Question 1

If a country uses a disclosed basis of accounting for private companies, which of the following statements is true?

Accepted Answer

A) Private companies can create their own GAAP as long as it is disclosed and the spirit of the country's GAAP standards has been followed. 
B) Private companies can pick and choose which aspects of GAAP to follow. 
C) Private companies must report using fair value. 
D) Private companies must report using both historical and fair value. 
A) Private companies can create their own GAAP as long as it is disclosed and the spirit of the country's GAAP standards has been followed. 
B) Private companies can pick and choose which aspects of GAAP to follow. 
C) Private companies must report using fair value. 
D) Private companies must report using both historical and fair value. B

Question 2

In Canada, who developed the accounting standards for private enterprises?

Accepted Answer

A) International Accounting Standards Board 
B) Accounting Standards Board 
C) Financial Accounting Standards Board 
D) Ontario Securities Commission 
A) International Accounting Standards Board 
B) Accounting Standards Board 
C) Financial Accounting Standards Board 
D) Ontario Securities Commission B

Question 3

France, Germany, Japan, and Canada are four countries that have adopted International Financial Reporting Standards. As a result, auto companies from these nations have similar statements, statement components, disclosures, and measurement methods.
Required:
Discuss the "invisible differences" that may cause statements from these countries to be less comparable, and give examples.

Accepted Answer

"Invisible differences" refers to differences in the economic, political, legal, and environmental systems within each country as well as the way of doing business.
Legal factors: One example of a legal factor is that in some countries, taxable income and accounting net income must be the same. This may motivate management to choose accounting policies that reduce earnings. Another difference in legal factors is that in countries where Islamic principles are followed, interest cannot be charged and therefore investors cannot lend money to companies and can only take an equity stake.
Ways of doing business: In Germany, employees and bankers are both represented on boards of directors. For companies that have high debt balances, this is seen as favourable since the bankers must believe that the company will be profitable and be able to repay these high levels of debt. In contrast, companies with low debt are seen to be unsuccessful, since the bank is unwilling to lend them any money.
In Japan, the corporate structure is very different from that in North America. In Japan, there is no parent company in a conglomerate structure, and instead the holdings in other companies may be no more than 3%. The majority of the shares are held by a group, rather than a single corporation. Consequently, consolidated statements do not show all of the assets and liabilities of the entire group of companies.
Economic and political factors: Inflation rates and foreign exchange rates may vary from country to country. The amount of inflation in a country may influence the amount of monetary assets and liabilities that a company chooses to have.
State control and regulations within a country can also differ. For rate regulated companies, there may be motivation to capitalize as many costs as possible and use more debt to finance operations.

Question 4

When the International Accounting Standards Board amends a standard, what must a code-law country do to adopt the amendment?

Accepted Answer

A) The country's securities regulators must approve the amendment. 
B) The country's professional accounting body must approve the amendment. 
C) The country must pass new legislation to adopt the amendment. 
D) The country's financial institution regulators must approve the amendment. 
A) The country's securities regulators must approve the amendment. 
B) The country's professional accounting body must approve the amendment. 
C) The country must pass new legislation to adopt the amendment. 
D) The country's financial institution regulators must approve the amendment.

Question 5

Management prepares the company's financial statements. Consequently, management's objectives will dominate the selection of accounting policies.
Required:
Give examples of users that might have the power to influence the accounting policy choices made by preparers.

Accepted Answer

The following are examples of users that

Question 6

Private companies have different users and user needs than public companies. As a result, many countries have decided to have a separate set of accounting standards that can be followed by private enterprises.
Required:
Describe the five different possible sets of GAAP that a country might adopt for private companies and briefly explain how each might be implemented. Discuss any advantages or disadvantages for these methods.

Accepted Answer

The five possible sets of GAAP are descr

Question 7

Which of the following is true about Canadian governmental reporting standards?

Accepted Answer

A) PSAB standards are recommendations only. 
B) PSAB standards are rules that must be followed. 
C) PSAB standards must be applied to all provincial public utilities. 
D) PSAB standards were developed by the OSC. 
A) PSAB standards are recommendations only. 
B) PSAB standards are rules that must be followed. 
C) PSAB standards must be applied to all provincial public utilities. 
D) PSAB standards were developed by the OSC.

Question 8

Which of the following statements is true about common-law countries?

Accepted Answer

A) Common-law countries must completely adopt IFRS. 
B) Amendments to IFRS by common-law countries must be done legislatively. 
C) Amendments to IFRS by common-law countries must be done by government regulation. 
D) In common-law countries, the local non-government standard setting authority can decide which international standards to adopt. 
A) Common-law countries must completely adopt IFRS. 
B) Amendments to IFRS by common-law countries must be done legislatively. 
C) Amendments to IFRS by common-law countries must be done by government regulation. 
D) In common-law countries, the local non-government standard setting authority can decide which international standards to adopt.

