Understanding Financial Accounting 3rd Canadian Edition by Christopher D. Burnley test bank
a) Dividends and Retained Earnings
b) Share Capital and Retained Earnings
c) Share Capital and Net Income
d) Net Income and Dividends
Answer: b
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
71. The change in retained earnings can be calculated as follows
a) Net Income – Dividends
b) Net Income + Dividends
c) Net Income – Interest
d) Net Income + Interest
Answer: a
Bloomcode: Comprehension
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
72. Dividends are paid when approved by the
a) board of directors.
b) management.
c) shareholders.
d) creditors.
Answer: a
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
73. The following information is NOT found on the Statement of Income:
a) EPS.
b) Depreciation Expense.
c) Goodwill.
d) Cost of Goods Sold.
Answer: c
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
74. Which of the following statements is correct?
a) The market value and the book value of a company’s shareholders’ equity are usually the same.
b) The market value is usually less than the book value of a company’s shareholders’ equity.
c) The market value is usually more than the book value of a company’s shareholders’ equity.
d) The value of the shareholders’ equity on the Statement of Financial Position is based on the value of the company’s shares in the market.
Answer: c
Bloomcode: Comprehension
Difficulty: Hard
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
75. Which of the following is a section found in the Statement of Cash Flows?
a) cash from lending activities
b) cash from shareholder activities
c) cash from financing activities
d) cash from borrowing activities
Answer: c
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
76. On the Statement of Cash Flows, the repayment of long-term obligations would be considered
a) a financing activity.
b) an investing activity.
c) an operating activity.
d) a reduction in a liability.
Answer: a
Bloomcode: Comprehension
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
77. The starting point in the operating activities section of the cash flow statement is
a) Sales Revenue.
b) Retained Earnings.
c) Beginning Cash Balance.
d) Net Income.
Answer: d
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
78. Where in the financial statements would a user find out which accounting policies management has selected to use?
a) Statement of Management Responsibility
b) Notes to the Financial Statements
c) Auditors’ Report
d) Management Discussion and Analysis
Answer: b
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.