Question 1

The role of the Accounting Standards Board (AcSB) in the formulation of accounting principles in Canada can be best described as:

Accepted Answer

A)  primary. 
B)  secondary. 
C)  sometimes primary and sometimes secondary. 
D)  non-existent.

Question 2

A company's functional currency is the currency in which it conducts most of its business.

Accepted Answer

A) True 
 B)False

Question 3

The International Accounting Standards Board is responsible for the creation of International Financial Reporting Standards used by companies whose securities are traded on international markets.

Accepted Answer

A) True 
 B)False

Question 4

Private placements refer to:

Accepted Answer

A)  funds not disclosed by private companies. 
B)  debt or equity securities issued to individuals or organizations without being listed with a securities commission. 
C)  shares that form part of a control block. 
D)  indirect negotiation with the one or more creditors.

Question 5

The influence of tax rules when selecting appropriate accounting treatment for a transaction is particularly strong with public companies.

Accepted Answer

A) True 
 B)False

Question 6

Choose the correct statement about audits of corporations:

Accepted Answer

A)  Outside auditors are paid by the government for auditing the financial statements of corporations. 
B)  Revenue Canada performs audits of corporations' financial statements. 
C)  Public corporations (those whose stock are traded on exchanges) are subject to annual audit as to their compliance with GAAP. 
D)  It is the employees of the firm being audited who perform the annual audit of the financial statements of that firm.

Question 7

The conceptual framework of accounting should have many positive effects as new accounting standards are developed. Which of the following is not one of those effects?

Accepted Answer

A)  Financial statements among companies and industries should be more consistent and comparable. 
B)  Standard setting should be more consistent with an overall statement of the objectives and concepts of financial reporting. 
C)  Users' understanding and confidence in financial statements should increase. 
D)  Management should have greater latitude in choosing among accounting alternatives. 
E)  Accountants should be better able to assess the validity of different accounting alternatives for similar and dissimilar transactions and events.

Question 8

Which of the following financial statements are required for companies adhering to IFRS but NOT ASPE (private entity GAAP)?

Accepted Answer

A)  Statement of Comprehensive income. 
B)  Statement of financial position. 
C)  Statement of Cash Flows. 
D)  Statement of Retained Earnings.

Question 9

What is the purpose of financial statements?

Accepted Answer

A)  To disclose the market value of the firm's assets and liabilities. 
B)  To determine compliance with tax laws. 
C)  To identify shareholders. 
D)  To help users make decisions.

Question 10

Due to the excellent work of the ACSB, there are very few choices among alternative accounting policies today.

Accepted Answer

A) True 
 B)False

Question 11

Secondary sources of GAAP should be evaluated on

Accepted Answer

A)  acceptance of the source by industry professionals. 
B)  the specificity of the source only. 
C)  the continued relevance of the source only. 
D)  the specificity of the source & the continued relevance of the source. 
E)  None of these answers are correct.

Question 12

The essential characteristic(s) of accounting is (are):

Accepted Answer

A)  communication of financial information to interested persons. 
B)  communication of financial information about economic entities. 
C)  identification, measurement, and communication of financial information. 
D)  communication of financial information to interested persons, communication of financial information about economic entities, and identification, measurement, and communication of financial information.

Question 13

Creditors and analysts who attempt to assess and predict future cash flows tend to prefer earnings measures that are supported by operating cash flows taken from the Cash Flow Statement. What comparisons do they use in assessing the entity's strength in respect of operating cash flows?

Accepted Answer

The answer of Creditors and analysts who attempt to assess...

Question 14

Which of the following is published by the Accounting Standards Board (AcSB)?

Accepted Answer

A)  Accounting Project Proposals. 
B)  Accounting Exposure Drafts. 
C)  Accounting Issues Papers. 
D)  CPA Handbook Sections and Accounting Guidelines. 
E)  Statements of Auditing Revisions.

Question 15

Private companies in Canada may choose between IFRS or ASPE.

Accepted Answer

A) True 
 B)False

Question 16

Compared to financial accounting, what are the major concerns of managerial accounting?

Accepted Answer

The answer of Compared to financial accounting, what are the...

Question 17

Give examples of provisions, known as maintenance tests or covenants which are often contained in debt contracts or agreements.

Accepted Answer

The answer of Give examples of provisions, known as maintenance...

Question 18

Only publicly traded companies in Canada are required to adopt IFRS.

Accepted Answer

A) True 
 B)False

Question 19

The Accounting Standards Board (ACSB) is an independent group established to promulgate accounting standards for governmental units such as provincial and civic entities.

Accepted Answer

A) True 
 B)False

Question 20

The primary responsibility of an independent auditor who is a professional accountant is to:

Accepted Answer

A)  Prepare or make changes to source documents. 
B)  Assess whether the management is honest. 
C)  Evaluate the "fair presentation" of the company's financial reports. 
D)  Prepare current financial reports for the client.

Exam 1: The Framework for Financial Reporting

The role of the Accounting Standards Board (AcSB) in the formulation of accounting principles in Canada can be best described as:

A company's functional currency is the currency in which it conducts most of its business.

The International Accounting Standards Board is responsible for the creation of International Financial Reporting Standards used by companies whose securities are traded on international markets.

Private placements refer to:

The influence of tax rules when selecting appropriate accounting treatment for a transaction is particularly strong with public companies.

Choose the correct statement about audits of corporations:

The conceptual framework of accounting should have many positive effects as new accounting standards are developed. Which of the following is not one of those effects?

Which of the following financial statements are required for companies adhering to IFRS but NOT ASPE (private entity GAAP) ?

What is the purpose of financial statements?

Due to the excellent work of the ACSB, there are very few choices among alternative accounting policies today.

Secondary sources of GAAP should be evaluated on

The essential characteristic(s) of accounting is (are) :

Creditors and analysts who attempt to assess and predict future cash flows tend to prefer earnings measures that are supported by operating cash flows taken from the Cash Flow Statement. What comparisons do they use in assessing the entity's strength in respect of operating cash flows?

Which of the following is published by the Accounting Standards Board (AcSB) ?

Private companies in Canada may choose between IFRS or ASPE.

Compared to financial accounting, what are the major concerns of managerial accounting?

Give examples of provisions, known as maintenance tests or covenants which are often contained in debt contracts or agreements.

Only publicly traded companies in Canada are required to adopt IFRS.

The Accounting Standards Board (ACSB) is an independent group established to promulgate accounting standards for governmental units such as provincial and civic entities.

The primary responsibility of an independent auditor who is a professional accountant is to: