Question 1

Accounting information is complete if it includes all information necessary to show the economic reality of the transaction.

Accepted Answer

A) True 
 B)False  True

Question 2

Financial statements are designed to provide information about all of the following EXCEPT

Accepted Answer

A)  the economic resources, obligations, and equity of the entity. 
B)  changes in economic resources, obligations, and equity of the entity. 
C)  management performance evaluations. 
D)  economic performance of the entity. 
A)  the economic resources, obligations, and equity of the entity. 
B)  changes in economic resources, obligations, and equity of the entity. 
C)  management performance evaluations. 
D)  economic performance of the entity. C

Question 3

Canadian accountants rely on ______________ to help them apply the conceptual framework to specific situations.

Accepted Answer

A)  the Canadian Business Corporations Act 
B)  identifiable rules 
C)  the rules of the Income Tax Act 
D)  professional judgment 
A)  the Canadian Business Corporations Act 
B)  identifiable rules 
C)  the rules of the Income Tax Act 
D)  professional judgment D

Question 4

Match between columns
                        Premises: Insurance expense is recorded each month, although the insurance policy covers a full year and is paid annually.
Interest expense is payable semi-annually and is recorded only when paid, with no adjustment at year end even though payment dates do not coincide with year end date.
A patent with an indefinite life has an original cost of $12,500 although the company was recently offered $1,000,000 by another company who wants to buy it.
One third of the company's sales were made to a related party and this fact is disclosed in the financial statements.
When preparing financial statements, the company's policy is to record all correcting entries, whether the correction is for $200,000 or $2.
The company's inventory's cost is $50,000, its retail value is $120,000, and if liquidated could be sold at auction for $30,000. The inventory is reported at $50,000 on the company's balance sheet.
The company accountant recently spent two days calculating the accrued utilities expense on 130 individual apartments for the last few days of the year. In the past, the amounts were estimated.
The company has a large number of accounts receivable which individually have small balances. In order to determine the allowance for doubtful accounts, the company uses an estimate based on past experience rather than taking the time to evaluate the collectability of individual accounts.
The proprietor of an unincorporated business maintains two bank accounts and two sets of accounting records - one for household expenses, and the other for business purposes.
The proprietor's babysitting costs are recorded in the company expense accounts.
The company's sales are made on credit, but to keep accounting costs down, sales are recorded when the customer accounts are paid.
After obtaining an independent appraisal which indicated a significant increase in value over original cost, the company restated its land at the higher amount. The company has not adopted the revaluation model for accounting for long-lived assets.
All assets are restated at their liquidation values.
A company's accountant notices that the petty cash account was not adjusted prior to preparing the year end financial statements and the account balance is incorrect by $13.52. However, the accountant decides to release the financial statements without making the correction.
The company records revenue when services are provided, not when the customers pay for the service.
A former employee has sued the company for a large amount, but no mention is made of this case in the financial statements.

Accepted Answer

The Answer of Full disclosure and Going concern assumption and is...

Question 5

Notes to the financial statements are required because the most important objective of financial reporting is to

Accepted Answer

A)  provide information to the taxing authorities. 
B)  obtain uniformity with foreign countries. 
C)  provide information useful for decision-making. 
D)  provide information about the board of directors. 
A)  provide information to the taxing authorities. 
B)  obtain uniformity with foreign countries. 
C)  provide information useful for decision-making. 
D)  provide information about the board of directors.

Question 6

Not every country uses the same conceptual framework or set of accounting standards.

Accepted Answer

A) True 
 B)False

Question 7

At the time of acquisition, long-lived assets are recorded at

Accepted Answer

A)  amortized cost. 
B)  lower of cost and market. 
C)  at fair market value. 
D)  at cost. 
A)  amortized cost. 
B)  lower of cost and market. 
C)  at fair market value. 
D)  at cost.

Question 8

Under ASPE, the characteristic which ensures that when preparing financial statements, accountants should choose the accounting treatment or estimate that will be least likely to overstate assets, revenues and gains and the least likely to understate liabilities, expenses and losses is

Accepted Answer

A)  conservatism. 
B)  understandability. 
C)  comparability. 
D)  relevance. 
A)  conservatism. 
B)  understandability. 
C)  comparability. 
D)  relevance.

Question 9

The conceptual framework will not be able to guide decisions about what to present in the financial statements.

Accepted Answer

A) True 
 B)False

Question 10

Management bonuses based on profit may encourage management to overstate profits.

Accepted Answer

A) True 
 B)False

Question 11

The main users of financial reporting are the employees of a company.

Accepted Answer

A) True 
 B)False

Question 12

When an asset ceases to have future value it should be expensed.

Accepted Answer

A) True 
 B)False

Question 13

Revenue recognition criteria states that revenue is recognized at the same time that a decrease in an asset is recognized or an increase in a liability is recognized for profit generating activities.

Accepted Answer

A) True 
 B)False

Question 14

When a private company is reporting under ASPE, and under the going concern assumption, the company will be reporting their equipment assets at

Accepted Answer

A)  original cost. 
B)  net realizable value. 
C)  original cost less accumulated depreciation. 
D)  undepreciated capital cost. 
A)  original cost. 
B)  net realizable value. 
C)  original cost less accumulated depreciation. 
D)  undepreciated capital cost.

