Module 1.12 O&G Accounting

Question 1

Objective 1 Key Terminology: The student will describe key accounting terminology such as assets, liabilities, receivables, payables, depreciation, depletion, owner’s equity, dividends, retained earnings, revenue, expenses, accruals and overheads.

Answer 1

Pg 5

Question 2

Objective 2 Corporate and Operational: The student will describe the corporate and operational accounting activities.

Answer 2

Pg 10

Question 3

Objective 3 Revenue Accounting: The student will describe the activities carried out in revenue accounting and the basic knowledge required to conduct the function.

Answer 3

Pg 11

Question 4

Objective 4 Oil Revenue Accounting: The student will describe the activities carried out in oil revenue accounting and the basic knowledge required to conduct the function.

Answer 4

Pg 12

Question 5

Objective 5 Gas Revenue Accounting: The student will describe the activities carried out in gas revenue accounting and the basic knowledge required to conduct the function.

Answer 5

Pg 15

Question 6

Objective 6 NGL Revenue Accounting: The student will describe the activities carried out in NGL revenue accounting and the basic knowledge required to conduct the function.

Answer 6

Pg 17

Question 7

Objective 7 Condensate Revenue Accounting: The student will describe the activities carried out in condensate revenue accounting and the basic knowledge required to conduct the function.

Answer 7

Pg 18

Question 8

Objective 8 Sulphur Revenue Accounting: The student will describe the activities carried out in sulphur revenue accounting and the basic knowledge required to conduct the function.

Answer 8

Pg 19

Question 9

Objective 9 Joint Venture Agreements: The student will be introduced to Joint Ventures.

Answer 9

Pg 20

Question 10

Objective 10 Joint Venture Accounting: The student will detail the basic functions carried out by the joint venture accountant and the terminology used in the function.

Answer 10

Pg 22

Question 11

Objective 11 Operating Expenses: The student will identify the types of costs that are categorized as operating expenses.

Answer 11

Pg 23

Question 12

Objective 12 Capital Costs: The student will detail types of costs that are categorized as capital costs.

Answer 12

Pg 24

Question 13

Objective 13 Equalization: The student will explain the concept of equalizations and how it is used to allocate operating and capital costs.

Answer 13

Pg 25

Question 14

Objective 14 Well Payouts: The student will explain the concept of well payout and how this concept is applied.

Answer 14

Pg 26

Question 15

Objective 15 Process Fees: The student will explain process fees and how they are applied.

Answer 15

Pg 30

Question 16

Question 1: Sales are
A - an asset account
B - a liability account
C - a revenue account
D - an expense account

Answer 16

C)

Question 17

Question 2: A chart of accounts is
A - a listing of the dollar value in each account
B - a listing of accounts used by a company
C - a statement of the financial status of the company
D - all of the above

Answer 17

B)

Question 18

Question 3: Operational accounting is primarily responsible for
A - the day-to-day activities of the company
B - annual shareholder reporting
C - required reporting to Revenue Canada
D - all of the above

Answer 18

A)

Question 19

Question 4: In calculating the base value of production on oil freehold and overriding royalties, the deductions normally allowed are
A - capital cost allowance
B - processing fees
C - operating expenses
D - trucking costs

Answer 19

D)

Question 20

Question 5: The standard volumetric measurement for natural gas in Canada is
A - barrels
B - cubic meters
C - thousands of cubic meters
D - gigajoules

Answer 20

C)

Question 21

Question 6: In calculating the volume base for gas freehold or overriding royalties
A - the contract typical typically requires that production volumes be used
B - the contract typically requires that processed volumes be used
C - the contract typically doesn’t address this issue
D - the contract typically requires that sales of gathered volumes be used

Answer 21

D)

Question 22

Question 7: Capital cost will generally be shared
A - on a throughput or well count basis
B - as determined by the operator
C - as determined by the joint venture accountant
D - based on the working interest shares

Answer 22

D)

Question 23

Question 8: Well pay-out statement are required
A - if a company elect to participate
B - if a company elect to go penalty
C - for all wells
D - for all joint interest wells

Answer 23

B)

Question 24

What are the major categories for the standardized chart of accounts? A chart of accounts is a list of what major category?

Answer 24

Assets, liabilities, shareholders equity, income and expenses

Question 25

``` Assets accounts are generally listed: A - alphabetical order B - in reducing order of liquidity C - chronologically D - by the book value ```

Answer 25

A)

Question 26

Liabilities accounts are generally listed A - short debt first and long term debt last B - in order of when the liability is/was acquired C - the most liquid to the least liquid debt D - the one with the highest interest rate

Answer 26

A)

Question 27

What is the double entry bookkeeping system?

Answer 27

Double entry bookkeeping means that for every debit there is a corresponding set of credits equal in value.

Question 28

``` The financial statements of a company at the end of an accounting period is derived from A - balance sheet B - income statement C - general ledger D - chart of accounts ```

Answer 28

C)

Question 29

``` What group of reports express the financial condition of the business A - financial statements B - balance sheet C - income statement D - general ledger ```

Answer 29

A)

Question 30

``` What report summarize the operating activity of a business over a period of time? A - revenue report B - expenses report C - income statement D - cost of operation ```

Answer 30

C)

Question 31

``` Which report shows the financial condition of the business over a period of time? A - annual statement B - balance sheet C - income statement D - none of the above ```

Answer 31

D)Remember the balance sheet is for a specific date in time not over a period of time

Question 32

What is the standard balance sheet equation? A - asset - liabilities = retained earnings B - assets - shareholder's equity = liabilities C - retained earnings + liabilities = assets D - assets = liabilities + shareholder's equity

Answer 32

D)

Question 33

``` Activity period is also known as A - exercise time B - production period C - revenue period D - time of operation ```

Answer 33

B)

Question 34

``` One metric ton of sulfur is equal to A - a lot of bricks B - a thousand kilos of feathers C - a thousand metric cube of gas D - a thousand metric cube of oil ```

Answer 34

B)

Question 35

``` What is the principal use of a by-product of sour gas production? A - sulfur B - gas by-product C - fertilizer D - chemicals enhancement ```

Answer 35

C)

Question 36

``` What is another word for sharing in accounting? A - equilibrium B - equalization C - pay back D - unitization ```

Answer 36

B)