Question 1

Discuss some of the conceptual framework concepts involved in determining whether to capitalize or expense an expenditure.

Accepted Answer

Consider whether the expenditure satisfi

Question 2

What is the most commonly used measurement basis?

Accepted Answer

A) Current cost. 
B) Realizable value. 
C) Historical cost. 
D) Present value. 
A) Current cost. 
B) Realizable value. 
C) Historical cost. 
D) Present value.

Question 3

During the past year, Easy Supplies Ltd.'s assets decreased $33,000, its liabilities decreased $41,000, its share capital increased $5,000, and Easy recorded net profit of $12,000. What was the amount of dividends declared?

Accepted Answer

A) $ 1,000 
B) $ 9,000 
C) $12,000 
D) $19,000 
A) $ 1,000 
B) $ 9,000 
C) $12,000 
D) $19,000

Question 4

Which of the following is not a purpose of a conceptual framework of accounting concepts and financial reporting objectives?

Accepted Answer

A) To increase the user's ability to understand financial statements. 
B) To increase financial statement users' confidence in financial reporting. 
C) To provide a foundation for detailed accounting and reporting rules. 
D) To enhance comparability among companies' financial statements. 
A) To increase the user's ability to understand financial statements. 
B) To increase financial statement users' confidence in financial reporting. 
C) To provide a foundation for detailed accounting and reporting rules. 
D) To enhance comparability among companies' financial statements.

Question 5

Maybel Company has a March 31, 2019 year end. Which of the following should not be recorded as a current liability?

Accepted Answer

A) A deposit received from a customer for the February 2020 rent on a 1-year lease entered into on March 1, 2019. 
B) Unpaid payroll taxes. 
C) Dividends in arrears on preferred dividends. 
D) Property taxes estimated and unpaid based on the prior year's municipal tax bill. 
A) A deposit received from a customer for the February 2020 rent on a 1-year lease entered into on March 1, 2019. 
B) Unpaid payroll taxes. 
C) Dividends in arrears on preferred dividends. 
D) Property taxes estimated and unpaid based on the prior year's municipal tax bill.

Question 6

Which statement best describes a publicly accountable enterprise?

Accepted Answer

A) An entity that has not issued debt instruments that are outstanding and traded in a public market. 
B) An entity that holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses. 
C) An entity that has not issued equity instruments that are outstanding and traded in a public market. 
D) An entity that holds assets in a legal capacity for a broad group of outsiders as one of its primary businesses. 
A) An entity that has not issued debt instruments that are outstanding and traded in a public market. 
B) An entity that holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses. 
C) An entity that has not issued equity instruments that are outstanding and traded in a public market. 
D) An entity that holds assets in a legal capacity for a broad group of outsiders as one of its primary businesses.

Question 7

Which concept of financial reporting is being described?
 $\begin{array}{c}
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\end{array}
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\hline \text {Situation}\
\hline \text {A reporting entity will continue its operations into the}\
\text { foreseeable future.}\
\hline \text {Record transactions when they have been settled in cash }\
\text {as of the balance sheet date.}\

\hline \text {Measured in physical quantities, a company should be}\
\text { capable of producing as much at the end of an}\
 \text {accounting period as it was able to produce at the}\
\text { beginning of that period.}\
\hline \text {Record transactions even if they have not been settled in }\
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\hline \text {A company should have as much resources in monetary}\
\text { terms at the end of an accounting period as it had at the }\
\text {beginning of that period.}\
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Accepted Answer

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Question 8

Which of the following is/are constraints in the financial reporting process?

Accepted Answer

A) Classifying an item as a revenue versus an expense in the income statement. 
B) Using the historical cost versus the fair value method to measure transactions. 
C) Recognizing an item as an asset versus a liability in the balance sheet. 
D) Benefits of information versus the costs of producing that information. 
A) Classifying an item as a revenue versus an expense in the income statement. 
B) Using the historical cost versus the fair value method to measure transactions. 
C) Recognizing an item as an asset versus a liability in the balance sheet. 
D) Benefits of information versus the costs of producing that information.

Question 9

JP Corporation had net income of $1,000,000 for 2020. After issuing its financial statements, the company realized that it had failed to include inventory from one of its small warehouses for several years. Specifically, it forgot to include $20,000 on December 31, 2019 and $30,000 on December 31, 2020. Which of the following is TRUE regarding JP's 2020 net income?

Accepted Answer

A) Net income was understated by $10,000. 
B) Net income was overstated by $10,000. 
C) Net income was understated by $30,000. 
D) Net income was overstated by $30,000. 
A) Net income was understated by $10,000. 
B) Net income was overstated by $10,000. 
C) Net income was understated by $30,000. 
D) Net income was overstated by $30,000.

Question 10

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

Accepted Answer

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

Question 11

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 12

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 13

Which is a purpose of the conceptual framework in accounting?

