Question 1

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with the

Accepted Answer

A)  full disclosure principle. 
B)  periodicity assumption. 
C)  going concern assumption. 
D)  economic entity assumption. 
A)  full disclosure principle. 
B)  periodicity assumption. 
C)  going concern assumption. 
D)  economic entity assumption.

Question 2

Which of the following is NOT a good example of the matching principle?

Accepted Answer

A)  A machine that produces certain goods is depreciated over its useful life. The depreciation expense is matched with the proceeds from the sale of those goods. 
B)  The entire amount of a two-year insurance premium is expensed in the first year. 
C)  An uncollectible receivable is written off in the year that the sale was made. 
D)  Recognition of revenue for which associated expenses cannot yet be determined is delayed until such determination can be made. 
A)  A machine that produces certain goods is depreciated over its useful life. The depreciation expense is matched with the proceeds from the sale of those goods. 
B)  The entire amount of a two-year insurance premium is expensed in the first year. 
C)  An uncollectible receivable is written off in the year that the sale was made. 
D)  Recognition of revenue for which associated expenses cannot yet be determined is delayed until such determination can be made.

Question 3

Under IFRS, equity does NOT include

Accepted Answer

A)  long-term leases. 
B)  common and/or preferred shares. 
C)  accumulated other comprehensive income. 
D)  retained earnings. 
A)  long-term leases. 
B)  common and/or preferred shares. 
C)  accumulated other comprehensive income. 
D)  retained earnings.

Question 4

Levels of the conceptual framework
Provide a brief overview of the levels of a conceptual framework.

Accepted Answer

First Level: The “why” – The conceptual

Question 5

Financial statements prepared under ASPE include a

Accepted Answer

A)  statement of comprehensive income. 
B)  statement of cash flows and a statement of changes in shareholders' equity. 
C)  balance sheet and a statement of retained earnings. 
D)  statement of retained earnings and a statement of comprehensive income. 
A)  statement of comprehensive income. 
B)  statement of cash flows and a statement of changes in shareholders' equity. 
C)  balance sheet and a statement of retained earnings. 
D)  statement of retained earnings and a statement of comprehensive income.

Question 6

Which statement is correct regarding enhancing qualitative characteristics?

Accepted Answer

A)  Full discussion of the information presented is a substitute for comparable information. 
B)  Numbers that are easily verifiable with a reasonable degree of accuracy are called soft numbers. 
C)  Information must be available before it loses its ability to influence users' decisions. 
D)  Financial information must be of sufficient quality and clarity that even uninformed readers can understand it. 
A)  Full discussion of the information presented is a substitute for comparable information. 
B)  Numbers that are easily verifiable with a reasonable degree of accuracy are called soft numbers. 
C)  Information must be available before it loses its ability to influence users' decisions. 
D)  Financial information must be of sufficient quality and clarity that even uninformed readers can understand it.

Question 7

Management Discussion and Analysis (MD&A) does NOT include

Accepted Answer

A)  notes to the financial statements. 
B)  key performance drivers. 
C)  the company's vision and strategy. 
D)  the company's capabilities (capital and other resources). 
A)  notes to the financial statements. 
B)  key performance drivers. 
C)  the company's vision and strategy. 
D)  the company's capabilities (capital and other resources).

Question 8

Accounting information is considered to be relevant when it

Accepted Answer

A)  can be depended on to represent the economic conditions and events that it is intended to represent. 
B)  is capable of making a difference in a decision. 
C)  is understandable by reasonably informed users of accounting information. 
D)  is verifiable and neutral. 
A)  can be depended on to represent the economic conditions and events that it is intended to represent. 
B)  is capable of making a difference in a decision. 
C)  is understandable by reasonably informed users of accounting information. 
D)  is verifiable and neutral.

Question 9

Fundemental characteristics of useful information
What steps should be taken to ensure that both fundamental characteristics of useful information, relevance and representational faithfulness, are present?

Accepted Answer

In order to ensure that both fundamental

Question 10

Comprehensive income
Describe the income concept of comprehensive income and what is included in this notion of income under IFRS? What is included in it under ASPE?

Accepted Answer

Under IFRS, comprehensive income include

Question 11

Fraudulent financial reporting is a business reality. While it cannot be eliminated, the risk of fraudulent reporting can be decreased. Which of the following considerations is least likely to lessen that risk?

Accepted Answer

A)  an independent audit committee 
B)  an internal audit function 
C)  vigilant management 
D)  an increased focus on tying bonuses to short-term company performance 
A)  an independent audit committee 
B)  an internal audit function 
C)  vigilant management 
D)  an increased focus on tying bonuses to short-term company performance

Question 12

Use of an allowance for doubtful accounts is an application of the

Accepted Answer

A)  matching principle. 
B)  revenue recognition principle. 
C)  historical cost principle. 
D)  full disclosure principle. 
A)  matching principle. 
B)  revenue recognition principle. 
C)  historical cost principle. 
D)  full disclosure principle.

Question 13

Principles-based GAAP is sometimes criticized for being

Accepted Answer

A)  too inflexible. 
B)  too flexible. 
C)  too inconsistent. 
D)  too difficult for the reader to understand. 
A)  too inflexible. 
B)  too flexible. 
C)  too inconsistent. 
D)  too difficult for the reader to understand.

Question 14

Forms of business organization
Identify at least two (2) common forms of business organization. For each business structure name an associated pro and con.

Accepted Answer

The answer of Forms of business organization
Identify at least two...

