ACCT 621 UCW Practicing_1
Question type: True/False
1) Internal users of accounting information include a company's shareholders. False
2) The issue of shares and the distribution of dividends do not affect profit. True
3) Proprietorships and partnerships are taxable entities. False
4) The notes to the financial statements are not required. False
5) Interest expense is classified as an operating activity. False
6) Question type: Multiple Choice
7) Which of the following is not an external user of accounting data? a) labour unions
b) customers
c) economic planners
d) finance directors
7) Which of the following type of companies must adopt International Financial Reporting
Standards?
a) proprietorship
b) publicly-traded corporations
c) partnerships
d) private corporations
8) Internal users want answers to all of the following questions except
a) what is the cost of manufacturing each unit of the product?
b) which product line is more profitable?
c) is the company earning enough to give me a return on my investment?
d) is cash sufficient to pay the bills?
9) The statement of financial position and the statement of changes in equity are interrelated
because
a) the beginning amount of retained earnings on the statement of changes in equity is
reported on the statement of financial position.
b) the amount of assets on the statement of financial position is reported on the statement of
changes in equity.
c) the ending amount of each of the components of shareholders’ equity on the statement of
changes in equity is reported on the statement of financial position.
d) the amount of liabilities on the statement of financial position is reported on the statement
of changes in equity.
10) Easy transfer of ownership is a characteristic of which form of business organization?
a) proprietorship
b) partnership
c) publicly-traded corporation
d) all of the above
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11) The statement of financial position reports
a) assets owned by the business.
b) claims to assets by creditors.
c) claims to assets by shareholders.
d) all of the above.
12) The statement that is dated at a specific point in time is the
a) statement of cash flows.
b) statement of financial position.
c) statement of changes in equity.
d) Both b) and c) are correct.
13) Which of the following would be considered an investing activity?
a) the recording of depreciation expense
b) the retirement of outstanding debt
c) the purchase of inventory for resale
d) the construction of a new factory
14) To determine how much of a company’s cumulative profits has been distributed to its
shareholders, one would refer to the a) statement of financial position.
b) notes to the financial statements.
c) statement of cash flows.
d) statement of changes in equity.
15) Cost of goods sold is classified as a(n)
a) asset
b) expense
c) liability
d) revenue
16) The financial statements are usually prepared in which of the following sequence?
a) Income statement, Statement of financial position, Statement of changes in equity, Statement
of cash flows
b) Statement of financial position, Statement of changes in equity, Statement of cash flows,
Income statement
c) Statement of financial position, Statement of cash flows, Income statement, Statement of
changes in equity
d) Income statement, Statement of changes in equity, Statement of financial position, Statement
of cash flows
17) Which of the following financial statements would you use to determine a company’s
source(s) of financing?
a) statement of financial position
b) income statement
c) statement of changes in equity
d) bank statement
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18) Which of the following would not appear on the income statement?
a) service revenue
b) interest expense
c) profit
d) dividends
19) Which of the following would not appear directly on the statement of changes in equity?
a) beginning retained earnings balance
b) dividends
c) service revenue
d) profit
20) Saira’s Maid Service Ltd. began the year with total assets of $120,000 and shareholders’
equity of $40,000. During the year, the company earned $90,000 in profit and paid $20,000 in
dividends. Total assets at the end of the year were $215,000. Shareholders’ equity at the end of
the year was
Opening equity 40,000
a) $130,000.
(+) Profit 90,000
b) $110,000. (-) Dividend. 20,000
c) $150,000. Closing 110,000
d) $135,000.
21) Repayment of non-current notes payable is an example of a (an)
a) operating activity.
b) financing activity.
c) investing activity.
d) delivery activity.
22) Financial statements are prepared to provide information to which users?
a) regulators
b) bond holders
c) investors
d) all of the above
23) The statement of changes in equity is dependent on the results of the
a) income statement.
b) statement of financial position.
c) statement of cash flow.
d) statement of assets and liabilities.
24) Which of the following would appear on the statement of financial position?
a) service revenue
b) interest expense
c) profit
d) accounts receivable
25) Purchasing a new building is an example of a(n)
a) operating activity.
b) financing activity.
c) investing activity.
d) delivery activity.
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