Question 1

The underlying concept that the value of accounting information must exceed the expenditures incurred to provide it is called the:

Accepted Answer

A) substance over form. 
B) cost/benefit implementation constraint. 
C) conservatism. 
D) full-disclosure principle. 
A) substance over form. 
B) cost/benefit implementation constraint. 
C) conservatism. 
D) full-disclosure principle.

Question 2

Increases in equity (net assets) from peripheral or incidental transactions of an entity are called:

Accepted Answer

A) revenues. 
B) gains. 
C) net income. 
D) economic benefits. 
A) revenues. 
B) gains. 
C) net income. 
D) economic benefits.

Question 3

To Recording periodic depreciation on assets such as buildings or machinery is an application of the matching principle.

Accepted Answer

A) True 
 B)False

Question 4

Under IFRS,a change in accounting policy must result in information that is more reliable and relevant.

Accepted Answer

A) True 
 B)False

Question 5

Accrual accounting is essentially an application of:

Accepted Answer

A) the conservatism principle. 
B) the historical cost principle. 
C) the materiality constraint. 
D) the matching principle. 
A) the conservatism principle. 
B) the historical cost principle. 
C) the materiality constraint. 
D) the matching principle.

Question 6

A mining company with global operations sets up a mining operation in Northern Quebec.Five years later,the mine is completely depleted and the area abandoned.The company has an excellent track record,both with respect to its corporate citizenship and environmental responsibility,having always restored all mining sites to their original state,regardless of any contractual obligations.
However,the company did not restore the land on its Northern Quebec mining site,citing recent cash flow issues and the absence of any written agreement to do so with the Quebec government.
The Quebec government then decides to sue the company,for damages to its land.
Do you think the Quebec government has a strong case here? Why or why not?

Accepted Answer

While there is no legal obligation for t

Question 7

An accounting error may be all of the following except:

Accepted Answer

A) A mistake. 
B) An inaccurate estimate made in good faith. 
C) intentional. 
D) unintentional. 
A) A mistake. 
B) An inaccurate estimate made in good faith. 
C) intentional. 
D) unintentional.

Question 8

No revenue whatsoever from the performance of a service can be recognized until all of the service has been performed.

Accepted Answer

A) True 
 B)False

Question 9

The primary qualitative criteria of accounting information include which of the following:

Accepted Answer

A) Comparability (including consistency). 
B) Understandability. 
C) Relevance. 
D) Materiality. 
A) Comparability (including consistency). 
B) Understandability. 
C) Relevance. 
D) Materiality.

Question 10

Neutrality is an ingredient of the qualitative criteria of $$\begin{array} { | l | l | l | } 
\hline & \text { Relevance } & \text { Reliability } \
\hline 1 & \text { Yes } & \text { Yes } \
\hline 2 & \text { No } & \text { Yes } \
\hline 3 & \text { Yes } & \text { No } \
\hline 4 & \text { No } & \text { No } \
\hline
\end{array}$$

Accepted Answer

A) Choice 1 
B) Choice 2 
C) Choice 3 
D) Choice 4 
A) Choice 1 
B) Choice 2 
C) Choice 3 
D) Choice 4

Question 11

A firm's accounting policy is to immediately expense the cost of metal wastebaskets it purchases for use by its employees at their desks.The total cost of wastebaskets in any year is $1,000 and the firm has $6 billion in total assets.The firm expects the wastebaskets to last indefinitely.The firm

Accepted Answer

A) Is violating GAAP 
B) Is invoking the materiality constraint 
C) Is invoking the conservatism constraint 
D) Is violating the relevance principle 
E) None of these answers are correct. 
A) Is violating GAAP 
B) Is invoking the materiality constraint 
C) Is invoking the conservatism constraint 
D) Is violating the relevance principle 
E) None of these answers are correct.

Question 12

The cost-benefit trade-off is a persuasive constraint under both IFRS and ASPE.

Accepted Answer

A) True 
 B)False

Question 13

Interperiod comparability is significantly enhanced when two similar companies use the same accounting methods during a single reporting period.

Accepted Answer

A) True 
 B)False

Question 14

If accounting information is timely and has predictive and feedback value,then it can be characterized as:

Accepted Answer

A) Verifiable. 
B) Qualitative. 
C) Reliable. 
D) Relevant. 
A) Verifiable. 
B) Qualitative. 
C) Reliable. 
D) Relevant.

Question 15

Relevance and representation faithfulness are the fundamental qualities under IFRS.

Accepted Answer

A) True 
 B)False

Question 16

Warranty expense on goods sold should be recognized in the period of the sale,even though the costs to fulfill warranty claims will not be incurred until two or three years later.

Accepted Answer

A) True 
 B)False

Question 17

Verifiability focuses on the correct application of a basis of measurement rather than its appropriateness.

