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Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
1) Which of the following persons or groups have the ultimate control of a corporation? 1)
A) the shareholders B) the board of directors
C) the audit committee D) the chief executive officer
2) Financial statements are: 2)
A) reports issued by outside consultants who are hired to analyze key operations of the
business
B) standard documents that tell us how well a business is performing and where it stands in
financial terms
C) standard documents issued by outside consultants who are hired to analyze key operations
of the business in financial terms
D) reports created by management that states it is responsible for the acts of the corporation
TRUE/FALSE. Write ‘T’ if the statement is true and ‘F’ if the statement is false.
3) Since they are both the same activities, the terms “accounting” and “bookkeeping” are synonymous 3)
and can be used interchangeably.
4) The three forms of business organizations are proprietorships, partnerships, and non-profit 4)
organizations.
5) Accounting is called an information system since it measures business activities, processes data 5)
into reports, and communicates results to decision makers.
6) From a legal perspective, proprietors, partners, and shareholders are personally liable for a 6)
corporation’s debts.
7) From an accounting viewpoint, a proprietorship is a distinct and separate entity from the 7)
proprietor.
8) The owners’ equity of proprietorships and partnerships is different. 8)
9) Financial accounting information is prepared exclusively for external users. 9)
10) Management accounting is prepared primarily for external users. 10)
11) One benefit of organizing a business as a proprietorship is that the proprietor is not required to 11)
pay income tax on the business’ earnings.
1
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
12) Accounting is often referred to as “the language of business.” Why is accounting described this way? How is
accounting different from bookkeeping?
13) There are several types of decision makers who use accounting information. List five of these users of
accounting information and give an example of a decision each would make.
14) What are the three forms of business organizations? How do they differ?
15) There are many different stakeholders in Dollarama Inc. Explain why the same information may not be
suitable or appropriate for all stakeholders.
16) Dollarama is a publicly owned corporation. How does it differ from a privately owned corporation?
17) What is a not-for-profit organization?
18) Think about the impact accounting has on our economy and our nation. Name some external groups interested
in reviewing a company’s financial statements.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
19) Accounting standards for accountants in Canada are established by: 19)
A) the Canadian Public Accountability Board
B) the International Accounting Standards Board
C) the Canadian Securities Administrators
D) the Chartered Professional Accountants of Canada
20) The accounting equation can be stated as: 20)
A) Assets + Liabilities = Shareholders’ equity
B) Assets + Shareholders’ equity = Liabilities
C) Assets = Liabilities – Shareholders’ equity
D) Assets = Liabilities + Shareholders’ equity
21) The owners’ interest in the assets of a corporation is known as: 21)
A) revenues B) shareholders’ equity
C) expenses D) assets
22) If liabilities increase $120,000 during a given period and shareholders’ equity decreases $25,000 22)
during the same period, assets must:
A) decrease $95,000 B) decrease $145,000
C) increase $95,000 D) increase $145,000
2
23) Which of the following best describes a liability? 23)
A) Liabilities are economic obligations to creditors to be paid at some future date by the
company.
B) Liabilities are accounts receivable of the company.
C) Liabilities are future economic benefits to which a company is entitled.
D) Liabilities are a form of share capital.
24) Expenses are: 24)
A) increases in liabilities resulting from purchasing assets
B) decreases in retained earnings resulting from operations
C) increases in assets resulting from operations
D) increases in retained earnings resulting from operations
25) On January 1, 2020, total assets for Liftoff Technologies were $125,000; on December 31, 2020, total 25)
assets were $145,000. On January 1, 2020, total liabilities were $110,000; on December 31, 2020,
total liabilities were $115,000. What are the amount of the change and the direction of the change
in Liftoff Technologies shareholders’ equity for 2020?
A) increase of $30,000 B) increase of $15,000
C) decrease of $30,000 D) decrease of $15,000
26) Receivables are classified as: 26)
A) assets B) decreases in earnings
C) increases in earnings D) liabilities
27) Shareholders’ equity for Raisin Corporation on January 1, 2020 and December 31, 2020 were 27)
$60,000 and $75,000, respectively. Assets on January 1, 2020 and December 31, 2020 were $115,000
and $105,000, respectively. Liabilities on January 1, 2020 were $55,000. What is the amount of
liabilities on December 31, 2020?
A) $55,000 B) $40,000 C) $30,000 D) $15,000
28) Claims held by the shareholders (owners) of a corporation are referred to as: 28)
A) share capital B) share capital minus retained earnings
C) share capital plus retained earnings D) retained earnings
29) Revenues are: 29)
A) decreases in assets resulting from delivering goods or services to customers
B) decreases in retained earnings resulting from delivering goods or services to customers
C) increases in liabilities resulting from delivering goods or services to customers
D) increases in retained earnings resulting from delivering goods or services to customers
30) If assets increase $120,000 during a given period and liabilities decrease $25,000 during the same 30)
period, shareholders’ equity must:
A) increase $145,000 B) decrease $95,000
C) increase $95,000 D) decrease $145,000