100;
Accrued liabilities $3,550;
Short-term notes payable $15,800;
Long-term notes payable $96,500;
Contributed capital $189,000;
Retained earnings $68,550.
What are Pioneer's total current liabilities?
$48,450
$32,650
$44,900
$144,950
Which of the following activities does not violate the revenue recognition principle?
Recording revenue in December 20X6 for units manufactured but not yet sold to customers.
Not recording interest earned in 20X6 until the cash is received in 20X7.
Recording cash received in advance from customers as a liability when the product is not yet shipped.
Recording cash received in advance from customers as revenue when the product is not yet shipped.
During 2022, Baltic Company incurred operating expenses amounting to $250,000, of which $156,000 was paid in cash; the balance will be paid during 2023. Which of the following is correct for the 2022 year-end statement of financial position?
Shareholders' equity decreases $250,000, assets decrease $156,000, and liabilities increase $94,000.
Shareholders' equity decreases $156,000 and assets decrease $156,000.
Assets decrease $250,000, liabilities increase $94,000, and shareholders' equity decreases $250,000.
Assets decrease $250,000 and shareholders' equity decreases $250,000.
The adoption of International Financial Reporting Standards can be viewed as an application of which of the following quality enhancing characteristics?
Timeliness
Verifiability
Comparability
Representational faithfulness
Retained earnings at the end of the period is equal to
retained earnings at the beginning of the period plus net earnings minus dividends.
net earnings for the period plus shares issued for the period and net earnings minus dividends
retained earnings at the beginning of the period plus net earnings minus liabilities.
assets plus liabilities
Under the accrual basis of accounting
events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.
cash must be received before revenue is recognized.
the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared.
profit is calculated by matching cash outflows against cash inflows.
On July 1, Rawling Store paid $6,000 to Iceberg Realty for six months' rent, starting July 1. Prepaid rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by Rawling Store is
debit prepaid rent, $6,000; credit rent expense, $6,000
debit rent expense, $1,000; credit prepaid rent, $1,000
debit prepaid rent, $1,000; credit rent expense, 1000
debit rent expense, $6,000; credit prepaid rent, $6,000.
What is the primary purpose of the statement of financial position?
To report the difference between cash inflows and cash outflows for the period.
To report assets at their current market value at a particular point in time.
To measure the net earnings of a business up to a particular point in time.
To report the financial position of the reporting entity at a particular point in time.
On January 1, 2023, the general ledger of Hermoso Company included supplies of $1,600. During 2023, supplies purchased amounted to $6,200. A physical count of inventory on hand at December 31, 2023 determined that the amount of supplies on hand was $1,800. How much is the supplies expense for year 2023?
$1,600
$6,400
$6,000
$7,800
Prepaid expenses are
paid and recorded in an asset account before they are used or consumed.
incurred but not yet paid or recorded.
incurred and already paid or recorded.
paid and recorded in an asset account after they are used or consumed
A landlord collected $5,300 cash from a tenant for December 2022's rent but the contract rate set for the tenant's December rent is $8,600. Which of the following is true with respect to the landlord's financial statements using IFRS?
$5,300 would appear on the statement of financial position as prepaid rent.
$8,600 would appear on the statement of financial position as rent receivable.
$8,600 would be reported on the statement of cash flows.
$8,600 would appear on the statement of earnings as rent revenue.
Which of the following properly describes the impact on the financial statements when a company borrows $32,000 from a local bank?
Assets decrease $32,000.
Net earnings increases $32,000.
Shareholders' equity increases $32,000.
Liabilities increase $32,000.
Abe Cox is the sole owner and manager of Cox Auto Repair Shop Inc. In 20X6, Cox purchased a new apple computer for personal use and continued to use the Dell computer in the business. Which of the following fundamentals prevents Cox from recording the cost of the new apple computer as an asset to the business?
Historical cost principle
Full disclosure
Separate-entity assumption
Revenue principle
An adjusted trial balance
is a required financial statement under international financial reporting standards.
is prepared after the financial statements are completed.
cannot be used to prepare financial statements.
cannot be used to prepare financial statements.
proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made.
