This statement provides a "snap shot" of a company's financial affairs at a specific point of time.
Answer: Balance Sheet
True or False?
A partnership is not a taxable separate legal entity.
Answer: True
True or False?
The owners, or shareholders, of a corporation are not liable for the debts and obligations of a corporation.
Answer: True
True or False?
Shareholders of a corporation are liable only for the value of the shares purchased.
Answer: True
True or False?
Individuals who acquire shares in a corporation own the assets of the company.
Answer: False
True or False?
The primary advantage of a corporate form of business is that a corporation is a separate legal entity.
Answer: True
Fill in the Blank
This accounting guideline requires amounts in the accounts and on the financial statements to be the actual cost rather than the current value.
Answer: Cost principle
Fill in the Blank
This is the accounting guideline that requires that revenues be shown on the income statement in the period in which they are earned, not in the period when the cash is collected.
Answer:
Revenue recognition principle
_____________ is an accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur.
Answer:
Accrual accounting
This principle holds that expenses directly associated with particular revenues should be recognized in the same period in which the revenue is recognized.
Answer:
Matching principal
Corporations report their income on the basis of a _________ that may be different from the calendar year.
Answer:
Fiscal period
Fiscal year
True or False?
The CRA (Canada Revenue Agency) will only approve changes to your fiscal year period that it considers to be made for "sound business reasons".
Answer:
True
True or False?
A sole proprietorship is a separate legal entity with a separate tax status from the individual owner.
Answer:
False,
See page 8.1
True or False?
A sole proprietor will have unlimited liability.
Answer:
True
True or False?
Each partner in a general partnership is personally responsible for the liabilities of all other partners and is potentially on the hook for the full amount of all partnership liabilities?
Answer: True
A _______________ is also known as a Statement of Financial Position
Answer: Balance Sheet
True or False?
Limited partners are not allowed to participate in the day to day operations of the business?
Answer: True
The general partners in a limited partnership have unlimited liability.
Answer: True.
A __________ is also known as a Statement of Assets and Liabilities.
Answer:
Balance Sheet
Assets = _______ + ____________
Answer:
Assets = Liabilities + Owner's Equity
List the two classifications of assets.
Answer:
Current assets
Noncurrent assets
Accounts receivable is an example of a ___________ asset.
Answer:
Current asset
A prepaid expense is an example of a _________ asset.
Answer:
Current
A ________________ is an item on an entity's balance sheet that is either cash, a cash equivalent, or which can be converted into cash within one year
Answer:
current asset
____________ are those liabilities that the enterprise expects to pay off within one year
Answer:
current liabilities
The income statement is also known as . . . . (list 2)
Answer:
- Revenue and expense Statement
- Profit and Loss Statement
________ connects the balance sheet and income statement.
Answer:
Net income
See page 8.14
____________ represent services for which cash has been paid but the services have not yet been consumed.
Answer:
Prepaid expenses
See page 8.8
This is a method of computing depreciation by dividing the difference between an asset's cost and its expected salvage value by the number of years it is expected to be used.
Answer: Straight Line Depreciation Method
This is s the means by which Canadian businesses may claim depreciation expense for calculating taxable income under the Income Tax Act.
Answer:
CCA, Capital Cost Allowance