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Chapter 1—Financial Statements and Making Business Decisions Copyright © 2021 Nelson Education Limited. Test Bank t/a Rich, Cornerstones of Financial Accounting, 3ce Page 1-1 1.The majority of business in Canada is conducted by corporations.
- True
- False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Forms of Business Organization
QUESTION TYPE: True/False
LEARNING OBJECTIVES: 1.2 - Identify forms of business organization and business activities.
KEYWORDS: Bloom’s Remember
2.The three main business activities are financing, operating, and investing.
- True
- False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Business Activities
QUESTION TYPE: True/False
LEARNING OBJECTIVES: 1.2 - Identify forms of business organization and business activities.
KEYWORDS: Bloom’s Remember
3.Internal users of accounting information include present creditors and management.
- True
- False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Financial Statements and Making Business Decisions
QUESTION TYPE: True/False
LEARNING OBJECTIVES: 1.1 - Identify the users of financial statements.
KEYWORDS: Bloom’s Remember
4.The statement of earnings summarizes the assets, liabilities, and shareholders’ equity for a period of time.
- True
- False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
REFERENCES: The Four Basic Financial Statements
QUESTION TYPE: True/False
Cornerstones of Financial Accounting 3rd Canadian Edition By Jay Rich, Maryanne Mowen, Don Hansen (Test Bank All Chapters, 100% Original Verified, A+ Grade)
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Chapter 1—Financial Statements and Making Business Decisions
Copyright © 2021 Nelson Education Limited. Test Bank t/a Rich, Cornerstones of Financial Accounting, 3ce Page 1-2
LEARNING OBJECTIVES: 1.3 - Understand the basic accounting equation.
1.4 - Understand how a statement of financial position is prepared and used.
KEYWORDS: Bloom’s Remember
- The four basic financial statements prepared by private companies are the statement of earnings,
- True
- False
statement of retained earnings, statement of financial position (or statement of financial position), and statement of cash flows.
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: The Four Basic Financial Statements
QUESTION TYPE: True/False
LEARNING OBJECTIVES: 1.3 - Understand the basic accounting equation.
KEYWORDS: Bloom’s Remember
- The amount of earnings distributed to shareholders can be found in the statement of earnings as an
- True
- False
expense.
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Using Statement of Earnings Information
QUESTION TYPE: True/False
LEARNING OBJECTIVES: 1.5 - Understand how a statement of earnings is prepared and used.
1.6 - Understand how a statement of changes in equity is prepared and used.
KEYWORDS: Bloom’s Higher Order
- Shareholders’ equity is composed of two main sources: liabilities and contributed capital.
- True
- False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Preparing a Statement of Financial Position
QUESTION TYPE: True/False
LEARNING OBJECTIVES: 1.4 - Understand how a statement of financial position is prepared and used.
KEYWORDS: Bloom’s Remember
- Accounting standards require that the statement of financial position be prepared on a classified basis. 2 / 4
Chapter 1—Financial Statements and Making Business Decisions
Copyright © 2021 Nelson Education Limited. Test Bank t/a Rich, Cornerstones of Financial Accounting, 3ce Page 1-3
- True
- False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
REFERENCES: Elements
QUESTION TYPE: True/False
LEARNING OBJECTIVES: 1.4 - Understand how a statement of financial position is prepared and used.
KEYWORDS: Bloom’s Remember
- For a private company, the only financial statement that reports the retained earnings balance at the end
- True
- False
of the period is the statement of retained earnings.
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Financial Statements and Making Business Decisions
QUESTION TYPE: True/False
LEARNING OBJECTIVES: 1.4 - Understand how a statement of financial position is prepared and used.
1.6 - Understand how a statement of changes in equity is prepared and used.
KEYWORDS: Bloom’s Higher Order
- A statement of earnings provides information at one specific point in time, while the other basic
- True
- False
financial statements provide information on activities that occur over a period of time.
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: The Four Basic Financial Statements
QUESTION TYPE: True/False
LEARNING OBJECTIVES: 1.5 - Understand how a statement of earnings is prepared and used.
KEYWORDS: Bloom’s Higher Order
- When an entity’s share issuances exceed its expenses for a period of time, the entity will report net
- True
- False
income.
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate 3 / 4
Chapter 1—Financial Statements and Making Business Decisions
Copyright © 2021 Nelson Education Limited. Test Bank t/a Rich, Cornerstones of Financial Accounting, 3ce Page 1-4
REFERENCES: Notes to the Financial Statements
QUESTION TYPE: True/False
LEARNING OBJECTIVES: 1.5 - Understand how a statement of earnings is prepared and used.
1.6 - Understand how a statement of changes in equity is prepared and used.
KEYWORDS: Bloom’s Higher Order
- Contributed capital is the residual interest that remains after deducting liabilities from shareholders’
- True
- False
equity.
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Notes to the Financial Statements
QUESTION TYPE: True/False
LEARNING OBJECTIVES: 1.4 - Understand how a statement of financial position is prepared and used.
KEYWORDS: Bloom’s Higher Order
- Preparing a statement of earnings includes (1) preparing a heading; (2) listing the revenues of the
- True
- False
company; (3) listing the expenses of the company; and (4) listing the dividends of the company.
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Preparing a Statement of Earnings
QUESTION TYPE: True/False
LEARNING OBJECTIVES: 1.5 - Understand how a statement of earnings is prepared and used.
KEYWORDS: Bloom’s Higher Order
- Shareholders’ equity arises primarily from contributed capital and retained earnings.
- True
- False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: Long-Term Liabilities and Shareholders’ Equity
QUESTION TYPE: True/False
LEARNING OBJECTIVES: 1.4 - Understand how a statement of financial position is prepared and used.
KEYWORDS: Bloom’s Higher Order
- A company can rely on its internal auditors, who are employees of the company, to provide assurance
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to the company’s shareholders that the financial statements are fairly presented.
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