Tiger Company's total shareholders' equity at the beginning of the year was $179,000. During the year Tiger reported the following:
Net income of $83,000.
Dividend declarations totaling $17,400.
Issued shares to shareholders in exchange for $44,000 cash.
Borrowed $11,400 from a shareholder.
What is Tiger's total shareholders' equity at the end of the year?
$306,000
$282,600
$300,000
$288,600
Closing entries
cause the revenue and expense accounts to have zero balances.
are prepared before the financial statements.
summarize the activity in every account.
reduce the number of permanent accounts.
In applying the revenue principle to a given transaction, the most important moment or period in time is when which of the following happens?
Related cash inflows occur.
Related expenses are incurred.
The service contract is signed regarding service to be performed.
Sales transaction is completed (i.e., ownership passes) or services are rendered.
On January 1, 2023, Ryan Company paid the premium on a two-year insurance policy in the amount of $6,200. At that time, the full amount paid was recorded as prepaid insurance. After recording the adjusting entry for the insurance policy on December 31, 2023, what would be the balance in Ryan Company's prepaid insurance account?
$2,000
$2,100
$3,100
$6,200
When a company buys equipment for $154,000 and pays for three fourths in cash and the other one fourth is financed by a note payable, which of the following are the effects on the accounting equation?
Total liabilities decrease $115,500.
Total assets increase $154,000.
Total liabilities increase $154,000.
Total assets increase $38,500.
An accountant has billed her clients for services performed in October. In November, she receives payments from her clients. What entry will she make upon receipt of the payments?
debit cash and credit service revenue.
debit deferred revenue and credit service revenue.
debit cash and credit accounts receivable.
debit accounts receivable and credit service revenue.
Air Canada will record the cash you pay when you book the flight ticket as
accounts receivable
short term investments
inventory
deferred revenue
At the end of December, the owner of an apartment complex realized that the December rent had not been collected from one of the tenants. December 31 was the end of the accounting year; therefore, the owner made the appropriate adjusting entry at that time. When the December rent was collected in January of the following year, the entry made by the apartment owner should include which of the following?
credit to Rent revenue.
debit to Rent revenue collected in advance.
credit to Rent receivable.
debit to Rent receivable.
Beacon, Incorporated reported the following amounts at the end of the first year of operations:
Contributed capital$ 314,000
Sales revenue$ 1,256,000
Total assets$ 942,000
Dividends declared$ 67,000
Total liabilities$ 325,000
What are the retained earnings of Beacon at the end of the year, and what amount of expenses were incurred during the year
Retained earnings are $617,000 and expenses incurred totaled $639,000.
Retained earnings are $303,000 and expenses incurred totaled $886,000.
Retained earnings are $617,000 and expenses incurred totaled $931,000.
Retained earnings are $303,000 and expenses incurred totaled $953,000.
Which of the following expenses is required calculate the gross profit on the statement of earnings?
General administrative expenses
Income tax expense
Advertising expense
Cost of sales
Which of the following statements is true?
Debits increase liabilities and decrease assets.
Credits decrease assets and decrease liabilities.
Debits increase assets and increase liabilities.
Credits decrease assets and increase liabilities.
In a classified statement of financial position which of the following is NOT true
The non-current assets and liabilities are presented before the current assets and liabilities.
Shareholders' equity is made up of retained earnings and share capital.
The asset and liability sections are divided into current and non-current sections.
The current assets are listed in order of liquidity
Sugar Industries has provided the following data for its 2022 operations (ignore income taxes):
revenues were $149,800.
expenses were $74,300.
Dividends declared and paid during totaled $14,900.
Total assets at December 31 were $278,500.
Total liabilities at December 31 were $159,500.
Contributed capital at December 31 was $55,000.
Which of the following is correct?
2022 net earnings was $60,600.
Retained earnings at December 31, 2022 were $60,600.
