Reference no: EM132671871

Problem 1: The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation: Verbally agreed to sign a 12 month commercial insurance contract for any liability that might emerge from the activity. $600 per month for 1 year

Option 1: Increase and decrease assets

Option 2: None of the others alternatives are correct

Option 3: Increase assets and increase liabilities

Option 4: Increase assets and increase Owner's equity

Option 5: Decrease assets and decrease liabilities

Problem 2: A corporation with total shareholders' equity of $85,000 paid a $10,000 business debt owed to a supplier. As a result of this transaction, total stockholders' equity

Option 1: Did not change

Option 2: Increased by $10,000

Option 3: Increased by some other amount

Option 4: Decreased by some other amount

Option 5: Decreased by $10,000

Problem 3: Which of the following would not appear on a balance sheet?

Option 1: Retained earnings

Option 2: Bonds payable

Option 3: Accounts receivable

Option 4: None of the others alternatives are correct

Option 5: Cost of goods sold

Problem 4: Choose the phrase that is most correct within the framework of Canadian GAAP:

Option 1: the cash paradigm always produces a higher net income than the accrual paradigm

Option 2: the cash paradigm always produces a lower net income than the accrual paradigm

Option 3: Canadian companies can freely choose under Canadian GAAP which of the two paradigms they adopt

Option 4: The cash paradigm will always yield an identical reported net income to the accrual paradigm

Option 5: It is situation specific (cannot be determined from the information provided here) which paradigm produces the highest reported income

Problem 5: Liabilities increase by $1 during the period and Assets decrease by $1 during the same period. This implies that:

Option 1: Equity decreases by $2 during this period

Option 2: Equity remains unchanged during this period

Option 3: The impact on Equity cannot be predicted from the limited information provided

Option 4: Equity decreases by $1 during this period

Option 5: Equity increases by $1 during this period