Question 1

The owners' equity of proprietorships and partnerships is different.

Accepted Answer

In proprietorships, the owner's equity is the same as the owner's investment in the business. In partnerships, the owner's equity includes each partner's investment as well as their share of the partnership's profits and losses.

Question 2

There are many different stakeholders in Canadian Tire Corporation.Explain why the same information may not be suitable or appropriate for all stakeholders.

Accepted Answer

Different stakeholders make different decisions that require different information.For example,lenders want to know whether the company will be able to repay its loans but the Canada Revenue Agency (CRA)wants to know the amount of taxes that should be paid for the current year.Much of the information that the lenders would request,such as who are the company's major customers and the amounts they owe the company,would be of no interest to CRA.CRA is simply interested in compliance with the income tax act.

Question 3

Since they are both the same activities,the terms "accounting" and "bookkeeping" are synonymous and can be used interchangeably.

Accepted Answer

While both accounting and bookkeeping involve the recording and reporting of financial transactions, accounting encompasses a wider range of activities such as analyzing financial data, creating financial statements, and providing advice to clients. Bookkeeping is a more narrow activity focused on recording and organizing financial transactions. Therefore, while related, the terms are not entirely interchangeable.

Question 4

Canadian Tire is a publicly owned corporation.How does it differ from a privately owned corporation?

Accepted Answer

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Question 5

Accounting is called an information system since it measures business activities,processes data into reports,and communicates results to decision makers.

Accepted Answer

Accounting collects and processes financial data and communicates it to stakeholders, including decision makers. This makes it an information system that provides valuable insights for making business decisions.

Question 6

From a legal perspective,sole proprietors,partners and shareholders are personally liable for the debts of their businesses they invest in.

Accepted Answer

Sole proprietors and partners are personally liable for business debts, but shareholders in a corporation have limited liability and are not personally responsible for business debts.

Question 7

What is a not-for-profit organization?

Accepted Answer

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Question 8

Accounting standards for accountants in Canada are established by:
A) the Canadian Institute of Chartered Professional Accountants
B) the Society of Management Accountants of Canada
C) the Certified General Accountants Association of Canada
D) the International Accounting Standards Board

Accepted Answer

The Canadian Institute of Chartered Professional Accountants (CPA Canada) is the national organization responsible for setting accounting standards in Canada. CPA Canada develops and maintains the accounting standards known as Generally Accepted Accounting Principles (GAAP) in Canada. The other organizations listed, such as the Society of Management Accountants of Canada (now known as the Chartered Professional Accountants of Canada) and the Certified General Accountants Association of Canada, are also professional accounting organizations, but they do not have the authority to establish accounting standards. The International Accounting Standards Board sets international accounting standards, but it does not have primary authority over Canadian accounting standards.

Question 9

Think about the impact accounting has on our economy and our nation.Name some external groups interested in reviewing a company's financial statements.

Accepted Answer

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Question 10

From an accounting viewpoint,a proprietorship is a distinct and separate entity from the proprietor.

Accepted Answer

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Question 11

Which of the following persons or groups have the ultimate control of a corporation?
A) the chief executive officer
B) the board of directors
C) the audit committee
D) the shareholders

Accepted Answer

The ultimate control of a corporation is held by the shareholders. While the CEO, board of directors, and audit committee all have important roles in the governance and management of the corporation, they ultimately answer to the shareholders who have the power to elect the board and make major decisions such as mergers and acquisitions.

Question 12

Financial statements are:
A) reports issued by outside consultants who are hired to analyze key operations of the business
B) reports created by management that states it is responsible for the acts of the corporation
C) standard documents that tell us how well a business is performing and where it stands in financial terms
D) standard documents issued by outside consultants who are hired to analyze key operations of the business in financial terms

Accepted Answer

Financial statements are standard documents that are prepared and issued by the company's management. These documents provide information about the company's financial performance, position, and cash flows. They include the income statement, balance sheet, and cash flow statement. They are meant to provide transparency and accountability to shareholders and potential investors.

Question 13

Management accounting is prepared primarily for external users.

Accepted Answer

Management accounting is prepared primarily for internal users such as managers, executives, and employees of an organization to assist in decision making, planning, and control. It is not intended for external users such as investors, creditors, or regulatory bodies.

Question 14

Accounting is often referred to as "the language of business." Why is accounting described this way? How is accounting different from bookkeeping?

Accepted Answer

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Question 15

One benefit of organizing a business as a proprietorship is that the proprietor is not required to pay income tax on the business' earnings.

Accepted Answer

As a proprietorship, the business and the owner are considered the same entity for tax purposes, so the proprietor must report the business' earnings as their personal income and pay income tax on those earnings.

Question 16

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.

Accepted Answer

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Question 17

The three forms of business organizations are sole proprietorships,partnerships,and non-profit organizations.

Accepted Answer

The three main forms of business organizations are sole proprietorships, partnerships, and corporations. Non-profit organizations are a separate category.

Question 18

The accounting equation can be stated as:
A) Assets + Liabilities = Shareholders' equity
B) Assets = Liabilities + Shareholders' equity
C) Assets = Liabilities - Shareholders' equity
D) Assets + Shareholders' equity = Liabilities

Accepted Answer

The accounting equation, also known as the balance sheet equation, is Assets = Liabilities + Shareholders' equity. This means that the total assets of a company are equal to the total of its liabilities and shareholders' equity. By rearranging the equation, we can also calculate any of the three components given the other two, but the standard form of the equation is Assets = Liabilities + Shareholders' equity.

Question 19

Financial accounting information is prepared exclusively for external users.

Accepted Answer

Financial accounting information is prepared for both external users, such as investors and creditors, and internal users, such as management, to make informed business decisions.

Question 20

What are the three forms of business organizations? How do they differ?

Accepted Answer

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Quiz 1: The Financial Statements