Total shareholders' equity at December 31, 2022 was $352,700.
Retained earnings at December 31, 2022 were $64,000.
At the beginning of 2022, Ironwood Company had assets of $220,000 and liabilities of $132,000. During 2022, assets increased $21,000 and liabilities increased $4,400. What was shareholders' equity at December 31, 2022?
$136,400
$62,600
$115,400
$104,600
Which of the following is not an example of an adjusting entry?
Recording unpaid interest at year end relating to an outstanding loan balance.
Reducing the prepaid rent account for the portion of rent consumed.
Recording the loss on the sale of equipment made during the year.
Recording depreciation on office computers purchased during the year.
A company's January 1, 2022 statement of financial position reported total assets of $115,000 and total liabilities of $44,000. During January 2022, the following transactions occurred: (A) the company issued shares and collected cash totaling $25,000; (B) the company paid an account payable of $5,500; (C) the company purchased supplies for $2,500 with cash; (D) the company purchased land for $45,000, paying $14,000 with cash and signing a note payable for the balance. What is total shareholders' equity after the transactions above?
$192,500
$96,000
$71,000
$25,000
If Ken Auto Shop earned $1,000 from Wood Trucking Company in the repair of its truck, and Wood has not yet paid for the services, where would Ken Auto Shop reflect this?
Statement of cash flows only.
Statement of financial position only.
Statement of Retained Earnings only.
Income statement and statement of financial position.
Which of the following reflects the impact of a transaction where $360,000 cash was invested by shareholders in exchange for shares?
Shareholder' equity and assets each increased $360,000
Shareholders' equity and revenues each increased $360,000.
Assets and retained earnings each increased $360,000.
Assets and revenues each increased $360,000.
The Pioneer Company has provided the following account balances:
Cash $39,600;
Short-term investments $5,600;
Accounts receivable $56,000;
Supplies $7,600;
Long-term notes receivable $3,600;
Equipment $104,000;
Factory Building $196,000;
Intangible assets $7,600;
Accounts payable $28,400;
Accrued liabilities $3,200;
Short-term notes payable $17,200;
Long-term notes payable $100,000;
Contributed capital $196,000;
Retained earnings $75,200.
What are Pioneer's total current assets?
$56,400
$45,200
$108,800
$52,800
During the current fiscal year, a company had revenues of $470,000, cost of goods sold of $315,000, and an income tax rate of 37 percent on earnings before income taxes. What was the company's current year net earnings?
$57,350
$470,000
$97,650
$173,900
If total liabilities decreased by $14,000, and shareholders’ equity increased by $6,000 during the same period, then the amount and direction (increase or decrease) of the period’s change in total assets is a(n)
$20,000 increase.
$8,000 decrease.
$14,000 decrease.
$8,000 increase.
Anchor Corporation has provided the following information for its most recent year of operation:
Revenues earned were $63,600, of which $7,200 were uncollected at the end of the year.
Operating expenses incurred were $25,200, of which $6,000 were unpaid at the end of the year.
Dividends declared were $8,400, of which $3,600 were unpaid at the end of the year.
Income tax expense is $11,520.
What is the amount of net earnings reported on Anchor's statement of earnings?
$22,680
$26,880
$26,100
$21,000
Ultra Realty received a cheque for $21,000 on July 1, which represents a 6-month advance payment of rent on a building it rents to a client. Deferred Rental Revenue was credited for the full $21,000. Financial statements will be prepared on July 31. Ultra Realty should make the following adjusting entry on July 31:
debit Rental Revenue, $3,500; credit Deferred Rental Revenue, $3,500.
debit Deferred Rental Revenue, $3,500; credit Rental Revenue, $3,500.
debit Deferred Rental Revenue, $21,000; credit Rental Revenue, $21,000.
debit Cash, $3,500; credit Rental Revenue, $3,500.
The statement of changes in equity is dependent on the results from
the statement of earnings.
the statement of financial position.
a company's share capital.
the statement of cash flows.
