Archives: Quiz

1) Accrual accounting provides several opportunities for unethical accounting. 2) The relative-fair-value method is the most conservative method of amortizing buildings and equipment. Answer: FALSE 3) The gross margin percentage is determined by dividing the gross margin by the net […]

1) A credit balance in the income summary account after closing revenues and expenses indicates a net income for the current period. 2) The entry to record the purchase of inventory on account in a perpetual inventory system includes a […]

1) To maintain effective internal control, all incoming mail should be opened by a mail room employee who does not have access to the accounting records. 2) An unearned revenue arises when a company receives cash from its customers in […]

1) The law requires most employers to provide a minimum number of weeks holiday per year. 2) The current ratio is the ratio of an entity’s current assets to owner’s equity. Answer: FALSE 3) Under the perpetual system, ending inventory […]

1) An amortizable asset’s carrying value is the assets cost less accumulated amortization. 2) The financial statements will contain errors if they are prepared before the adjusting entries are completed. Answer: TRUE 3) It is necessary to do a physical […]

1) Service charge and interest on loan are both adjustments required to the bank balance on a bank reconciliation. 2) Goodwill is a tangible asset. Answer: FALSE 3) The system of electronic linkages that allows different computers to share the […]

1) A loss on sale of an asset occurs when the book value is greater than the cash received. 2) A chart of accounts is a list of all of a company’s accounts with their account numbers. Answer: TRUE 3) […]

1) A subsidiary ledger is a book of accounts that provides supporting details on individual balances, the total of which appears in the general journal. 2) Data from source documents such as sales receipts and bank deposit slips are referred […]

1) The cost of land includes fencing, paving, sprinkler systems, and lighting. 2) When a revenue is recorded, the asset account cash is always increased along with owner’s equity. Answer: FALSE 3) Days’ sales in receivables is computed as average […]

1) Adjusting entries only involve income statement accounts. 2) Compare the effects of the FIFO and moving-weighted-average-cost methods on the value of ending inventory and cost of goods sold. Then contrast the methods when purchase prices are rising. Answer: FIFO […]

1) In a periodic inventory system, beginning inventory plus net purchases minus freight in equals cost of goods sold. 2) In provinces with PST, businesses must pay the tax when they are the final consumer of the goods. Answer: TRUE […]

1) Under IFRS the preferred term for accounts payable is provisions. 2) The general journal is used to record all transactions that do not fit one of the special journals. Answer: TRUE 3) The operating cycle is the time span […]

1) The methods of recording GST and HST are similar. 2) The supplier invoice should be matched with the purchase order and receiving report prior to preparing a cheque for payment. Answer: TRUE 3) Aging-of-accounts-receivable and percent-of-accounts receivable are both […]

1) Selling on credit creates both a benefit and a cost. 2) The acid-test ratio tells whether the entity could pay all its current liabilities if they came due immediately. Answer: TRUE 3) In a perpetual inventory system, the closing […]

1) The designation CA stands for Certified Public Accountant. 2) A liability account is credited when a prepaid expense is recorded initially as an expense. Answer: FALSE 3) It is necessary for the owners and top managers to demonstrate the […]

1) An NSF cheque should be added to the bank balance on a bank reconciliation. 2) The sum of the account balances in the accounts receivable subsidiary ledger should equal the balance in the accounts receivable account in the general […]

1) In a periodic inventory system, purchases of inventory are debited to an account entitled Purchases. 2) In a periodic inventory system, purchase returns and allowances and purchase discounts are considered contra liability accounts. Answer: FALSE 3) The right-hand side […]

1) The accounting cycle as well as financial statement presentation is different for companies reporting under international financial reporting standards (IFRS) and those reporting under accounting standards for private enterprises (ASPE). 2) The postclosing trial balance will not include any […]

1) The balance sheet lists all the entity’s assets, liabilities, and owner’s equity as of a specific date. 2) It is possible to have a credit balance for a specific accounts receivable account. Answer: TRUE 3) Liquidity measures how quickly […]

1) FIFO results in a more accurate portrayal of ending inventory on the balance sheet than does moving-weighted-average. 2) Most lines of credit are payable on demand. Answer: TRUE 3) The entry to record the purchase of inventory on account […]

1) The initial entry to establish a petty cash fund involves a debit to cash and a credit to petty cash. 2) Goodwill has an indefinite life, so it is not amortized, but tested for impairment. Answer: TRUE 3) A […]

1) The adjusting entry to record inventory shrinkage would include a debit to the cost of goods sold account in a perpetual inventory system. 2) The only way to reduce a current liability is to pay out cash. Answer: FALSE […]

1) Gross pay is the total amount of compensation earned by the employee less deductions. 2) The reliability characteristic means that accounting information is free from error and bias, i.e., objective. Answer: TRUE 3) A journal is a chronological record […]

1) An asset account is debited when unearned revenue is recorded initially as a revenue. 2) Members of the three professional accounting bodies in Canada, CAs, CGAs, and CMAs, have no set standards for ethical conduct. Answer: FALSE 3) Some […]

1) The concept underlying accounting for property, plant and equipment and amortization expense is the same as for prepaid expenses. 2) The purchase of office equipment for cash would increase assets and decrease liabilities. Answer: FALSE 3) Separation of duties […]

1) Gross margin is equal to net sales plus cost of goods sold. 2) Companies that report their results using international financial reporting standards (IFRS) still need to ensure that the debits and credits are equal for every transaction. Answer: […]

