Question 1

If cash flow prediction is a company's primary reporting objective, this would likely result in:

Accepted Answer

A)  Higher earnings. 
B)  Lower earnings. 
C)  Poor matching. 
D)  Fewer accruals and deferrals. 
A)  Higher earnings. 
B)  Lower earnings. 
C)  Poor matching. 
D)  Fewer accruals and deferrals.

Question 2

The various provincial securities commissions do not exert influence on the development of accounting standards.

Accepted Answer

A) True 
 B)False

Question 3

In Canada, income for tax and accounting purposes may be different.

Accepted Answer

A) True 
 B)False

Question 4

Earnings quality is said to be high when most of a company's earnings are the result of its continuing operations.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements regarding cash flows is not accurate?

Accepted Answer

A)  Before the present cash flow statement standard became effective, companies had a choice of whether to report cash flow from operating activities or working capital from operating activities. 
B)  Studies have shown that a cash flows report is more relevant to investor decisions than a working capital report. 
C)  The reported cash flow from operating activities has been found useful in evaluating a firm's ability to make interest payments and repay debt. 
D)  Information about past cash flows is useful in predicting an entity's future cash flows. 
E)  Information about the balances of current liabilities, long-term debt and stockholders' equity can be found in the statement of cash flows. 
A)  Before the present cash flow statement standard became effective, companies had a choice of whether to report cash flow from operating activities or working capital from operating activities. 
B)  Studies have shown that a cash flows report is more relevant to investor decisions than a working capital report. 
C)  The reported cash flow from operating activities has been found useful in evaluating a firm's ability to make interest payments and repay debt. 
D)  Information about past cash flows is useful in predicting an entity's future cash flows. 
E)  Information about the balances of current liabilities, long-term debt and stockholders' equity can be found in the statement of cash flows.

Question 6

Which of the following areas within the accounting field has as its main purpose serving the information needs of parties outside the reporting firm?

Accepted Answer

A)  Financial accounting. 
B)  Tax accounting. 
C)  Managerial accounting. 
D)  Auditing. 
A)  Financial accounting. 
B)  Tax accounting. 
C)  Managerial accounting. 
D)  Auditing.

Question 7

Canadian companies must always present their financial results in Canadian dollars.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statement(s) is(are) correct?

Accepted Answer

A)  Companies that use the disclosed basis of accounting are in effect using differential reporting. 
B)  Companies that use the disclosed basis of accounting are NOT allowed to use differential reporting. 
C)  When used, the disclosed basis of accounting must comply with GAAP. 
D)  Both "companies that use the disclosed basis of accounting are NOT allowed to use differential reporting" and "when used, the disclosed basis of accounting must comply with GAAP" are correct. 
A)  Companies that use the disclosed basis of accounting are in effect using differential reporting. 
B)  Companies that use the disclosed basis of accounting are NOT allowed to use differential reporting. 
C)  When used, the disclosed basis of accounting must comply with GAAP. 
D)  Both "companies that use the disclosed basis of accounting are NOT allowed to use differential reporting" and "when used, the disclosed basis of accounting must comply with GAAP" are correct.

Question 9

Instead of maximizing reported earnings, management may wish to minimize reported earnings an ongoing endeavour. Besides income tax minimization, what are some of the reasons why management would want to minimize earnings?

Accepted Answer

a) to avoid public embarrassment by redu

Question 10

Lenders and creditors are most concerned with a company's

Accepted Answer

A)  profitability. 
B)  adherence to covenants. 
C)  solvency. 
D)  cash flows. 
A)  profitability. 
B)  adherence to covenants. 
C)  solvency. 
D)  cash flows.

Question 11

What is GAAP, how is it currently defined, and what is the outcome of the due process?

Accepted Answer

GAAP is the set of rules, procedures, po

Question 12

Which of the following are major factors in the rapidly changing financial reporting environment in Canada?

Accepted Answer

A)  Increased demand for accountants and the impact of technology. 
B)  Globalization and the use of computer networks. 
C)  The growing number of institutional investors and the knowledge based economy. 
D)  Financial forecasting and planning for business. 
A)  Increased demand for accountants and the impact of technology. 
B)  Globalization and the use of computer networks. 
C)  The growing number of institutional investors and the knowledge based economy. 
D)  Financial forecasting and planning for business.

Question 13

Briefly explain how the CRA (Revenue Canada) differs from most GAAP based policies in terms of revenue recognition

Accepted Answer

Most GAAP-based policies recognize reven

Question 14

Professional accountants need a wide range of knowledge and skills. Which of the following is not an example of such knowledge or skills?

Accepted Answer

A)  An ability to calculate and analyze data, and a facility with numbers. 
B)  Knowledge of many disciplines such as finance, economics, management, marketing and statistics. 
C)  An ability to communicate in a concise and understandable manner. 
D)  Skills derived from prior management experience. 
A)  An ability to calculate and analyze data, and a facility with numbers. 
B)  Knowledge of many disciplines such as finance, economics, management, marketing and statistics. 
C)  An ability to communicate in a concise and understandable manner. 
D)  Skills derived from prior management experience.

