Test bank for intermediate accounting volume 1 5th edition

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Test Bank for Intermediate Accounting Volume 1 5th Edition

Multiple Choice Questions

Private placements refer to:

1 C shares that form part of a control block.

2 D all of these answers are correct.

3 B debt or equity securities issued to individuals or organizations without being listed with a securities commission.

4 A funds not disclosed by private companies.

What is the purpose of financial statements?

1 A to disclose the market value of the firm's assets and liabilities.

2 C to identify shareholders.

3 B to determine compliance with tax laws.

4 D to help users make decisions.

6) John is the vice president of marketing for a local tour guide company He is concerned that his customers are not

recommending his company to friends of theirs For John, this problem is a:

1 a purchase issue.

2 b demographic problem.

3 c prepurchase issue.

4 d postpurchase issue.

29) Research has shown that Mexican firms are less likely to have formal codes of ethics and more likely to bribe public officials than are American or Canadian companies This

demonstrates that:

1 a business practices can be unethical without being illegal.

2 b social marketing is not important in Mexico.

3 c cultural values and beliefs are important for determining what is considered ethical.

4 d American and Canadian companies are more respectful than Mexican companies.

22) People who have grown up “wired” in a world of digital technology are described as

1 B Accounting Exposure Drafts

2 A Accounting Project Proposals

3 E Statements of Auditing Revisions

4 D CICA Handbook Sections and Accounting Guidelines

5 C Accounting Issues Papers

33) Which Act is designed to protect consumers against

purchasing food, cosmetics, or drugs that are deceptive or

misleading, or that may pose a risk to health?

1 a Food and Drugs Act

2 b Consumer Packaging and Labelling Act

3 c Hazardous Products Act

4 d National Trademark and True Labelling Act

Generally accepted accounting principles currently are

promulgated primarily by the:

1 D Accounting Standards Board (AcSB)

2 A Canadian Academic Accounting Association (CAAA)

3 B Canada Customs and Revenue Agency

4 C Ontario Securities Commission (OSC)

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

1 B Companies that use the disclosed basis of accounting are NOT allowed to use differential reporting,

2 A Companies that use the disclosed basis of accounting are in effect using differential reporting,

3 C When used, the disclosed basis of accounting must comply with GAAP.

4 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.

Professional accountants need a wide range of knowledge and skills Which of the following is not an example of such

knowledge or skills?

1 A an ability to calculate and analyze data, and a facility with numbers.

2 C an ability to communicate in a concise and understandable manner.

3 B knowledge of many disciplines such as finance, economics, management,

marketing and statistics.

4 D skills derived from prior management experience.

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

1 A FASB

2 D OSC

3 C AcSB

4 B IASC

35) Jackson, the marketing manager for a large food

manufacturing plant, recently met with his boss because he was concerned that his company was violating the Food and Drugs Act of 1953 and the Competition Act of 1986 Based on this

information, what was the problem that Jackson was concerned about?

1 a The company had not taken any quality-control measures when producing its products.

2 b The company was advertising one of its unhealthy products as being healthy.

3 c The company would not reveal what information it was collecting from its customers.

4 d Its products were unsafe to consume and could cause harm to people.

External decision-makers include all of the following except:

1 C creditors.

2 B owners.

3 A managers.

4 D financial press.

The conceptual framework of accounting should have many positive effects as new accounting standards are developed Which of the following is not one of those effects?

1 D Management should have greater latitude in choosing among accounting

alternatives.

2 A Financial statements among companies and industries should be more consistent and comparable.

3 C Users' understanding and confidence in financial statements should increase.

4 B Standard setting should be more consistent with an overall statement of the

objectives and concepts of financial reporting.

5 E Accountants should be better able to assess the validity of different accounting alternatives for similar and dissimilar transactions and events.

27) Sara and Jessica text back and forth while Sara is shopping and Jessica is riding the bus to work This is an example of:

1 A Before the present cash flow statement standard became effective, companies had

a choice of whether to report cash flow from operating activities or working capital from operating activities.

2 D Information about past cash flows is useful in predicting an entity's future cash flows.

3 E Information about the balances of current liabilities, long-term debt and stockholders' equity can be found in the statement of cash flows.

4 B Studies have shown that a cash flows report is more relevant to investor decisions than a working capital report.

5 C The reported cash flow from operating activities has been found useful in evaluating

a firm's ability to make interest payments and repay debt.

Generally accepted accounting principles are:

1 A optional procedures for recording economic events

2 C the rules of accounting, prescribed exclusively by Federal regulatory agencies

3 D standards of accounting, a material departure from which may result in a qualified opinion issued by an auditor

4 B mandatory rules applied to both financial and management accounting

If cash flow prediction is a company's primary reporting

objective, this would likely result in:

1 C Poor matching

2 D Fewer accruals and deferrals

3 A Higher earnings

4 B Lower earnings

Generally accepted accounting principles

1 A include specific rules, practices and procedures.

2 D all of these answers are correct.

3 C standards of accounting, a material departure from which may result in a qualified opinion issued by an auditor.

4 B include broad principles and conventions of general applications including

underlying concepts

Pronouncements of the Accounting Standards Board:

1 C are similar in force and effect to those of the Accounting and Auditing Research Committee.

2 A are commonly known as "Accounting Research Studies."

3 B are enforced by the American Accounting Association.

4 E must be followed for income tax purposes.

5 D are commonly known as "Opinions."

The disclosed basis of accounting refers to

1 D the practice of disclosing all pertinent accounting policies in a company's annual report.

2 A the use of non-GAAP policies by private companies.

3 C the use of International Financial Reporting Standards.

4 B the use of non-GAAP policies by any company.

Which of the following is NOT a primary motivator for

maximizing net income?

1 C To enhance managers' performance-based compensation.

2 A Compliance with debt covenants.

3 D To minimize the company's income tax liability.

4 B To positively influence users' assessment of management performance.

10) Which of the following is not an example of a demographic variable?

3 c a virtual brand community.

4 d anti-consumption

The users toward which financial statements are directed:

1 A are very sophisticated and experienced in using financial information.

2 B are independent Public Accountants.

3 C have degrees in accounting and finance.

4 E are Chartered Financial Analysts.

5 D have a reasonable understanding of business and economic activities.

The stewardship function refers to

1 C The collection of information for planning the future of the entity, implementing those plans, and for controlling daily operations.

2 D The collection of information to help present and potential investors and creditors and other users in assessing the amounts, timing and uncertainty of prospective cash receipts.

3 B A company's corporate citizenship track record

4 A Disclosing management's use of funds and other financial information to absentee shareholders

12) Marketers who interact with their customers on a regular basis, and not just at the time of purchase, are most likely

15) The film The Wedding Crashers had what reported impact?

1 a It resulted in an decrease in wedding bookings.

2 b It led to a sell out DVD success.

3 c It caused an outbreak of uninvited wedding guests.

4 d It boosted the US economy by 15% in it’s year of release.

8) A fast-food chain describes its core customer as a single male under 30 years of age with a working class job, who reads little, likes loud music, and hangs out with friends This is an example of:

1 a subculture.

2 b marketing segmentation.

3 c demographics.

4 d typical male Canadian consumer of burgers.

11) Mary designed an unsuccessful advertising campaign for a medical insurance company that was targeted at 18- to 34-year- old males The campaign only included one commercial, which featured a young man who had become crippled in a skydiving accident While planning the campaign, Mary failed to recognize that:

1 a 18- to 34-year-old males are not interested in medical insurance.

2 b not all 18- to 34-year-old males share the same lifestyle.

3 c television commercials are not effective for advertising medical insurance.

4 d she should have also segmented based on ethnicity.

The primary responsibility of an independent auditor who is a professional accountant is to:

1 D prepare current financial reports for the client.

2 A verify the accuracy of the amounts determined by the client.

3 B assess whether the management is honest.

4 C evaluate the "fair presentation" of the company's financial reports.

Choose the correct statement about audits of corporations:

1 A Outside auditors are paid by the government for auditing the financial statements of corporations.

2 C Public corporations (those whose stock are traded on exchanges) are subject to annual audit as to their compliance with GAAP.

