Reference no: EM132671898

Problem 1) The two sources of any firm's assets are the firm's creditors and owners.this is always a true statement

Option 1: although false for most of the times, there are several exceptions detailed in Canadian GAAP

Option 2: although true for most of the times, there are several exceptions detailed in Canadian GAAP

Option 3: this is always a false statement

Option 4: Cannot say if it is true or false given the limited information provided

Problem 2) From this list of selected account balances/ determine the total for the Shareholders' Equity section of the balance sheet for Cabbage Company Ltd.

Investment in Shares of Rutabaga Limited = $ 2,500

Retained Earnings = 5,000

Cash (in special bank account for a payment of dividends) = 3,000

Note Payable to Suppliers = 2,000

Common Stock = 10,000

8% Preferred Stock = 7,500

Option 1: $22,500

Option 2: $25,500

Option 3: None of the others alternatives are correct

Option 4: $24,500

Option 5: $20,500

Problem 3) The Annual Report for a corporation:

Option 1: must contain comparative financial statements for five years

Option 2: is no longer prepared in Canada since financial statements are generated at least monthly

Option 3: is just another way of saying the Annual Financial Statements for the Company

Option 4: None of the above

Option 5: must contain an MD&A section (management discussion and analysis) where the management of the company attempts to explain the significance of the numbers in the financial statements

Problem 4) Which equation does not represent an acceptable presentation of the balance sheet equation?

Option 1: Assets = Liabilities + Capital stock + Contributed Surplus + Retained Earnings

Option 2: Assets Liabilities = Owners' Equity

Option 3: Assets = Equities

Option 4: None of the others alternatives are correct

Option 5: All of the equations included in the other alternatives are correct

Problem 5) On June 30, 2014, the balance sheet of Zorab & Co. showed total assets of $400,000, total liabilities of $300,000, and owner's equity of $100,000. The following transactions occurred in July of 2004:

The owner invested an additional $70,000 cash in the business.

The business purchased equipment for $150,000, paying $60,000 cash and issuing a note payable for $90,000.

The business paid off $40,000 of its accounts payable.

As of July 31, 2014 what is the amount reported in Total assets?

Option 1: $400,000

Option 2: $170,000

Option 3: $300,000

Option 4: $520,000

Option 5: $350,000