Accepted Answer

A) To support principles-based accounting standards, principles and practices. 
B) To provide rules from which decision-useful financial information can be developed. 
C) To promote global consistency, acceptance and adoption of IFRS around the globe. 
D) To develop different accounting practices between countries around the globe. 
A) To support principles-based accounting standards, principles and practices. 
B) To provide rules from which decision-useful financial information can be developed. 
C) To promote global consistency, acceptance and adoption of IFRS around the globe. 
D) To develop different accounting practices between countries around the globe.

Question 14

Which statement best describes a private enterprise?

Accepted Answer

A) Any entity that is not a publicly accountable enterprise. 
B) Any for-profit organization that is not a publicly accountable enterprise. 
C) An entity that holds assets in a legal capacity for a broad group of outsiders as one of its primary businesses. 
D) Any entity, excluding a not-for-profit organization. 
A) Any entity that is not a publicly accountable enterprise. 
B) Any for-profit organization that is not a publicly accountable enterprise. 
C) An entity that holds assets in a legal capacity for a broad group of outsiders as one of its primary businesses. 
D) Any entity, excluding a not-for-profit organization.

Question 15

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 16

What is not an information need of users of financial information under the IFRS Conceptual Framework?

Accepted Answer

A) Information on the amount of cash flows. 
B) Information about the timing of future cash flows. 
C) Information on the uncertainty of cash flows. 
D) Information about the amount of past cash flows. 
A) Information on the amount of cash flows. 
B) Information about the timing of future cash flows. 
C) Information on the uncertainty of cash flows. 
D) Information about the amount of past cash flows.

Question 17

Fail-Safe Computer Inc. sells equipment with a 2-year warranty. Prior experience indicates that costs for warranty repairs average 3% in the first year, and 2% in the second year. Sales were $300,000 and $400,000 in fiscal 2019 and 2020 respectively. It paid $5,000 for materials and labour to make warranty-related repairs in 2019. What amount will be recorded as warranty expense in 2019?

Accepted Answer

A) $5,000 
B) $12,000 
C) $15,000 
D) $18,000 
A) $5,000 
B) $12,000 
C) $15,000 
D) $18,000

Question 18

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 19

Which organization oversees accounting standards in Canada?

Accepted Answer

A) Financial Accounting Standards Board. 
B) Chartered Professional Accountants of each province. 
C) Chartered Professional Accountants of Canada. 
D) International Accounting Standards Board. 
A) Financial Accounting Standards Board. 
B) Chartered Professional Accountants of each province. 
C) Chartered Professional Accountants of Canada. 
D) International Accounting Standards Board.

Question 20

Provide three reasons for the importance of the conceptual framework for financial reporting.

Accepted Answer

A conceptual framework is like a strateg

Discuss some of the conceptual framework concepts involved in determining whether to capitalize or expense an expenditure.

What is the most commonly used measurement basis?

During the past year, Easy Supplies Ltd.'s assets decreased $33,000, its liabilities decreased $41,000, its share capital increased $5,000, and Easy recorded net profit of $12,000. What was the amount of dividends declared?

Which of the following is not a purpose of a conceptual framework of accounting concepts and financial reporting objectives?

Maybel Company has a March 31, 2019 year end. Which of the following should not be recorded as a current liability?

Which statement best describes a publicly accountable enterprise?

Which of the following is/are constraints in the financial reporting process?

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

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

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

Which is a purpose of the conceptual framework in accounting?

Which statement best describes a private enterprise?

The underlying or fundamental objective of the accounting conceptual framework is

What is not an information need of users of financial information under the IFRS Conceptual Framework?

When are financial items recognized in the financial statements?

Which organization oversees accounting standards in Canada?

Provide three reasons for the importance of the conceptual framework for financial reporting.

Fundamentals of Financial Accounting Theory

Accrual Accounting

Revenue and 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

Discuss some of the conceptual framework concepts involved in determining whether to capitalize or expense an expenditure.

What is the most commonly used measurement basis?

During the past year, Easy Supplies Ltd.'s assets decreased $33,000, its liabilities decreased $41,000, its share capital increased $5,000, and Easy recorded net profit of $12,000. What was the amount of dividends declared?

Which of the following is not a purpose of a conceptual framework of accounting concepts and financial reporting objectives?

Maybel Company has a March 31, 2019 year end. Which of the following should not be recorded as a current liability?

Which statement best describes a publicly accountable enterprise?

Which of the following is/are constraints in the financial reporting process?

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

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

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

Which is a purpose of the conceptual framework in accounting?

Which statement best describes a private enterprise?

The underlying or fundamental objective of the accounting conceptual framework is

What is not an information need of users of financial information under the IFRS Conceptual Framework?

When are financial items recognized in the financial statements?

Which organization oversees accounting standards in Canada?

Provide three reasons for the importance of the conceptual framework for financial reporting.

Fundamentals of Financial Accounting Theory

Accrual Accounting

Revenue and 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