Question 15

The disclosed basis of accounting refers to

Accepted Answer

A)  the use of non-GAAP policies by private companies. 
B)  the use of non-GAAP policies by any company. 
C)  the use of International Financial Reporting Standards. 
D)  the practice of disclosing all pertinent accounting policies in a company's annual report. 
A)  the use of non-GAAP policies by private companies. 
B)  the use of non-GAAP policies by any company. 
C)  the use of International Financial Reporting Standards. 
D)  the practice of disclosing all pertinent accounting policies in a company's annual report.

Question 16

In Canada, almost all equity financing for both public and private companies is done through private placements.

Accepted Answer

A) True 
 B)False

Question 17

The Federal Accounting Standards Board (FASB) is a branch of the CPA Order.

Accepted Answer

A) True 
 B)False

Question 18

The organization created to develop accounting standards in Canada, the AcSB, is NOT concerned about:

Accepted Answer

A)  reported cash flows. 
B)  reported earnings. 
C)  reported comparability of results. 
D)  reporting financial position. 
E)  All of these answers are correct. 
A)  reported cash flows. 
B)  reported earnings. 
C)  reported comparability of results. 
D)  reporting financial position. 
E)  All of these answers are correct.

Question 19

Users of financial statements can generally be broken down into which of the following two categories:

Accepted Answer

A)  Government and external users. 
B)  Government and investors. 
C)  Creditors and Investors. 
D)  External users and preparers. 
A)  Government and external users. 
B)  Government and investors. 
C)  Creditors and Investors. 
D)  External users and preparers.

Question 20

It is acceptable for publicly traded Canadian companies to report under US GAAP.

Accepted Answer

A) True 
 B)False

If cash flow prediction is a company's primary reporting objective, this would likely result in:

The various provincial securities commissions do not exert influence on the development of accounting standards.

In Canada, income for tax and accounting purposes may be different.

Earnings quality is said to be high when most of a company's earnings are the result of its continuing operations.

Which of the following statements regarding cash flows is not accurate?

Which of the following areas within the accounting field has as its main purpose serving the information needs of parties outside the reporting firm?

Canadian companies must always present their financial results in Canadian dollars.

Which of the following statement(s) is(are) correct?

Instead of maximizing reported earnings, management may wish to minimize reported earnings an ongoing endeavour. Besides income tax minimization, what are some of the reasons why management would want to minimize earnings?

Lenders and creditors are most concerned with a company's

What is GAAP, how is it currently defined, and what is the outcome of the due process?

Which of the following are major factors in the rapidly changing financial reporting environment in Canada?

Briefly explain how the CRA (Revenue Canada) differs from most GAAP based policies in terms of revenue recognition

Professional accountants need a wide range of knowledge and skills. Which of the following is not an example of such knowledge or skills?

The disclosed basis of accounting refers to

In Canada, almost all equity financing for both public and private companies is done through private placements.

The Federal Accounting Standards Board (FASB) is a branch of the CPA Order.

The organization created to develop accounting standards in Canada, the AcSB, is NOT concerned about:

Users of financial statements can generally be broken down into which of the following two categories:

It is acceptable for publicly traded Canadian companies to report under US GAAP.

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters

Exam 1: The Framework for Financial Reporting

If cash flow prediction is a company's primary reporting objective, this would likely result in:

The various provincial securities commissions do not exert influence on the development of accounting standards.

In Canada, income for tax and accounting purposes may be different.

Earnings quality is said to be high when most of a company's earnings are the result of its continuing operations.

Which of the following statements regarding cash flows is not accurate?

Which of the following areas within the accounting field has as its main purpose serving the information needs of parties outside the reporting firm?

Canadian companies must always present their financial results in Canadian dollars.

Which of the following statement(s) is(are) correct?

Instead of maximizing reported earnings, management may wish to minimize reported earnings an ongoing endeavour. Besides income tax minimization, what are some of the reasons why management would want to minimize earnings?

Lenders and creditors are most concerned with a company's

What is GAAP, how is it currently defined, and what is the outcome of the due process?

Which of the following are major factors in the rapidly changing financial reporting environment in Canada?

Briefly explain how the CRA (Revenue Canada) differs from most GAAP based policies in terms of revenue recognition

Professional accountants need a wide range of knowledge and skills. Which of the following is not an example of such knowledge or skills?

The disclosed basis of accounting refers to

In Canada, almost all equity financing for both public and private companies is done through private placements.

The Federal Accounting Standards Board (FASB) is a branch of the CPA Order.

The organization created to develop accounting standards in Canada, the AcSB, is NOT concerned about:

Users of financial statements can generally be broken down into which of the following two categories:

It is acceptable for publicly traded Canadian companies to report under US GAAP.

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Revenue Recognition

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Long-Lived Assets

Depreciation, Amortization, and Impairment

Financial Instruments: Investments in Bonds and Equity Securities

Filters