Question 1

Financial accounting is concerned with the process that culminates in

Accepted Answer

A)  the preparation of financial reports. 
B)  specialized reports for inventory management and control. 
C)  specialized reports for income tax calculation and recognition. 
D)  reports on changes in stock prices and future estimates of market position. 
A)  the preparation of financial reports. 
B)  specialized reports for inventory management and control. 
C)  specialized reports for income tax calculation and recognition. 
D)  reports on changes in stock prices and future estimates of market position. A

Question 2

Whether a business is successful and thrives is determined by

Accepted Answer

A)  free enterprise or competition. 
B)  competition and markets only. 
C)  markets and free enterprise only. 
D)  markets, competition, and free enterprise. 
A)  free enterprise or competition. 
B)  competition and markets only. 
C)  markets and free enterprise only. 
D)  markets, competition, and free enterprise. D

Question 3

Stakeholders in the financial reporting environment
Briefly describe the much-publicized subprime lending crisis in the United States, and identify the stakeholders and how they were affected.

Accepted Answer

At the centre of this issue were securitized mortgage assets that were sold to investors. These assets were based on mortgages that had been extended to high-risk borrowers who could no longer afford their mortgage payments once interest rates rose. This led to a flooding of the housing market as borrowers walked away from their houses (and debt). The primary stakeholders were the lenders, borrowers, and investors. Lenders (acting in their own self-interest) sold these investments to investors who may not have fully understood the high-risk nature of their investment. Borrowers lost their homes they could no longer afford, and investors suffered large losses due to the defaulted loans.

Question 4

Objectives of financial reporting
What are the objectives of financial reporting by business enterprises?

Accepted Answer

The objectives of financial reporting ar

Question 5

Technology and financial information
Explain how technology impacts the accountants' role as providers of information.

Accepted Answer

Technology impacts the process of identi

Question 6

As of 2011, the responsibilities of the Accounting Standards Board (AcSB) in Canada relate to setting standards for

Accepted Answer

A)  publicly accountable entities only. 
B)  both publicly accountable entities and private enterprises. 
C)  private enterprises, not-for-profit entities, and pension plans. 
D)  not-for-profit entities and pension plans only. 
A)  publicly accountable entities only. 
B)  both publicly accountable entities and private enterprises. 
C)  private enterprises, not-for-profit entities, and pension plans. 
D)  not-for-profit entities and pension plans only.

Question 7

One political factor influencing the standard-setting process is how the standard-setting bodies are financed. Which of the following is NOT an IASB principle regarding the nature and amount of funding?

Accepted Answer

A)  Closed-loop: Financial commitments for funding should be contingent upon particular outcomes. 
B)  Broad-based: It should not rely on one or a few sources. 
C)  Compelling: Constituents should not be allowed to benefit from the standards without contributing to the process of standard setting. 
D)  Country-specific: Funding should be shared by the major economies on a proportionate basis. 
A)  Closed-loop: Financial commitments for funding should be contingent upon particular outcomes. 
B)  Broad-based: It should not rely on one or a few sources. 
C)  Compelling: Constituents should not be allowed to benefit from the standards without contributing to the process of standard setting. 
D)  Country-specific: Funding should be shared by the major economies on a proportionate basis.

Question 8

IFRS taxonomy
What is the IFRS taxonomy and how is it used?

Accepted Answer

The IASB has created the IFRS taxonomy,

Question 9

Role of securities commissions and stock exchanges
Explain the role of securities commissions and stock exchanges in financial reporting.

Accepted Answer

The securities commissions and stock exc

Question 10

In a rules-based approach (such as U.S. GAAP), compared to a principles-based approach (such as Canadian GAAP),

Accepted Answer

A)  the body of knowledge is smaller. 
B)  the importance of communicating the best information to users is emphasized. 
C)  since it is more prescriptive, it may be easier to defend how to account for a particular item. 
D)  companies frequently do not interpret the rules literally. 
A)  the body of knowledge is smaller. 
B)  the importance of communicating the best information to users is emphasized. 
C)  since it is more prescriptive, it may be easier to defend how to account for a particular item. 
D)  companies frequently do not interpret the rules literally.

Question 11

Information asymmetry
In markets where information asymmetry exists, there can be adverse selection and moral hazard. Explain what these terms mean.

Accepted Answer

Adverse selection refers to hidden knowl

Question 12

Financial versus managerial accounting
Distinguish between financial and managerial accounting.

Accepted Answer

Financial accounting (financial reportin

Question 13

In Canada, the body that has the responsibility of overseeing the Accounting Standards Board (AcSB) is the

Accepted Answer

A)  Accounting Standards Oversight Council (AcSO
C) . 
B)  International Accounting Standards Board (IAS
B) . 
C)  Canadian Institute of Chartered Accountants (CIC
A) . 
D)  Financial Accounting Standards Board (FAS
B) . 
A)  Accounting Standards Oversight Council (AcSO
C) . 
B)  International Accounting Standards Board (IAS
B) . 
C)  Canadian Institute of Chartered Accountants (CIC
A) . 
D)  Financial Accounting Standards Board (FAS
B) .

Question 14

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

Accepted Answer

A)  communication of financial information to interested internal parties only. 
B)  communication of economic information to external parties. 
C)  identification and measurement of financial information only. 
D)  identification, measurement, and communication of financial information. 
A)  communication of financial information to interested internal parties only. 
B)  communication of economic information to external parties. 
C)  identification and measurement of financial information only. 
D)  identification, measurement, and communication of financial information.

Question 15

Under ASPE, the other (as opposed to primary) sources of GAAP include

Accepted Answer

A)  the CICA Handbook and appendices. 
B)  Accounting Guidelines, including appendices. 
C)  pronouncements by accounting standard-setting bodes in other jurisdictions. 
D)  All of these are primary sources of GAAP. 
A)  the CICA Handbook and appendices. 
B)  Accounting Guidelines, including appendices. 
C)  pronouncements by accounting standard-setting bodes in other jurisdictions. 
D)  All of these are primary sources of GAAP.

Question 16

In Canada, the body that is NOT instrumental in the development of financial reporting standards is the

Accepted Answer

A)  Accounting Standards Board (AcS
B) . 
B)  Financial Accounting Standards Board (FAS
B) . 
C)  International Accounting Standards Board (IAS
B) . 
D)  American Institute of Certified Public Accountants. 
A)  Accounting Standards Board (AcS
B) . 
B)  Financial Accounting Standards Board (FAS
B) . 
C)  International Accounting Standards Board (IAS
B) . 
D)  American Institute of Certified Public Accountants.

Question 17

Information provided by accounting is important because it enables investors and creditors to

Accepted Answer

A)  compare income and assets of companies. 
B)  assess the relative risks and returns of investment opportunities. 
C)  channel their resources more effectively. 
D)  all of the above 
A)  compare income and assets of companies. 
B)  assess the relative risks and returns of investment opportunities. 
C)  channel their resources more effectively. 
D)  all of the above

Question 18

IFRS Discussion Group
Explain the purpose of the IFRS Discussion Group.

Accepted Answer

The IFRS Discussion Group (IFRS DG) is a

Question 19

Which of the following is NOT true regarding accrual-basis accounting?

Accepted Answer

A)  A company records events that change its financial statements in the periods in which the events occur. 
B)  Revenues and expenses are recognized in the periods in which the company receives or pays cash. 
C)  It has greater potential to depict meaningful trends in revenues and expenses. 
D)  Revenues and expenses can be more easily related to the economic environment of the period in which they occurred. 
A)  A company records events that change its financial statements in the periods in which the events occur. 
B)  Revenues and expenses are recognized in the periods in which the company receives or pays cash. 
C)  It has greater potential to depict meaningful trends in revenues and expenses. 
D)  Revenues and expenses can be more easily related to the economic environment of the period in which they occurred.

Question 20

Which of the following is an argument in favour of a GAAP body of knowledge that is more prescriptive, or rules-based?

Accepted Answer

A)  It always emphasizes communicating the best information for users. 
B)  The body of knowledge becomes significantly smaller and therefore easier to manage. 
C)  It may be easier to defend how to account for a particular item. 
D)  There is a tendency for companies to interpret guidelines loosely, and thus account for items inconsistently. 
A)  It always emphasizes communicating the best information for users. 
B)  The body of knowledge becomes significantly smaller and therefore easier to manage. 
C)  It may be easier to defend how to account for a particular item. 
D)  There is a tendency for companies to interpret guidelines loosely, and thus account for items inconsistently.

Financial accounting is concerned with the process that culminates in

Whether a business is successful and thrives is determined by

Stakeholders in the financial reporting environment Briefly describe the much-publicized subprime lending crisis in the United States, and identify the stakeholders and how they were affected.

Objectives of financial reporting What are the objectives of financial reporting by business enterprises?

Technology and financial information Explain how technology impacts the accountants' role as providers of information.

As of 2011, the responsibilities of the Accounting Standards Board (AcSB) in Canada relate to setting standards for

One political factor influencing the standard-setting process is how the standard-setting bodies are financed. Which of the following is NOT an IASB principle regarding the nature and amount of funding?

IFRS taxonomy What is the IFRS taxonomy and how is it used?

Role of securities commissions and stock exchanges Explain the role of securities commissions and stock exchanges in financial reporting.

In a rules-based approach (such as U.S. GAAP), compared to a principles-based approach (such as Canadian GAAP),

Information asymmetry In markets where information asymmetry exists, there can be adverse selection and moral hazard. Explain what these terms mean.

Financial versus managerial accounting Distinguish between financial and managerial accounting.

In Canada, the body that has the responsibility of overseeing the Accounting Standards Board (AcSB) is the

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

Under ASPE, the other (as opposed to primary) sources of GAAP include

In Canada, the body that is NOT instrumental in the development of financial reporting standards is the

Information provided by accounting is important because it enables investors and creditors to

IFRS Discussion Group Explain the purpose of the IFRS Discussion Group.

Which of the following is NOT true regarding accrual-basis accounting?

Which of the following is an argument in favour of a GAAP body of knowledge that is more prescriptive, or rules-based?

Conceptual Framework Underlying Financial Reporting

Measurement

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Inventory

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

Filters

Exam 1: The Canadian Financial Reporting Environment

Financial accounting is concerned with the process that culminates in

Whether a business is successful and thrives is determined by

Stakeholders in the financial reporting environment Briefly describe the much-publicized subprime lending crisis in the United States, and identify the stakeholders and how they were affected.

Objectives of financial reporting What are the objectives of financial reporting by business enterprises?

Technology and financial information Explain how technology impacts the accountants' role as providers of information.

As of 2011, the responsibilities of the Accounting Standards Board (AcSB) in Canada relate to setting standards for

One political factor influencing the standard-setting process is how the standard-setting bodies are financed. Which of the following is NOT an IASB principle regarding the nature and amount of funding?

IFRS taxonomy What is the IFRS taxonomy and how is it used?

Role of securities commissions and stock exchanges Explain the role of securities commissions and stock exchanges in financial reporting.

In a rules-based approach (such as U.S. GAAP), compared to a principles-based approach (such as Canadian GAAP),

Information asymmetry In markets where information asymmetry exists, there can be adverse selection and moral hazard. Explain what these terms mean.

Financial versus managerial accounting Distinguish between financial and managerial accounting.

In Canada, the body that has the responsibility of overseeing the Accounting Standards Board (AcSB) is the

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

Under ASPE, the other (as opposed to primary) sources of GAAP include

In Canada, the body that is NOT instrumental in the development of financial reporting standards is the

Information provided by accounting is important because it enables investors and creditors to

IFRS Discussion Group Explain the purpose of the IFRS Discussion Group.

Which of the following is NOT true regarding accrual-basis accounting?

Which of the following is an argument in favour of a GAAP body of knowledge that is more prescriptive, or rules-based?

Conceptual Framework Underlying Financial Reporting

Measurement

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Inventory

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Intangible Assets and Goodwill

Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

Filters