Question 15

In the following transactions, indicate when revenue should be recognized:
1. In September, Mount Allison University collects tuition revenue for the term from students. The term runs from September through December.
2. Grinstone Island Company sells merchandise with terms of 2/10, n/30, FOB destination.
3. The Ottawa Senators sell season tickets to games in ScotiaBank Place. Fans can purchase the tickets at any time, although the season doesn't officially begin until September. It runs from September through May.
4. Porter Airline sells you a refundable airline ticket in September for your flight home at Christmas.
5. The University Bookstore has the following return policy for textbook sales: "Textbooks (new and used) may be returned for seven calendar days from the start of classes. After that time, textbooks (new and used) may be returned within 48 hours of purchase."
Instructions
Identify when revenue should be recognized in each of the above situations.

Accepted Answer

1. The revenue should be recognized on a

Question 16

The following transactions occurred during 2014:
1. A television set is delivered to the customer in August. Six instalment payments of $200 per month begin the following January. Ignore interest considerations.
2. Goods are sold FOB shipping point. An item with a retail value of $10,000 is loaded onto the truck on May 31, but not unloaded until June 3 because the recipient delayed paying the freight bill until then. The vendor prepares and mails the invoice to the customer on June 10.
3. A computer network system and related cables are delivered to the customer's premises on March 31. Installation is completed by April 30, after which the system is ready for use. The vendor provides monthly support and upgrades for 4 months following the month of installation (through August). The value of the system and cables is $50,000, the value of the installation services is $22,000 and the value of the monthly support totals $6,000.
4. Goods are sold FOB destination. An order with an invoice total of $3,500 is loaded onto the truck January 31 and delivered on February 1.
5. A customer prepays for 10 oil changes for a total of $300. During December, two oil changes are completed for this customer.
Instructions
Identify in which month revenue should be recognized in each situation. If revenue should be recognized in more than one month, calculate the amounts that apply to each relevant month.

Accepted Answer

1. Because the goods have been delivered

Question 17

Match between columns
                        Premises: Neutral
Information that is useful in making resource allocation decisions
Confirmatory value
Faithful representation
Owners' equity
Timeliness
Information that is helpful in assessing management's performance
Full disclosure principle
Expense
Comparability-consistency

Accepted Answer

The Answer of Objective of Financial Reporting and Qualitative Characteristics is...

Question 18

In order for information to be useful in decision making, the information must demonstrate relevance and faithful representation.

Accepted Answer

A) True 
 B)False

Question 19

In order to assess the financial performance of a company, the financial statements must

Accepted Answer

A)  be prepared on a monthly basis. 
B)  provide information on management's use of the company's resources. 
C)  be audited annually. 
D)  provide information concerning changes in the company's share price. 
A)  be prepared on a monthly basis. 
B)  provide information on management's use of the company's resources. 
C)  be audited annually. 
D)  provide information concerning changes in the company's share price.

Question 20

Consistency occurs when companies with similar circumstances use the same accounting principles.

Accepted Answer

A) True 
 B)False

Accounting information is complete if it includes all information necessary to show the economic reality of the transaction.

Financial statements are designed to provide information about all of the following EXCEPT

Canadian accountants rely on ______________ to help them apply the conceptual framework to specific situations.

Notes to the financial statements are required because the most important objective of financial reporting is to

Not every country uses the same conceptual framework or set of accounting standards.

At the time of acquisition, long-lived assets are recorded at

Under ASPE, the characteristic which ensures that when preparing financial statements, accountants should choose the accounting treatment or estimate that will be least likely to overstate assets, revenues and gains and the least likely to understate liabilities, expenses and losses is

The conceptual framework will not be able to guide decisions about what to present in the financial statements.

Management bonuses based on profit may encourage management to overstate profits.

The main users of financial reporting are the employees of a company.

When an asset ceases to have future value it should be expensed.

Revenue recognition criteria states that revenue is recognized at the same time that a decrease in an asset is recognized or an increase in a liability is recognized for profit generating activities.

When a private company is reporting under ASPE, and under the going concern assumption, the company will be reporting their equipment assets at

In order for information to be useful in decision making, the information must demonstrate relevance and faithful representation.

In order to assess the financial performance of a company, the financial statements must

Consistency occurs when companies with similar circumstances use the same accounting principles.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters

Exam 11: Accounting Principles

Accounting information is complete if it includes all information necessary to show the economic reality of the transaction.

Financial statements are designed to provide information about all of the following EXCEPT

Canadian accountants rely on ______________ to help them apply the conceptual framework to specific situations.

Notes to the financial statements are required because the most important objective of financial reporting is to

Not every country uses the same conceptual framework or set of accounting standards.

At the time of acquisition, long-lived assets are recorded at

Under ASPE, the characteristic which ensures that when preparing financial statements, accountants should choose the accounting treatment or estimate that will be least likely to overstate assets, revenues and gains and the least likely to understate liabilities, expenses and losses is

The conceptual framework will not be able to guide decisions about what to present in the financial statements.

Management bonuses based on profit may encourage management to overstate profits.

The main users of financial reporting are the employees of a company.

When an asset ceases to have future value it should be expensed.

Revenue recognition criteria states that revenue is recognized at the same time that a decrease in an asset is recognized or an increase in a liability is recognized for profit generating activities.

When a private company is reporting under ASPE, and under the going concern assumption, the company will be reporting their equipment assets at

In order for information to be useful in decision making, the information must demonstrate relevance and faithful representation.

In order to assess the financial performance of a company, the financial statements must

Consistency occurs when companies with similar circumstances use the same accounting principles.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Long-Lived Assets

Current Liabilities

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters