Question 1

Starting in 2011, what is the definition of a private enterprise (PE) under Canadian GAAP?

Accepted Answer

A)  A corporation that has no public shareholders. 
B)  A corporation that has less than 500 shareholders and is not listed on a stock exchange. 
C)  A corporation which is not profit oriented. 
D) A profit oriented enterprise that has none of its issued and outstanding financial instruments traded in a public market and does not hold assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses. 
A)  A corporation that has no public shareholders. 
B)  A corporation that has less than 500 shareholders and is not listed on a stock exchange. 
C)  A corporation which is not profit oriented. 
D) A profit oriented enterprise that has none of its issued and outstanding financial instruments traded in a public market and does not hold assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses. D

Question 2

Which of the following is NOT a reason why a Canadian private company would elect to report under IFRS?

Accepted Answer

A)  The company is planning to go public in the near future. 
B)  The company seeks comparability with public companies of a similar size. 
C)  It is likely to be less expensive than reporting under ASPE. 
D) The company is a subsidiary of a Canadian public company. 
A)  The company is planning to go public in the near future. 
B)  The company seeks comparability with public companies of a similar size. 
C)  It is likely to be less expensive than reporting under ASPE. 
D) The company is a subsidiary of a Canadian public company. C

Question 3

The CPA Canada Handbook -- Accounting is the handbook of Canadian accounting standards. Why do companies in Canada ensure that their financial reporting is consistent with Canadian GAAP?

Accepted Answer

A)  Their bank requires them to do so. 
B)  Their auditors require them to do so. 
C)  Reporting under the CPA Canada Handbook - Accounting is required by public companies' boards of directors. 
D) Compliance with the CPA Canada Handbook - Accounting pronouncements is usually required by many legal statutes. 
A)  Their bank requires them to do so. 
B)  Their auditors require them to do so. 
C)  Reporting under the CPA Canada Handbook - Accounting is required by public companies' boards of directors. 
D) Compliance with the CPA Canada Handbook - Accounting pronouncements is usually required by many legal statutes. D

Question 4

Which of the following would NOT be a reason to obtain a greater understanding of accounting practices in other nations?

Accepted Answer

A)  Financial results are disclosed in different currencies. 
B)  One needs to be aware of differing disclosure requirements from nation to nation, as this impacts the preparation of financial statements. 
C)  Income-smoothing may have affected a foreign subsidiary's results; such smoothing practices are not permitted in North America. 
D) Departures from the historical cost principle may be possible in other nations. 
A)  Financial results are disclosed in different currencies. 
B)  One needs to be aware of differing disclosure requirements from nation to nation, as this impacts the preparation of financial statements. 
C)  Income-smoothing may have affected a foreign subsidiary's results; such smoothing practices are not permitted in North America. 
D) Departures from the historical cost principle may be possible in other nations.

Question 5

List some of the key differences between IFRS and ASPE.

Accepted Answer

Some key differences between IFRS and AS

Question 6

What choice(s) do private enterprises have in their financial reporting in Canada?

Accepted Answer

A)  They have no choice at all; they will need to report under IFRS. 
B)  They may elect to continue with differential reporting. 
C)  They may adopt accounting principles that are appropriate to the circumstances. 
D) They may elect to report under either IFRS or ASPE. 
A)  They have no choice at all; they will need to report under IFRS. 
B)  They may elect to continue with differential reporting. 
C)  They may adopt accounting principles that are appropriate to the circumstances. 
D) They may elect to report under either IFRS or ASPE.

Question 7

What disclosure requirements must be met when a Canadian company adopts IFRS for the first time?

Accepted Answer

1. The company must reconcile its equity

Question 8

X Inc. and Y Inc. are virtually identical companies with identical cost structures and very similar business practices operating in the same lines of business. X Inc. is a public company based in Canada and follows IFRS while Y Inc. is a private enterprise based in Canada and follows ASPE. The following were the condensed income statements for both companies for the last year before both adopted IFRS.
Required:
Given the information provided, what are some possible causes for the differing results of these companies?
 $$\begin{array} { | l | l | l | } 
\hline &\text {X Inc: } & \text { Y Inc. } \
\hline \text { Sales: } & \$ 1,000,000 & \$ 2,000,000 \
\hline \text { Less: } & & \
\hline \text { Cost of Goods Sold } & \$ 500,000 & \$ 1,600,000 \
\hline \text { Gross Margin } & \$ 500,000 & \$ 400,000 \
\hline \text { Administrative Expenses } & \$ 200,000 & \$ 300,000 \
\hline & & \
\hline \text { Net Income: } & \$ 300,000 & \$ 100,000 \
\hline
\end{array}$$ T

Accepted Answer

here could be many possible explanations

Question 9

Which enterprises must report under IFRS in Canada?

Accepted Answer

A)  All corporations, government agencies and private companies. 
B)  Public companies and private companies whose shareholders' equity is in excess of $500,000,000 at any particular year end. 
C)  Public companies, private companies and not-for-profit organizations. 
D) Publicly accountable enterprises. 
A)  All corporations, government agencies and private companies. 
B)  Public companies and private companies whose shareholders' equity is in excess of $500,000,000 at any particular year end. 
C)  Public companies, private companies and not-for-profit organizations. 
D) Publicly accountable enterprises.

Question 10

The current ratio measures:

Accepted Answer

A)  liquidity. 
B)  solvency. 
C)  profitability of assets. 
D) profitability of owners' investment. 
A)  liquidity. 
B)  solvency. 
C)  profitability of assets. 
D) profitability of owners' investment.

Question 11

What approach did Canada first decide to take with respect to convergence with IFRS?

Accepted Answer

A)  Harmonization of CPA Canada Handbook with IFRS. 
B)  Substituting IFRS for Canadian GAAP when approved by the IASB. 
C)  Adopting some but not necessarily all IFRSs by reviewing them on a case by case basis. 
D) Reviewing them with all publically accountable entities to see which ones would be acceptable. 
A)  Harmonization of CPA Canada Handbook with IFRS. 
B)  Substituting IFRS for Canadian GAAP when approved by the IASB. 
C)  Adopting some but not necessarily all IFRSs by reviewing them on a case by case basis. 
D) Reviewing them with all publically accountable entities to see which ones would be acceptable.

Question 12

Briefly discuss the anticipated changes to accounting standards in Canada over the next few years.

Accepted Answer

1. The format and structure of financial

Question 13

For which of the following types of organizations does the CPA Canada Handbook not provide specific accounting standards?

Accepted Answer

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

Question 14

Which decision has Canada made with respect to financial reporting for private enterprises?

Accepted Answer

A)  To adopt the IFRS standards for small and medium-sized enterprises. 
B)  To retain the current standards. 
C)  To look to US GAAP for standards. 
D) To develop and maintain its own standards for private enterprises. 
A)  To adopt the IFRS standards for small and medium-sized enterprises. 
B)  To retain the current standards. 
C)  To look to US GAAP for standards. 
D) To develop and maintain its own standards for private enterprises.

Question 15

Which of the following would be most affected by financial statements being prepared under different accounting principles?

Accepted Answer

A)  Reduced comparability. 
B)  Reduced reliability. 
C)  Increased complexity. 
D) Inaccurate asset valuations. 
A)  Reduced comparability. 
B)  Reduced reliability. 
C)  Increased complexity. 
D) Inaccurate asset valuations.

Question 16

The formula for the current ratio is:

Accepted Answer

A)  current assets - current liabilities 
B)  current assets / current liabilities 
C)  total debt / shareholders' equity 
D) net income / shareholders' equity 
A)  current assets - current liabilities 
B)  current assets / current liabilities 
C)  total debt / shareholders' equity 
D) net income / shareholders' equity

Question 17

One of the underlying assumptions of the Historical Cost Principle is that a stable unit of measure (currency) should be used for Financial Reporting. Is this always the case?

Accepted Answer

The Historical Cost Principle is not ver

Question 18

The debt-to-equity ratio measures:

Accepted Answer

A)  liquidity. 
B)  solvency. 
C)  profitability of assets. 
D) profitability of owners' investment. 
A)  liquidity. 
B)  solvency. 
C)  profitability of assets. 
D) profitability of owners' investment.

Starting in 2011, what is the definition of a private enterprise (PE) under Canadian GAAP?

Which of the following is NOT a reason why a Canadian private company would elect to report under IFRS?

The CPA Canada Handbook -- Accounting is the handbook of Canadian accounting standards. Why do companies in Canada ensure that their financial reporting is consistent with Canadian GAAP?

Which of the following would NOT be a reason to obtain a greater understanding of accounting practices in other nations?

List some of the key differences between IFRS and ASPE.

What choice(s) do private enterprises have in their financial reporting in Canada?

What disclosure requirements must be met when a Canadian company adopts IFRS for the first time?

Which enterprises must report under IFRS in Canada?

The current ratio measures:

What approach did Canada first decide to take with respect to convergence with IFRS?

Briefly discuss the anticipated changes to accounting standards in Canada over the next few years.

For which of the following types of organizations does the CPA Canada Handbook not provide specific accounting standards?

Which decision has Canada made with respect to financial reporting for private enterprises?

Which of the following would be most affected by financial statements being prepared under different accounting principles?

The formula for the current ratio is:

One of the underlying assumptions of the Historical Cost Principle is that a stable unit of measure (currency) should be used for Financial Reporting. Is this always the case?

The debt-to-equity ratio measures:

Investments in Equity Securities

Business Combinations

Consolidation of Non-Wholly Owned Subsidiaries

Consolidation Subsequent to Acquisition Date

Intercompany Inventory and Land Profits

A Intercompany Profits in Depreciable Assets B Intercompany Bondholdings

Consolidated Cash Flows and Changes in Ownership

Other Consolidation Reporting Issues

Foreign Currency Transactions

Translation and Consolidation of Foreign Operations

Accounting for Not-For-Profit and Public Sector Organizations

Filters

Exam 1: Conceptual and Case Analysis Frameworks for Financial Reporting

Starting in 2011, what is the definition of a private enterprise (PE) under Canadian GAAP?

Which of the following is NOT a reason why a Canadian private company would elect to report under IFRS?

The CPA Canada Handbook -- Accounting is the handbook of Canadian accounting standards. Why do companies in Canada ensure that their financial reporting is consistent with Canadian GAAP?

Which of the following would NOT be a reason to obtain a greater understanding of accounting practices in other nations?

List some of the key differences between IFRS and ASPE.

What choice(s) do private enterprises have in their financial reporting in Canada?

What disclosure requirements must be met when a Canadian company adopts IFRS for the first time?

Which enterprises must report under IFRS in Canada?

The current ratio measures:

What approach did Canada first decide to take with respect to convergence with IFRS?

Briefly discuss the anticipated changes to accounting standards in Canada over the next few years.

For which of the following types of organizations does the CPA Canada Handbook not provide specific accounting standards?

Which decision has Canada made with respect to financial reporting for private enterprises?

Which of the following would be most affected by financial statements being prepared under different accounting principles?

The formula for the current ratio is:

One of the underlying assumptions of the Historical Cost Principle is that a stable unit of measure (currency) should be used for Financial Reporting. Is this always the case?

The debt-to-equity ratio measures:

Investments in Equity Securities

Business Combinations

Consolidation of Non-Wholly Owned Subsidiaries

Consolidation Subsequent to Acquisition Date

Intercompany Inventory and Land Profits

A Intercompany Profits in Depreciable Assets B Intercompany Bondholdings

Consolidated Cash Flows and Changes in Ownership

Other Consolidation Reporting Issues

Foreign Currency Transactions

Translation and Consolidation of Foreign Operations

Accounting for Not-For-Profit and Public Sector Organizations

Filters