Question 9

Which of the following private companies is required to use IFRS?

Accepted Answer

A) Investment companies 
B) Import/export companies 
C) Manufacturing companies 
D) Accounting firms 
A) Investment companies 
B) Import/export companies 
C) Manufacturing companies 
D) Accounting firms

Question 10

Which financial reporting approach has Canada decided to take with respect to private enterprises?

Accepted Answer

A) IFRS 
B) Special adaptation of IFRS for small and medium enterprises 
C) Canadian GAAP for private enterprises 
D) Disclosed basis of accounting 
A) IFRS 
B) Special adaptation of IFRS for small and medium enterprises 
C) Canadian GAAP for private enterprises 
D) Disclosed basis of accounting

Question 11

A Hong Kong-based company is listed on the Toronto Stock Exchange, but not on the Hong Kong Stock Exchange. If there are any issues about the company's reporting, the primary enforcement rests ________.

Accepted Answer

A) in Hong Kong 
B) with the OSC 
C) with the SEC 
D) with an international tribunal 
A) in Hong Kong 
B) with the OSC 
C) with the SEC 
D) with an international tribunal

Question 12

What accounting standards are contained in the CICA Handbook, Part III?

Accepted Answer

A) IFRS 
B) ASPE 
C) NFP 
D) Government 
A) IFRS 
B) ASPE 
C) NFP 
D) Government

Question 13

Why has the reputation of U.S. accounting standards decreased in recent years?

Accepted Answer

A) The U.S. deficit is at a record high. 
B) Many U.S. businesses have declared bankruptcy. 
C) There have been some notable American accounting scandals, such as Enron. 
D) Lengthy prison sentences have been given to unethical American executives, such as Bernie Madoff. 
A) The U.S. deficit is at a record high. 
B) Many U.S. businesses have declared bankruptcy. 
C) There have been some notable American accounting scandals, such as Enron. 
D) Lengthy prison sentences have been given to unethical American executives, such as Bernie Madoff.

Question 14

What accounting standards should government NFP organizations follow?

Accepted Answer

A) CICA Handbook, Part III only 
B) CICA Public Sector Accounting Handbook only 
C) Choice of CICA Handbook, Part III or CICA Public Sector Accounting Handbook 
D) Choice of CICA Handbook, Part III; CICA Public Sector Accounting Handbook; or IFRS 
A) CICA Handbook, Part III only 
B) CICA Public Sector Accounting Handbook only 
C) Choice of CICA Handbook, Part III or CICA Public Sector Accounting Handbook 
D) Choice of CICA Handbook, Part III; CICA Public Sector Accounting Handbook; or IFRS

Question 15

What do business enterprises have that NFPs do not have?

Accepted Answer

A) Specified products or services 
B) Identifiable customers or clients 
C) Employees 
D) Boards of directors 
A) Specified products or services 
B) Identifiable customers or clients 
C) Employees 
D) Boards of directors

Question 16

NFP organizations can choose among reporting approaches contained within the framework provided by the CICA Handbook. Which of the following is not a consideration in choosing the approach?

Accepted Answer

A) Nature of the NFP's operations 
B) Sources of the NFP's funding 
C) The NFP's reporting objectives 
D) Whether or not the NFP uses the restricted fund method of accounting 
A) Nature of the NFP's operations 
B) Sources of the NFP's funding 
C) The NFP's reporting objectives 
D) Whether or not the NFP uses the restricted fund method of accounting

Question 17

Countries establish their accounting standards using one of two methods. They can be either code-law countries or common-law countries.
Required:
Explain these two separate methods used to establish reporting standards and why IFRS might not be adopted completely under either method. Provide examples of each type.

Accepted Answer

Code-law countries are countries that es

Question 18

In Germany, what does a company that has no debt indicate?

Accepted Answer

A) It is a superior company with stable earnings. 
B) It is a safer company to invest in than a company with debt. 
C) It is highly supported by financial markets. 
D) The banks do not have any faith in the company. 
A) It is a superior company with stable earnings. 
B) It is a safer company to invest in than a company with debt. 
C) It is highly supported by financial markets. 
D) The banks do not have any faith in the company.

Question 19

Which of the following Canadian accounting standards are not included in the CICA Handbook?

Accepted Answer

A) Publicly accountable enterprises 
B) Private enterprises 
C) Not-for-profit organizations 
D) Government 
A) Publicly accountable enterprises 
B) Private enterprises 
C) Not-for-profit organizations 
D) Government

Question 20

For international standards to be applied effectively, a country does not require ________.

