Question 1

Which of the following financial statements are required for companies adhering to IFRS but NOT ASPE (private entity GAAP)?
A) Statement of Comprehensive income.
B) Statement of financial position.
C) Statement of Cash Flows.
D) Statement of Retained Earnings.

Accepted Answer

The Statement of Comprehensive Income is required under IFRS but not under ASPE, where comprehensive income items can be presented in the notes to the financial statements instead.

Question 2

The role of the Accounting Standards Board (AcSB) in the formulation of accounting principles in Canada can be best described as:
A) primary.
B) secondary.
C) sometimes primary and sometimes secondary.
D) non-existent.

Accepted Answer

The AcSB is the primary body responsible for setting accounting standards in Canada. It establishes Generally Accepted Accounting Principles (GAAP) that all Canadian entities must follow, as well as continuously monitoring and updating these standards as necessary. Therefore, the AcSB plays a central role in the formulation of accounting principles in Canada.

Question 3

Discuss in general the due process procedure the AcSB follows in developing accounting standards. Who are the groups which typically have opposing views when it comes to accounting standards, and why?

Accepted Answer

The answer of Discuss in general the due process procedure...

Question 4

Discuss the reasons why a corporation would have the motive or the tendency to adopt the same accounting practices for financial reporting purposes as for tax reporting.

Accepted Answer

The answer of Discuss the reasons why a corporation would...

Question 5

Give examples of provisions, known as maintenance tests or covenants which are often contained in debt contracts or agreements.

Accepted Answer

The answer of Give examples of provisions, known as maintenance...

Question 6

The essential characteristic(s) of accounting is (are):
A) communication of financial information to interested persons.
B) communication of financial information about economic entities.
C) identification, measurement, and communication of financial information.
D) communication of financial information to interested persons, communication of financial information about economic entities, and identification, measurement, and communication of financial information.

Accepted Answer

The essential characteristics of accounting include the identification, measurement, and communication of financial information about economic entities to interested persons. This encompasses all the elements listed in options A, B, and C, making D the comprehensive choice that accurately describes the essential characteristics of accounting.

Question 7

The body that has the responsibility to set generally accepted accounting principles in Canada is the:
A) FASB.
B) IASC.
C) AcSB.
D) OSC.

Accepted Answer

The body that has the responsibility to set generally accepted accounting principles in Canada is the Accounting Standards Board (AcSB), a part of the Canadian Institute of Chartered Accountants (CICA). FASB (Financial Accounting Standards Board) is the standard-setting body in the United States, IASC (International Accounting Standards Committee) is now replaced by the IASB (International Accounting Standards Board), and OSC (Ontario Securities Commission) is a provincial regulatory agency that oversees securities markets in Ontario.

Question 8

During the coming years, we should expect the ACSB to:
A) extend differential reporting options available to private companies.
B) harmonize Canadian GAAP to international standards.
C) continue to provide accounting standards for private companies.
D) All of these choices are correct.

Accepted Answer

All three options listed are within the scope of the ACSB's responsibilities and activities, and therefore are likely areas of focus for the coming years.

Question 9

The International Accounting Standards Committee (IASC), established in 1973 has the objective to promote the worldwide harmonization of accounting principles. Is this harmonization necessary to allow movement of capital between countries?

Accepted Answer

The answer of The International Accounting Standards Committee (IASC), established...

Question 10

Why is the response time more rapid for the Financial Standards Board (FASB) in the U.S. who issue Statements of Financial Accounting Standards (SFAS) than the CICA AcSB who take as much as two years to bring new Handbook Recommendations to fruition.

Accepted Answer

The answer of Why is the response time more rapid...

Question 11

Which of the following statement(s) is(are) correct?
A) Companies that use the disclosed basis of accounting are in effect using differential reporting.
B) Companies that use the disclosed basis of accounting are NOT allowed to use differential reporting.
C) When used, the disclosed basis of accounting must comply with GAAP.
D) Both "companies that use the disclosed basis of accounting are NOT allowed to use differential reporting" and "when used, the disclosed basis of accounting must comply with GAAP" are correct.

Accepted Answer

The answer of Which of the following statement(s) is(are) correct?
A)...

Question 12

Which of the following is NOT a primary source of GAAP?
A) Accounting sections of the CPA Handbook, PART I.
B) FASB accounting standards.
C) Accounting Guidelines issued by the AcSB.
D) Accounting sections of the CPA Handbook, PART II.

Accepted Answer

The answer of Which of the following is NOT a...

Question 13

Private placements refer to:
A) funds not disclosed by private companies.
B) debt or equity securities issued to individuals or organizations without being listed with a securities commission.
C) shares that form part of a control block.
D) indirect negotiation with the one or more creditors.

Accepted Answer

Private placements refer to the issuance of debt or equity securities to selected individuals or organizations without registration with a securities commission. This method of fundraising is typically used by private companies to raise capital without the costs and regulatory burdens of a public offering.

Question 14

Secondary sources of GAAP should be evaluated on
A) acceptance of the source by industry professionals.
B) the specificity of the source only.
C) the continued relevance of the source only.
D) the specificity of the source & the continued relevance of the source.
E) None of these answers are correct.

Accepted Answer

Both the specificity and continued relevance of the source should be considered when evaluating secondary sources of GAAP. Specificity ensures that the guidance provided is relevant to the specific situation at hand, while continued relevance ensures that the source is still applicable in the current accounting environment. Acceptance by industry professionals may be a consideration, but it is not the most important factor.

Question 15

Compared to financial accounting, what are the major concerns of managerial accounting?

Accepted Answer

The answer of Compared to financial accounting, what are the...

Question 16

The disclosed basis of accounting refers to
A) the use of non-GAAP policies by private companies.
B) the use of non-GAAP policies by any company.
C) the use of International Financial Reporting Standards.
D) the practice of disclosing all pertinent accounting policies in a company's annual report.

Accepted Answer

The answer of The disclosed basis of accounting refers to
A)...

Question 17

Creditors and analysts who attempt to assess and predict future cash flows tend to prefer earnings measures that are supported by operating cash flows taken from the Cash Flow Statement. What comparisons do they use in assessing the entity's strength in respect of operating cash flows?

Accepted Answer

The answer of Creditors and analysts who attempt to assess...

Question 18

Instead of maximizing reported earnings, management may wish to minimize reported earnings an ongoing endeavour. Besides income tax minimization, what are some of the reasons why management would want to minimize earnings?

Accepted Answer

The answer of Instead of maximizing reported earnings, management may...

Question 19

Lenders and creditors are most concerned with a company's
A) profitability.
B) adherence to covenants.
C) solvency.
D) cash flows.

Accepted Answer

The answer of Lenders and creditors are most concerned with...

Question 20

What is GAAP, how is it currently defined, and what is the outcome of the due process?

Accepted Answer

The answer of What is GAAP, how is it currently...

Quiz 1: The Framework for Financial Reporting

Which of the following financial statements are required for companies adhering to IFRS but NOT ASPE (private entity GAAP) ?

The role of the Accounting Standards Board (AcSB) in the formulation of accounting principles in Canada can be best described as:

Discuss in general the due process procedure the AcSB follows in developing accounting standards. Who are the groups which typically have opposing views when it comes to accounting standards, and why?

Discuss the reasons why a corporation would have the motive or the tendency to adopt the same accounting practices for financial reporting purposes as for tax reporting.

Give examples of provisions, known as maintenance tests or covenants which are often contained in debt contracts or agreements.

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

The body that has the responsibility to set generally accepted accounting principles in Canada is the:

During the coming years, we should expect the ACSB to:

The International Accounting Standards Committee (IASC), established in 1973 has the objective to promote the worldwide harmonization of accounting principles. Is this harmonization necessary to allow movement of capital between countries?

Why is the response time more rapid for the Financial Standards Board (FASB) in the U.S. who issue Statements of Financial Accounting Standards (SFAS) than the CICA AcSB who take as much as two years to bring new Handbook Recommendations to fruition.

Which of the following statement(s) is(are) correct?

Which of the following is NOT a primary source of GAAP?

Private placements refer to:

Secondary sources of GAAP should be evaluated on

Compared to financial accounting, what are the major concerns of managerial accounting?

The disclosed basis of accounting refers to

Creditors and analysts who attempt to assess and predict future cash flows tend to prefer earnings measures that are supported by operating cash flows taken from the Cash Flow Statement. What comparisons do they use in assessing the entity's strength in respect of operating cash flows?

Instead of maximizing reported earnings, management may wish to minimize reported earnings an ongoing endeavour. Besides income tax minimization, what are some of the reasons why management would want to minimize earnings?

Lenders and creditors are most concerned with a company's

What is GAAP, how is it currently defined, and what is the outcome of the due process?