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Unformatted text preview: EFA1S08 ©CGA-Canada, 2008 Page 1 of 9 CGA-CANADA FINANCIAL ACCOUNTING FUNDAMENTALS [FA1] EXAMINATION September 2008 Marks Time: 3 Hours Note: Narratives for journal entries are not required. 30 Question 1 Select the best answer for each of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations. Note: 1 1 / 2 marks each a. Which of the following financial statements reports the profitability of a company for a period of time? 1) Income statement 2) Balance sheet 3) Statement of owner’s equity 4) Cash flow statement b. Which of the following represents costs incurred, or assets used up, by a company for generating revenue? 1) Assets 2) Liabilities 3) Revenues 4) Expenses c. What is a key advantage of the corporate form of business organization? 1) Limited life 2) Corporation not taxed 3) Limited liability of shareholders 4) Not a separate legal entity d. Which of the following best describes the effect of recording credit entries? 1) Increases in assets, increases in liabilities, and increases in revenues 2) Decreases in assets, decreases in liabilities, and decreases in revenues 3) Increases in assets, decreases in liabilities, and increases in expenses 4) Decreases in assets, increases in liabilities, and increases in revenues Continued... EFA1S08 ©CGA-Canada, 2008 Page 2 of 9 e. A credit balance is the normal balance for which of the following accounts? 1) Prepaid expense 2) Unearned revenue 3) Amortization expense 4) Buildings f. When a journal entry was posted to record a $6,000 purchase of equipment on account, it was incorrectly recorded as a debit to accounts payable and a credit to equipment. Which of the following statements is true with respect to the effect of this error on the trial balance? 1) The credit side is $6,000 higher than the debit side. 2) Both the debit and credit sides are $6,000 higher than they should be. 3) The debit side is $6,000 higher than the credit side. 4) Both the debit and credit sides are $12,000 lower than they should be. g. If a 15-year bond is issued at a discount, which of the following statements is true? 1) The carrying value of the bond will be greater than its par value. 2) The carrying value of the bond will be less than its par value. 3) The carrying value of the bond will be the same as its par value. 4) The carrying value of the bond will be included in current liabilities. h. If a 10-year bond is issued at a premium, which of the following statements is true with respect to the carrying value of the bond at maturity?...
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