Question 1

Which is not a qualitative characteristic of financial information in the IFRS Framework?

Accepted Answer

A) Understandability. 
B) Historical cost. 
C) Representational faithfulness. 
D) Comparability. 
A) Understandability. 
B) Historical cost. 
C) Representational faithfulness. 
D) Comparability.

Question 2

Which statement best explains the concept of "representational faithfulness"?

Accepted Answer

A) Transactions should be recorded in accordance with their substance rather than their legal form. 
B) Transactions should be recorded in accordance with their legal form rather than their substance. 
C) Transactions should be recorded accurately and completely to be useful to financial statement users. 
D) Transactions should be recorded using the rules and guidelines provided in the accounting standards. 
A) Transactions should be recorded in accordance with their substance rather than their legal form. 
B) Transactions should be recorded in accordance with their legal form rather than their substance. 
C) Transactions should be recorded accurately and completely to be useful to financial statement users. 
D) Transactions should be recorded using the rules and guidelines provided in the accounting standards.

Question 3

Computer Inc. sells equipment with a 3-year warranty. Prior experience indicates that costs for warranty repairs average 3% in the first year, 2% in the second year and 1% in the third year. In 2013, Computer had sales of $800,000. It paid $20,000 for materials and labour to make warranty-related repairs in 2013. What amount will be recorded as warranty expense in 2013?

Accepted Answer

A) $16,000 
B) $24,000 
C) $28,000 
D) $48,000 
A) $16,000 
B) $24,000 
C) $28,000 
D) $48,000

Question 4

Which of the following accurately describes the objective of financial reporting under the IFRS Conceptual Framework?

Accepted Answer

A) The Framework focuses on a narrow set of users such as investors and lenders. 
B) Special purpose financial statements are required under the Framework. 
C) In the Framework, users include a broad range such as employees and customers. 
D) Under the Framework, general purpose financial statements increase moral hazard. 
A) The Framework focuses on a narrow set of users such as investors and lenders. 
B) Special purpose financial statements are required under the Framework. 
C) In the Framework, users include a broad range such as employees and customers. 
D) Under the Framework, general purpose financial statements increase moral hazard.

Question 5

Which statement best explains the qualitative characteristic of "completeness"?

Accepted Answer

A) Financial statements should represent the underlying transactions, assets and liabilities. 
B) Omission of financial information that would influence a user's economic decision. 
C) Financial information should not contain errors or bias. 
D) Financial statements should not omit material items or transactions. 
A) Financial statements should represent the underlying transactions, assets and liabilities. 
B) Omission of financial information that would influence a user's economic decision. 
C) Financial information should not contain errors or bias. 
D) Financial statements should not omit material items or transactions.

Question 6

What decision would users of financial information need to make under the IFRS Framework?

Accepted Answer

A) Determining whether to lend to the company. 
B) Determining if a company is an ethical company. 
C) Determining if the liquidation values are accurate. 
D) Determine if the company is socially responsible. 
A) Determining whether to lend to the company. 
B) Determining if a company is an ethical company. 
C) Determining if the liquidation values are accurate. 
D) Determine if the company is socially responsible.

Question 7

Which statement best explains the meaning of "measurement" in financial reporting?

Accepted Answer

A) Determining where items should be presented in the body of the financial statements. 
B) Presenting an item in the financial statements but not in the notes. 
C) Quantifying items so that they can be presented in the body of the financial statements. 
D) Presenting expenses in the same accounting period as the related revenues. 
A) Determining where items should be presented in the body of the financial statements. 
B) Presenting an item in the financial statements but not in the notes. 
C) Quantifying items so that they can be presented in the body of the financial statements. 
D) Presenting expenses in the same accounting period as the related revenues.

Question 8

Which statement best explains the meaning of "comparability" in financial reporting?