Accepted Answer

A) professional financial preparers 
B) quality auditors 
C) an independent enforcement agency 
D) companies with ethical managers 
A) professional financial preparers 
B) quality auditors 
C) an independent enforcement agency 
D) companies with ethical managers

If a country uses a disclosed basis of accounting for private companies, which of the following statements is true?

In Canada, who developed the accounting standards for private enterprises?

When the International Accounting Standards Board amends a standard, what must a code-law country do to adopt the amendment?

Management prepares the company's financial statements. Consequently, management's objectives will dominate the selection of accounting policies. Required: Give examples of users that might have the power to influence the accounting policy choices made by preparers.

Which of the following is true about Canadian governmental reporting standards?

Which of the following statements is true about common-law countries?

Which of the following private companies is required to use IFRS?

Which financial reporting approach has Canada decided to take with respect to private enterprises?

A Hong Kong-based company is listed on the Toronto Stock Exchange, but not on the Hong Kong Stock Exchange. If there are any issues about the company's reporting, the primary enforcement rests ________.

What accounting standards are contained in the CICA Handbook, Part III?

Why has the reputation of U.S. accounting standards decreased in recent years?

What accounting standards should government NFP organizations follow?

What do business enterprises have that NFPs do not have?

NFP organizations can choose among reporting approaches contained within the framework provided by the CICA Handbook. Which of the following is not a consideration in choosing the approach?

In Germany, what does a company that has no debt indicate?

Which of the following Canadian accounting standards are not included in the CICA Handbook?

For international standards to be applied effectively, a country does not require ________.

Intercorporate Equity Investments: an Introduction

Business Combinations

Appendix A: AIncome Tax Allocation

Wholly Owned Subsidiaries: Reporting Subsequent Acquisitions

Appendix A: Wholly Owned Subsidiaries: Reporting Subsequent Acquisitions

Appendix B: Wholly Owned Subsidiaries: Reporting Subsequent Acquisitions

Consolidation of Non-Wholly Owned Subsidiaries

Appendix A: Step Purchases

Appendix B: Decreases in Ownership Interest

Subsequent-Year Consolidations: General Approach

Appendix A: Preferred and Restricted Shares of Investee Corporation

Appendix B: Intercompany Bond Holdings

Segment and Interim Reporting

Foreign Currency Transactions and Hedges

Reporting Foreign Operations

Financial Reporting for Not-For-Profit Organizations

Appendix A: Fund Accounting

Public Sector Financial Reporting

Filters

Exam 1: Setting the Stage

If a country uses a disclosed basis of accounting for private companies, which of the following statements is true?

In Canada, who developed the accounting standards for private enterprises?

When the International Accounting Standards Board amends a standard, what must a code-law country do to adopt the amendment?

Management prepares the company's financial statements. Consequently, management's objectives will dominate the selection of accounting policies. Required: Give examples of users that might have the power to influence the accounting policy choices made by preparers.

Which of the following is true about Canadian governmental reporting standards?

Which of the following statements is true about common-law countries?

Which of the following private companies is required to use IFRS?

Which financial reporting approach has Canada decided to take with respect to private enterprises?

A Hong Kong-based company is listed on the Toronto Stock Exchange, but not on the Hong Kong Stock Exchange. If there are any issues about the company's reporting, the primary enforcement rests ________.

What accounting standards are contained in the CICA Handbook, Part III?

Why has the reputation of U.S. accounting standards decreased in recent years?

What accounting standards should government NFP organizations follow?

What do business enterprises have that NFPs do not have?

NFP organizations can choose among reporting approaches contained within the framework provided by the CICA Handbook. Which of the following is not a consideration in choosing the approach?

In Germany, what does a company that has no debt indicate?

Which of the following Canadian accounting standards are not included in the CICA Handbook?

For international standards to be applied effectively, a country does not require ________.

Intercorporate Equity Investments: an Introduction

Business Combinations

Appendix A: AIncome Tax Allocation

Wholly Owned Subsidiaries: Reporting Subsequent Acquisitions

Appendix A: Wholly Owned Subsidiaries: Reporting Subsequent Acquisitions

Appendix B: Wholly Owned Subsidiaries: Reporting Subsequent Acquisitions

Consolidation of Non-Wholly Owned Subsidiaries

Appendix A: Step Purchases

Appendix B: Decreases in Ownership Interest

Subsequent-Year Consolidations: General Approach

Appendix A: Preferred and Restricted Shares of Investee Corporation

Appendix B: Intercompany Bond Holdings

Segment and Interim Reporting

Foreign Currency Transactions and Hedges

Reporting Foreign Operations

Financial Reporting for Not-For-Profit Organizations

Appendix A: Fund Accounting

Public Sector Financial Reporting

Filters