Understanding Financial Accounting 3rd Canadian Edition by Christopher D. Burnley test bank
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic
12. The financial statements of a company are prepared by the shareholders.
Answer: False
Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Identify and explain the content and reporting objectives of the four basic financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic
13. Assets are listed in the order of their liquidity on the classified Statement of Financial Position.
Answer: True
Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Identify and explain the content and reporting objectives of the four basic financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic
14. Prepaid expenses can be found on the Statement of Income.
Answer: False
Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Identify and explain the content and reporting objectives of the four basic financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic
15. The Statement of Financial Position measures cash inflows and outflows of a company over a period of time.
Answer: False
Bloomcode: Knowledge
Difficulty: Medium
Learning Objective: Identify and explain the content and reporting objectives of the four basic financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic
16. Profit is determined by subtracting the income earned during the period from the expenses incurred during the same period.
Answer: False
Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Identify and explain the content and reporting objectives of the four basic financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic
17. Income can also include gains that a company generates from sales that are outside their normal course of operations.
Answer: True
Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Identify and explain the content and reporting objectives of the four basic financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic
18. Expenses are defined as increases in economic benefits.
Answer: False
Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Identify and explain the content and reporting objectives of the four basic financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic
19. Gross profit is equal to the sales received from goods and the operating expenses incurred during the period.
Answer: False
Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Identify and explain the content and reporting objectives of the four basic financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic
20. Net earnings is the amount of the company’s revenue that remains after all its expenses are accounted for.
Answer: True
Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Identify and explain the content and reporting objectives of the four basic financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic
21. Retained earnings are the earnings that have been kept and NOT paid out as dividends.
Answer: True
Bloomcode: Knowledge
Difficulty: Medium
Learning Objective: Identify and explain the content and reporting objectives of the four basic financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic
22. Liquidity refers to how long something will be received, realized, or consumed.
Answer: False
Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Identify and explain the content and reporting objectives of the four basic financial statements and the notes to the financial statements.
CPA: Financial Reporting
AACSB: Analytic
23. Canadian companies use a 12-month period to distinguish between items that are current from those that are non-current.