Understanding Financial Accounting 3rd Canadian Edition by Christopher D. Burnley test bank
AACSB: Analytic
53. All of the following are investing activities EXCEPT for
a) earning interest income.
b) purchasing property, plant, and equipment.
c) purchasing other companies' shares.
d) selling property, plant, and equipment.
Answer: a
Bloomcode: Comprehension
Difficulty: Easy
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic
54. Which of the following is a typical financing activity?
a) payment of dividends
b) payment of interest expense
c) payment of wages
d) purchases of inventory
Answer: a
Bloomcode: Comprehension
Difficulty: Easy
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic
55. Operating activities include all of the following EXCEPT for
a) collections of accounts receivable.
b) payment of tax expense.
c) payment of dividends.
d) payment of interest expense.
Answer: c
Bloomcode: Comprehension
Difficulty: Easy
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic
56. Which of the following is NOT a typical operating activity?
a) payment of accounts payable
b) payment of long-term notes payable
c) payment of wages
d) collection of accounts receivable
Answer: b
Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic
57. An example of a financing activity is
a) purchase of property.
b) issuing shares.
c) sales to customers.
d) payment of taxes.
Answer: b
Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic
58. An example of an investing activity is
a) purchase of inventory.
b) collections of amounts owed by customers.
c) purchase of shares of other companies.
d) payment of taxes.
Answer: c
Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic
59. An example of an operating activity is
a) repaying loan principal.
b) paying dividends.
c) purchase of shares of other companies.
d) payments of taxes owed to the government.
Answer: d
Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic
60. A friend is looking to purchase shares as an investment, but would like information about whether the company has paid dividends in the last year. Where would your friend find this information in the financial statements?
a) Income Statement
b) Operating Activities on the Cash Flow Statement
c) Investing Activities on the Cash Flow Statement
d) Financing Activities on the Cash Flow Statement
Answer: d
Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic
61. A positive ___ represents an internal source of funding.
a) cash flow
b) revenue account
c) dividends account
d) share capital account
Answer: d
Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Explain the three categories of business activities and identify examples of transactions related to each category.
CPA: Financial Reporting
AACSB: Analytic
62. Capital Appreciation refers to
a) the sale of shares at a price higher than the purchase price.
b) the gain on the sale of an asset.
c) the allocation of the value of an asset over its useful life.