3 D It is the employees of the firm being audited who perform the annual audit of the financial statements of that firm.

4 B Revenue Canada performs audits of corporations' financial statements.

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

1 B communication of financial information about economic entities.

2 C identification, measurement, and communication of financial information.

3 A communication of financial information to interested persons.

4 D all of these.

Users of financial statements can generally be broken down into which of the following two categories:

1 A Internal and external users.

2 D External users and preparers.

3 B Government and investors.

4 C Creditors and Investors.

An organization that has not published financial accounting standards is the

1 D the Emerging Issues Committee

2 B the Certified Management Accountants of Canada.

3 C the International Accounting Standards Committee.

4 A the Institute of Chartered Accountants.

General-purpose financial statements report financial

information relevant to:

1 C government users only.

2 A investors only.

3 B creditors only.

4 D investors, creditors and government users.

25) An e-tailer is:

1 a a market research company that primarily collects data online.

2 b an anti e-commerce advocate.

3 c an online retail supplier.

4 d an end-of-purchase

5 feedback service.

19) One of the fundamental premises of the modern field of consumer behaviour is that people often buy products not for what they do, but for what they:

21) Christina Chiang has decided to order a week's worth of groceries from HomeGrocer.com She places her order and is pleasantly surprised when she receives her order at her

doorstep six hours after the order was placed This transaction

1 A Statement of Comprehensive income.

2 B Statement of Changes in Equity.

3 D Statement of Retained Earnings.

4 E Both A & B are correct.

5 C Statement of Cash Flows.

3) If a product succeeds in satisfying needs and is purchased over and over, it most likely has attained:

4 A profitability.

Which of the following are major factors in the rapidly changing financial reporting environment in Canada?

1 C the growing number of institutional investors and the knowledge based economy.

2 D none of these answers is correct.

3 B globalization and the use of computer networks.

4 A increased demand for accountants and the impact of technology.

20) If you listed your collection of NHL rookie cards on eBay, you would be engaging in which type of commerce?

1 a transactional

2 b psychographic

3 c B2C

4 d C2C

Secondary sources of GAAP should be evaluated on

1 E none of these answers is correct.

2 A acceptance of the source by industry professionals.

3 B the specificity of the source.

4 D both the specificity of the source & the continued relevance of the source.

5 C the continued relevance of the source.

24) Groups of people that unite on the Internet to share a

passion for a product are known as:

1 a chat rooms.

2 b virtual brand communities.

3 c consumer networks.

4 d product organizations.

28) Global terms like kuroi kiri, la mordida, bustarella, and

baksheesh are referring to:

1 a competition.

2 b segmentation.

3 c theft.

4 d bribery.

31) Although research has shown that consumers think better

of products made by firms they feel are behaving ethically,

many "ethical" companies encounter difficulties selling their products What is a good a reason for this?

1 a Ethical companies do not make good quality products.

2 b Products made by ethical companies are hard to find for consumers.

3 c Sometimes consumers' buying behaviour is not consistent with their positive

attitudes about ethical products.

4 d Consumers lie on surveys about ethical companies in order to appear like they care.

5) Tina, a supervisor of displays for Sears Canada, knows that attractive displays can generate additional sales of particular items From a marketer's perspective, this is a/an:

1 a purchase issue

2 b postpurchase issue

3 c merchandising complexity

4 d loss leader

The role of the Accounting Standards Board (ACSB) in the

formulation of accounting principles in Canada can be best described as

4 E all of these answers are correct.

5 A reported cash flows.

9) In studying consumer behaviour, it is often useful to

categorize people on the basis of some similarity Descriptions such as age, gender, income, or occupation are called:

1 a demographics.

2 b psychographics.

3 c personal profiles.

4 d physiology.

17) Saucony Canada held a contest asking consumers to send

in their own photos, which will be utilized in a future advertising campaign for the company This is an example of:

1 a anticonsumption.

2 b consumer-generated content

3 c social marketing.