Accepted Answer

A) True 
 B)False

Question 18

The assumption that dollars will buy the same quantity of goods and services today as they would have five years ago is the:

Accepted Answer

A) revenue recognition principle. 
B) time period assumption. 
C) separate entity assumption. 
D) unit-of-measure assumption. 
E) continuity assumption. 
A) revenue recognition principle. 
B) time period assumption. 
C) separate entity assumption. 
D) unit-of-measure assumption. 
E) continuity assumption.

Question 19

The going concern principal does not apply if a company is expected to be liquidated in the next 24 months.

Accepted Answer

A) True 
 B)False

Question 20

State the accounting assumption,principle,information characteristic or constraint that is most applicable:
1.An officer of Nanuck Inc.purchased a new home computer for personal use with company money,charging miscellaneous expense.
________________________________
2.A machine,which cost $60,000,is reported at its current market value of $90,000.
________________________________
3.Nanuck Inc.decides to establish a large loss and related liability this year because of the possibility that it may lose a pending patent infringement lawsuit.The possibility of loss is considered remote by its lawyers.
________________________________
4.Because the company's income is low this year,a switch from accelerated depreciation to straight-line depreciation is made this year.________________________________
5.The president of Nanuck Inc.believes it is foolish to report financial information on a yearly basis.Instead,the president believes that financial information should be disclosed only when significant new information is available related to the company's operations.__________________________________

Accepted Answer

1.Separate entity.
2

The underlying concept that the value of accounting information must exceed the expenditures incurred to provide it is called the:

Increases in equity (net assets) from peripheral or incidental transactions of an entity are called:

To Recording periodic depreciation on assets such as buildings or machinery is an application of the matching principle.

Under IFRS,a change in accounting policy must result in information that is more reliable and relevant.

Accrual accounting is essentially an application of:

An accounting error may be all of the following except:

No revenue whatsoever from the performance of a service can be recognized until all of the service has been performed.

The primary qualitative criteria of accounting information include which of the following:

Neutrality is an ingredient of the qualitative criteria of Relevance Reliability 1 Yes Yes 2 No Yes 3 Yes No 4 No No

A firm's accounting policy is to immediately expense the cost of metal wastebaskets it purchases for use by its employees at their desks.The total cost of wastebaskets in any year is $1,000 and the firm has $6 billion in total assets.The firm expects the wastebaskets to last indefinitely.The firm

The cost-benefit trade-off is a persuasive constraint under both IFRS and ASPE.

Interperiod comparability is significantly enhanced when two similar companies use the same accounting methods during a single reporting period.

If accounting information is timely and has predictive and feedback value,then it can be characterized as:

Relevance and representation faithfulness are the fundamental qualities under IFRS.

Warranty expense on goods sold should be recognized in the period of the sale,even though the costs to fulfill warranty claims will not be incurred until two or three years later.

Verifiability focuses on the correct application of a basis of measurement rather than its appropriateness.

The assumption that dollars will buy the same quantity of goods and services today as they would have five years ago is the:

The going concern principal does not apply if a company is expected to be liquidated in the next 24 months.

The Framework for Financial Reporting

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Property,Plant,and Equipment; Intangibles; and Goodwill

Depreciation,Amortization,and Impairment

Financial Instruments: Investments in Debt and Equity Securities

Filters

Exam 2: Accounting Judgements

The underlying concept that the value of accounting information must exceed the expenditures incurred to provide it is called the:

Increases in equity (net assets) from peripheral or incidental transactions of an entity are called:

To Recording periodic depreciation on assets such as buildings or machinery is an application of the matching principle.

Under IFRS,a change in accounting policy must result in information that is more reliable and relevant.

Accrual accounting is essentially an application of:

An accounting error may be all of the following except:

No revenue whatsoever from the performance of a service can be recognized until all of the service has been performed.

The primary qualitative criteria of accounting information include which of the following:

Neutrality is an ingredient of the qualitative criteria of Relevance Reliability 1 Yes Yes 2 No Yes 3 Yes No 4 No No

A firm's accounting policy is to immediately expense the cost of metal wastebaskets it purchases for use by its employees at their desks.The total cost of wastebaskets in any year is $1,000 and the firm has $6 billion in total assets.The firm expects the wastebaskets to last indefinitely.The firm

The cost-benefit trade-off is a persuasive constraint under both IFRS and ASPE.

Interperiod comparability is significantly enhanced when two similar companies use the same accounting methods during a single reporting period.

If accounting information is timely and has predictive and feedback value,then it can be characterized as:

Relevance and representation faithfulness are the fundamental qualities under IFRS.

Warranty expense on goods sold should be recognized in the period of the sale,even though the costs to fulfill warranty claims will not be incurred until two or three years later.

Verifiability focuses on the correct application of a basis of measurement rather than its appropriateness.

The assumption that dollars will buy the same quantity of goods and services today as they would have five years ago is the:

The going concern principal does not apply if a company is expected to be liquidated in the next 24 months.

The Framework for Financial Reporting

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Property,Plant,and Equipment; Intangibles; and Goodwill

Depreciation,Amortization,and Impairment

Financial Instruments: Investments in Debt and Equity Securities

Filters