Question 15

The costs of providing useful information do NOT include

Accepted Answer

A)  collecting, processing, and distributing information. 
B)  auditing financial statements. 
C)  disclosure to competitors. 
D)  users' allocation of resources. 
A)  collecting, processing, and distributing information. 
B)  auditing financial statements. 
C)  disclosure to competitors. 
D)  users' allocation of resources.

Question 16

Financial reporting is

Accepted Answer

A)  independent of the environment in which it operates. 
B)  the result of carefully applied professional judgement. 
C)  influenced by the decisions of individuals who act in the interest of stakeholders at the expense of themselves. 
D)  completely free of bias. 
A)  independent of the environment in which it operates. 
B)  the result of carefully applied professional judgement. 
C)  influenced by the decisions of individuals who act in the interest of stakeholders at the expense of themselves. 
D)  completely free of bias.

Question 17

Principles- vs. rules-based GAAP
There has been much discussion about principles-based standards versus rules-based standards. Discuss the advantages and disadvantages of a principles-based approach.

Accepted Answer

Advantages of a principles-based approac

Question 18

Which of the following statements does NOT apply to the historical cost principle?

Accepted Answer

A)  Historical cost represents a value at a point in time. 
B)  The principle does not apply to financial instruments. 
C)  Historical cost results from a reciprocal or two-way exchange. 
D)  Over time, historical cost becomes irrelevant in terms of predictive value. 
A)  Historical cost represents a value at a point in time. 
B)  The principle does not apply to financial instruments. 
C)  Historical cost results from a reciprocal or two-way exchange. 
D)  Over time, historical cost becomes irrelevant in terms of predictive value.

Question 19

Control and the economic entity assumption
Consolidated financial statements are prepared from the perspective of the economic entity. Determination of which business units, or subsidiaries, are to be included in the entity is rooted in the definition of control. Describe how this concept is interpreted under IFRS and ASPE, respectively. Discuss the significance of this difference in interpretation.

Accepted Answer

IFRS 10 notes that the investor has cont

Question 20

Management Discussion and Analysis (MD&A) is

Accepted Answer

A)  notes on meetings between management and auditors. 
B)  an internal document not released to shareholders. 
C)  supplementary information included in the annual report. 
D)  supplementary information included in the notes to the financial statements. 
A)  notes on meetings between management and auditors. 
B)  an internal document not released to shareholders. 
C)  supplementary information included in the annual report. 
D)  supplementary information included in the notes to the financial statements.

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with the

Which of the following is NOT a good example of the matching principle?

Under IFRS, equity does NOT include

Levels of the conceptual framework Provide a brief overview of the levels of a conceptual framework.

Financial statements prepared under ASPE include a

Which statement is correct regarding enhancing qualitative characteristics?

Management Discussion and Analysis (MD&A) does NOT include

Accounting information is considered to be relevant when it

Fundemental characteristics of useful information What steps should be taken to ensure that both fundamental characteristics of useful information, relevance and representational faithfulness, are present?

Comprehensive income Describe the income concept of comprehensive income and what is included in this notion of income under IFRS? What is included in it under ASPE?

Fraudulent financial reporting is a business reality. While it cannot be eliminated, the risk of fraudulent reporting can be decreased. Which of the following considerations is least likely to lessen that risk?

Use of an allowance for doubtful accounts is an application of the

Principles-based GAAP is sometimes criticized for being

Forms of business organization Identify at least two (2) common forms of business organization. For each business structure name an associated pro and con.

The costs of providing useful information do NOT include

Financial reporting is

Principles- vs. rules-based GAAP There has been much discussion about principles-based standards versus rules-based standards. Discuss the advantages and disadvantages of a principles-based approach.

Which of the following statements does NOT apply to the historical cost principle?

Management Discussion and Analysis (MD&A) is

The Canadian Financial Reporting Environment

Measurement

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Inventory

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

Filters

Exam 2: Conceptual Framework Underlying Financial Reporting

During the lifetime of an entity, accountants produce financial statements at arbitrary points in time in accordance with the

Which of the following is NOT a good example of the matching principle?

Under IFRS, equity does NOT include

Levels of the conceptual framework Provide a brief overview of the levels of a conceptual framework.

Financial statements prepared under ASPE include a

Which statement is correct regarding enhancing qualitative characteristics?

Management Discussion and Analysis (MD&A) does NOT include

Accounting information is considered to be relevant when it

Fundemental characteristics of useful information What steps should be taken to ensure that both fundamental characteristics of useful information, relevance and representational faithfulness, are present?

Comprehensive income Describe the income concept of comprehensive income and what is included in this notion of income under IFRS? What is included in it under ASPE?

Fraudulent financial reporting is a business reality. While it cannot be eliminated, the risk of fraudulent reporting can be decreased. Which of the following considerations is least likely to lessen that risk?

Use of an allowance for doubtful accounts is an application of the

Principles-based GAAP is sometimes criticized for being

Forms of business organization Identify at least two (2) common forms of business organization. For each business structure name an associated pro and con.

The costs of providing useful information do NOT include

Financial reporting is

Principles- vs. rules-based GAAP There has been much discussion about principles-based standards versus rules-based standards. Discuss the advantages and disadvantages of a principles-based approach.

Which of the following statements does NOT apply to the historical cost principle?

Management Discussion and Analysis (MD&A) is

The Canadian Financial Reporting Environment

Measurement

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Inventory

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

Filters