1) Every adjusting entry affects an account on the income statement and an account on the balance sheet. 2) The credit department should have no access to cash. Answer: TRUE 3) Gross margin minus operating expenses equals income from operations […]

Derivatives Markets, 3e (McDonald) Chapter 1 Introduction to Derivatives 1.1 Multiple Choice Question: Which of the following is not a derivative instrument? A) Contract to sell corn B) Option agreement to buy land C) Installment sales agreement D) Mortgage backed […]

Exam Name___________________________________ TRUE/FALSE. Write ‘T’ if the statement is true and ‘F’ if the statement is false. Question: Question: The last step in analyzing an ethical issue should be to identify the stakeholders people  who have a vested interest […]

Exam Name___________________________________ TRUE/FALSE. Write ‘T’ if the statement is true and ‘F’ if the statement is false. Question: An adhocracy is a knowledge-based organization where goods and services depend on the expertise and knowledge of professionals. Answer: Question: From the […]

Exam Name___________________________________ TRUE/FALSE. Write ‘T’ if the statement is true and ‘F’ if the statement is false. Question: Operational management is responsible for directing the day-to-day operations of the business and therefore needs transaction-level information. Answer: Question: You would use […]

Exam Name___________________________________ TRUE/FALSE. Write ‘T’ if the statement is true and ‘F’ if the statement is false. Question: Internet advertising is growing at approximately 10 percent a year. Answer: Question: Developing a new product, fulfilling an order, and hiring a […]

CHAPTER 23 QUIZ 1. An example of a performance measure based on external financial information would be a. market share. b. stock prices. c. innovation measures. d. defect rates. 2. Which of the following does not describe the three steps […]

CHAPTER 22 QUIZ 1. If management decides to pursue an unwise goal, the management control system for that company should a. reinforce this company goal. b. be scrapped because an unwise goal will harm the company and should not be […]

CHAPTER 21 QUIZ 1. [CPA Adapted] If the algebraic sum of the present values of all cash flows related to a proposed capital expenditure discounted at the company’s required rate of return is positive, it indicates that the a. resultant […]

CHAPTER 20 QUIZ 1. Which of the following categories of costs are important when managing inventories of goods for sale according to the authors of the text? a. Purchasing, ordering, supply, spoilage, and opportunity b. Purchasing, stockout, carrying, ordering, and […]

CHAPTER 19 QUIZ 1. The four cost categories in a cost of quality program are a. product design, process design, internal success, and external success. b. prevention, appraisal, internal failure, and external failure. c. design, conformance, control, and process. d. […]

CHAPTER 18 QUIZ 1. [CPA Adapted] In manufacturing its products for the month of September 2008, El Dorado Corporation incurred normal spoilage of $7,000 and abnormal spoilage of $3,000. How much spoilage cost should El Dorado charge as inventoriable for […]

CHAPTER 17 QUIZ Use the following information for questions 1 through 10. Top That manufactures baseball-style hats. Material is introduced at the beginning of the process in the Cutting Department. Conversion costs are incurred (and allocated) uniformly throughout the process. […]

CHAPTER 16 QUIZ The following data apply to questions 1 through 5. Brant Corporation manufactures two products out of a joint process—Scout and Andro. The joint (common) costs incurred are $400,000 for a standard production run that generates 70,000 pounds […]

CHAPTER 15 QUIZ 1. The use of a dual-rate cost-allocation method recognizes a. the improvements in technology allowing for use of multiple cost pools. b. the need to use both budgeted and actual cost rates when allocating. c. the need […]

CHAPTER 14 QUIZ 1. Which of the following is not a primary purpose given in the text for allocating costs? a. To provide information for economic decisions b. To motivate managers and other employees c. To measure income and assets […]

CHAPTER 13 QUIZ 1. Which of the following are two generic strategies described in the text that a company can use? a. Growth and product differentiation b. Price recovery and growth c. Product differentiation and cost leadership d. Cost leadership […]

CHAPTER 12 QUIZ 1. Major influences of competitors, costs, and customers on pricing decisions are factors of a. supply and demand. b. activity-based costing and activity-based management. c. key management themes that are important to managers attaining success in their […]

CHAPTER 11 QUIZ 1. Which of the following should not be considered for every option in the decision process? a. Relevant revenues b. Relevant costs c. Historical costs d. Opportunity costs 2. What is always the question to ask to […]

CHAPTER 10 QUIZ 1. A mixed cost function has a constant component of $20,000. If the total cost is $60,000 and the independent variable has the value 200, what is the value of the slope coefficient? a. $200 b. $400 […]

CHAPTER 9 QUIZ 1. The main difference between variable costing and absorption costing is a. the treatment of nonmanufacturing costs. b. the accounting for variable manufacturing costs. c. the accounting for fixed manufacturing costs. d. their value for decision makers. […]

CHAPTER 8 QUIZ 1. Which of the following pertains primarily to the planning of fixed overhead costs? a. A standard rate per output unit is developed. b. Only essential activities are to be undertaken. c. Activities are to be undertaken […]

CHAPTER 7 QUIZ 1. [CMA Adapted] Flexible budgets a. accommodate changes in the inflation rate. b. accommodate changes in activity levels. c. are used to evaluate capacity utilization. d. are static budgets that have been revised for changes in price(s). […]

CHAPTER 6 QUIZ 1. Budgeting is the common accounting tool companies use for planning and controlling. Budgets a. provide a measure of planned financial results. b. are prepared independent of the company’s long term strategies. c. do not usually reflect […]