1. Which of the following defines liabilities?

A. Probable debts or obligations of an entity as a result of future transactions which will be paid with assets or services.

B. Possible debts or obligations of an entity as a result of past transactions which will be paid with assets or services.

C. Probable debts or obligations of an entity as a result of past transactions which will be paid with assets or services.

D. None of the others alternatives are correct

E. Possible debts or obligations of an entity as a result of future transactions which will be paid with assets or services.

2. Choose the phrase that is most correct within the framework of Canadian GAAP:

A. Canadian companies can freely choose under Canadian GAAP which of the two paradigms they adopt

B. The cash paradigm will always yield an identical reported net income to the accrual paradigm

C. the cash paradigm always produces a higher net income than the accrual paradigm

D. the cash paradigm always produces a lower net income than the accrual paradigm

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

3. On September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks. The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation:

September	Description	Amount
29	Received the payment for the birthday party for the 7 years old boy of September 12th	$1000

A. Increase assets and increase Owner's equity

B. Increase and decrease assets

C. None of the others alternatives are correct

D. Increase assets and increase liabilities

E. Decrease assets and decrease liabilities

4. On September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks. The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation:

September	Description	Amount
8	Labour day, no events, no work so Richard goes to the gym and does a double routine (the rest of the days he just does a simple routine of 2.5 hours).

A. Increase assets and increase Owner's equity

B. Increase and decrease assets

C. Increase assets and increase liabilities

D. None of the others alternatives are correct

E. Decrease assets and decrease liabilities

5. The Pay Pac Corporation failed to record the purchase of inventory on account at the end of 20X1. In which of the following ways is the balance sheet misstated?

A. Assets are understated and liabilities are overstated

B. Assets, liabilities, and shareholders' equity are all correctly stated

C. None of the others alternatives are correct

D. Assets and shareholders' equity are both understated

E. Assets and liabilities are both understated

6. Which of the following would not appear on a balance sheet?

A. Bonds payable

B. None of the others alternatives are correct

C. Retained earnings

D. Cost of goods sold

E. Accounts receivable

7. The balance in all assets accounts combined is $100,000 on December 1 During December, the following transactions took place: Purchase of $10,000 of inventory for cash. Purchase of $15,000 of machinery on account. Retirement of $20,000 in bonds with cash. What is the combined December 31 balance in the asset accounts?

A. $80,000

B. None of the others alternatives are correct

C. $95,000

D. $115,000

E. $105,000

8. Better Company has the following information in its records: Cost of Goods Sold = $255,000 Operating Expenses = $144,500 Net Income = $25,500 Sales for the period must have been:

A. $280,500

B. Some other amount

C. $425,000

D. $400,000

E. $399,500

9. The statement which best embodies the concept of "Matching" would be:

A. Getting the costs associated with generating a revenue stream in the same income statement as that revenue stream

B. Matching ensures that each accounting transaction is matched with an underlying accounting principle.

C. Matching ensures that that each balance sheet account is paired with an income statement account

D. None of the others alternatives are correct

E. Ensuring there is a liability to match each asset on the balance sheet

10. On September 1, 2015, Richard started a small business called "Ricky Rock Wrestling for Fun". "Ricky Rock" offers a party package designed for active kids, teen and adults that want to learn and practice wrestling activities for fun by learning how to perform headlocks, leg scissors and other tricks. The following transaction occurred during the first month of operations, please indicate what's the effect on the accounting equation:

September	Description	Amount
2	Purchase in cash costumes of famous wrestlers to wear at parties. The costumes can last 2 years.	$600

A. Increase and decrease assets

B. None of the others alternatives are correct

C. Increase assets and increase Owner's equity

D. Increase assets and increase liabilities

E. Decrease assets and decrease liabilities