Accepted Answer

A) Financial information that is available quickly to financial statement users. 
B) Financial information that can be objectively confirmed by another person. 
C) Financial reports that are comprehendible to the users of such reports. 
D) Financial statement preparers using consistent accounting policies year over year. 
A) Financial information that is available quickly to financial statement users. 
B) Financial information that can be objectively confirmed by another person. 
C) Financial reports that are comprehendible to the users of such reports. 
D) Financial statement preparers using consistent accounting policies year over year.

Question 9

What information does the balance sheet provide to users of financial information under the IFRS Framework?

Accepted Answer

A) Information about changes in liabilities over a period of time. 
B) Information about changes in resources over a period of time. 
C) Information about the performance of a company over a period of time. 
D) Information about the state of a company at a point in time. 
A) Information about changes in liabilities over a period of time. 
B) Information about changes in resources over a period of time. 
C) Information about the performance of a company over a period of time. 
D) Information about the state of a company at a point in time.

Question 10

Which statement best explains the qualitative characteristic of "relevance"?

Accepted Answer

A) Financial reports should be understandable to the users of the information. 
B) Omitting information would influence a user's economic decision. 
C) Information should influence a user's economic decisions. 
D) Financial reports should be accurate and complete. 
A) Financial reports should be understandable to the users of the information. 
B) Omitting information would influence a user's economic decision. 
C) Information should influence a user's economic decisions. 
D) Financial reports should be accurate and complete.

Question 11

The underlying or fundamental objective of the accounting conceptual framework is

Accepted Answer

A) decision usefulness. 
B) comparability. 
C) representational faithfulness. 
D) understandability. 
A) decision usefulness. 
B) comparability. 
C) representational faithfulness. 
D) understandability.

Question 12

ABC Manufacturing has incurred $250,000 to defend itself against a patent infringement lawsuit from CCB Limited. CCB has won, but ABC is planning to appeal the decision and continue pursuing its case. ABC is permitted to use its patent during the appeal process.
Provide two arguments to support ABC capitalizing the $250,000 expenses associated with a lawsuit. Provide two arguments against ABC capitalizing the $250,000 expenses associated with a lawsuit. Which option would you recommend and why?

Accepted Answer

Arguments to support capitalizing:
•The

Question 13

Which of the following is an attribute of "representational faithfulness"?

Accepted Answer

A) Historical cost. 
B) Confirmatory value. 
C) Neutrality. 
D) Understandability. 
A) Historical cost. 
B) Confirmatory value. 
C) Neutrality. 
D) Understandability.

Question 14

When actual financial statements routinely report results that overstate or understate a company's financial position, which qualitative characteristic is violated?

Accepted Answer

A) Relevance. 
B) Neutrality. 
C) Conservatism. 
D) Reliability. 
A) Relevance. 
B) Neutrality. 
C) Conservatism. 
D) Reliability.

Question 15

When are financial items recognized in the financial statements?

Accepted Answer

A) Items are recognized if the fair value amounts can be determined. 
B) Items are recognized if the inflows or outflows of resources are probable. 
C) Items are recognized if the future gains will result from disposal of the item. 
D) Items are recognized if there are no measurement uncertainties. 
A) Items are recognized if the fair value amounts can be determined. 
B) Items are recognized if the inflows or outflows of resources are probable. 
C) Items are recognized if the future gains will result from disposal of the item. 
D) Items are recognized if there are no measurement uncertainties.

Question 16

Explain how accounting standards are set in Canada.

Accepted Answer

In Canada, the Canada Business Corporati

Question 17

Which organization oversees accounting standards in Canada?

Accepted Answer

A) Financial Accounting Standards Board. 
B) Institutes of Chartered Accountants in each province. 
C) Canadian Institute of Chartered Accountants. 
D) International Accounting Standards Board. 
A) Financial Accounting Standards Board. 
B) Institutes of Chartered Accountants in each province. 
C) Canadian Institute of Chartered Accountants. 
D) International Accounting Standards Board.

Question 18

Which financial statement is not needed under the IFRS Framework?

Accepted Answer

A) Balance sheet. 
B) Statement of retained earnings. 
C) Income statement. 
D) Statement of cash flows. 
A) Balance sheet. 
B) Statement of retained earnings. 
C) Income statement. 
D) Statement of cash flows.

Question 19

Which statement best explains the meaning of "recognition" in financial reporting?

Accepted Answer

A) Determining where items should be presented in the body of the financial statements. 
B) Presenting an item in the financial statements, rather than simply disclosing in the notes. 
C) Quantifying items so that they can be presented in the body of the financial statements. 
D) Presenting expenses in the same accounting period as the related revenues. 
A) Determining where items should be presented in the body of the financial statements. 
B) Presenting an item in the financial statements, rather than simply disclosing in the notes. 
C) Quantifying items so that they can be presented in the body of the financial statements. 
D) Presenting expenses in the same accounting period as the related revenues.

Question 20

Lean Ltd. had a balance of $52,300 in the office supplies account at the start of the year. During the year, purchases of $141,700 were made and debited to the office supplies account. At the end of the year, a physical count of the office supplies indicated $41,800 on hand. What was the office supplies expense for the year?

Accepted Answer

A) $141,700 
B) $152,200 
C) $183,500 
D) $194,000 
A) $141,700 
B) $152,200 
C) $183,500 
D) $194,000

Which is not a qualitative characteristic of financial information in the IFRS Framework?

Which statement best explains the concept of "representational faithfulness"?

Which of the following accurately describes the objective of financial reporting under the IFRS Conceptual Framework?

Which statement best explains the qualitative characteristic of "completeness"?

What decision would users of financial information need to make under the IFRS Framework?

Which statement best explains the meaning of "measurement" in financial reporting?

Which statement best explains the meaning of "comparability" in financial reporting?

What information does the balance sheet provide to users of financial information under the IFRS Framework?

Which statement best explains the qualitative characteristic of "relevance"?

The underlying or fundamental objective of the accounting conceptual framework is

Which of the following is an attribute of "representational faithfulness"?

When actual financial statements routinely report results that overstate or understate a company's financial position, which qualitative characteristic is violated?

When are financial items recognized in the financial statements?

Explain how accounting standards are set in Canada.

Which organization oversees accounting standards in Canada?

Which financial statement is not needed under the IFRS Framework?

Which statement best explains the meaning of "recognition" in financial reporting?

Fundamentals of Financial Accounting Theory

Accrual Accounting

Revenue Recognition

Cash and Receivables

Inventories

Financial Assets

Property, Plant, and Equipment

Intangible Assets, Goodwill, Mineral Resources, and Government Grants

Applications of Fair Value to Non-Current Assets

Filters

Exam 2: Conceptual Frameworks for Financial Reporting

Which is not a qualitative characteristic of financial information in the IFRS Framework?

Which statement best explains the concept of "representational faithfulness"?

Which of the following accurately describes the objective of financial reporting under the IFRS Conceptual Framework?

Which statement best explains the qualitative characteristic of "completeness"?

What decision would users of financial information need to make under the IFRS Framework?

Which statement best explains the meaning of "measurement" in financial reporting?

Which statement best explains the meaning of "comparability" in financial reporting?

What information does the balance sheet provide to users of financial information under the IFRS Framework?

Which statement best explains the qualitative characteristic of "relevance"?

The underlying or fundamental objective of the accounting conceptual framework is

Which of the following is an attribute of "representational faithfulness"?

When actual financial statements routinely report results that overstate or understate a company's financial position, which qualitative characteristic is violated?

When are financial items recognized in the financial statements?

Explain how accounting standards are set in Canada.

Which organization oversees accounting standards in Canada?

Which financial statement is not needed under the IFRS Framework?

Which statement best explains the meaning of "recognition" in financial reporting?

Fundamentals of Financial Accounting Theory

Accrual Accounting

Revenue Recognition

Cash and Receivables

Inventories

Financial Assets

Property, Plant, and Equipment

Intangible Assets, Goodwill, Mineral Resources, and Government Grants

Applications of Fair Value to Non-Current Assets

Filters