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1.

Under IFRS, contingent liabilities should be recorded in the accounts if there is a remote

possibility that the contingency will actually occur.

True

False

2.

The classification of a liability as current or non-current is important because it may affect the

evaluation of a companys liquidity.

True

False

3.

The liability of a shareholder is usually limited to the shareholders investment in the

corporation.

True

False

4.

The sale of shares in a corporation by one shareholder to another affects the total capital of

the corporation..

True

False

5.

Contributed capital is the amount shareholders paid or contributed to the corporation in

exchange for shares of ownership.

True

False

6.

The liability for a cash dividend is recorded on the date of record, because it is on that date

that the shareholders who will receive the dividend are identified.

True

False

7.

Declaration and distribution of a stock dividend does not affect the total amount of

shareholders equity.

True

False

8.

The current ratio should not be interpreted on its own without also looking at the receivables

turnover and inventory turnover ratios.

True

False

9.

The receivables turnover ratio is useful in assessing the profitability of receivables.

True

False

2

School of Business

2016, Southern Alberta Institute of Technology

I

NTRODUCTORY

F

INANCIAL

A

CCOUNTING

I

10.

The price-earnings ratio reflects investors expectations about the future profitability of the

company.

True

Fals