Test bank for intermediate accounting 2nd canadian edition by spiceland

Test Bank for Intermediate Accounting 2nd Canadian Edition Accrual accounting attempts to measure revenues and expenses that occurred during accounting periods so they equal net operati

Test Bank for Intermediate Accounting 2nd Canadian Edition

Accrual accounting attempts to measure revenues and expenses that

occurred during accounting periods so they equal net operating cash

flow

1 True

2 False

The FASB is currently the public sector organization responsible for setting accounting standards in Canada

The Canadian legislation and securities regulations require companies listed

on Canadian stock exchanges to prepare statements that conform to

1 True

4 D Mergers and acquisitions.

Corporations issue their shares to the investing public in the:

1 A Option A

2 B Option B

3 C Option C

4 D Option D

The primary focus for financial accounting information is to provide

information useful for:

1 A Option A

2 B Option B

3 C Option C

4 D Option D

Which of the following is not true about net operating cash flow?

1 A It is the difference between cash receipts and cash disbursements from providing goods and services

2 B It is a measure used in accrual accounting and is recognized as the best predictor of future operating cash flows

3 C Over short periods of time, it may not be indicative of long-run generating ability

cash-4 D It is easy to understand and all information required to measure it is factual

Which of the following groups is not among financial intermediaries?

1 A Mutual fund managers

2 B Financial analysts

3 C CICA

4 D Credit rating organizations

Which of the following is responsible for setting accounting standards in Canada?

1 A IASB

2 B AcSB

3 C FASB

4 D AICPA

Which of the following does not apply to secondary markets?

1 A Transactions are important to the efficient allocation of resources in our economy

2 B New resources are provided when shares of a company are sold by the corporation to the initial owners

3 C Transactions help to establish market prices for additional shares that may

be issued in the future

4 D Many investors might be unwilling to provide resources to corporations if there is no available mechanism for the future sale of their stocks and bonds

to others

A cause-and-effect relationship is implicit in the:

1 A Realization principle

2 B Historical cost principle.

3 C Matching principle

4 D Going concern assumption

The full disclosure principle requires a balance between:

1 A Comparability and consistency

2 B Relevance and cost effectiveness

3 C Reliability and neutrality

4 D Timeliness and predictive value

Which of the following groups is not among the external users for whom financial statements are prepared?

1 A Customers

2 B Suppliers

3 C Employees

4 D All of these are external users of financial statements

In a recent annual report, Apple Computer reported the following in one of its disclosure notes: "Warranty Expense: The Company provides currently for the estimated cost for product warranties at the time the related revenue is recognized." This note exemplifies Apple's use of:

GAAP is an abbreviation for:

1 A Generally authorized accounting procedures

2 B Generally applied accounting procedures

3 C Generally accepted auditing practices

4 D Generally accepted accounting principles

The Security commissions in Canada are responsible for

1 A Accounting Standards

2 B Overseeing capital market exchanges

3 C Banking regulations

4 D Setting interest rates

Which of the following is not a primary source of GAAP

1 A Matching principle

2 B Historical cost principle

3 C Materiality constraint.

4 D full disclosure principle

Identify the traits that make financial information useful:

1 A Comparability and Consistency

2 B Reliability and relevance

3 C Understandability

4 D All of the above

The process of identifying, measuring, analyzing and communicating financial information to plan, evaluate and control operations is

1 A Financial Accounting

2 B Auditing

3 C Tax accounting

4 D Management Accounting

A firm's comprehensive income is always:

1 A The same as its net income

2 B Greater than its net income

3 C Less than its net income

4 D Could be greater than or less than net income

Which of the following has the authority to set accounting standards in the United States?

2 B Using the scientific method

3 C Pure deductive reasoning

4 D Pure inductive reasoning

The International Accounting Standards Board:

1 A Was the predecessor to the IASC

2 B Can overrule the FASB when their policies disagree

3 C Promotes the use of high-quality, understandable global accounting standards.

4 D Has its headquarters in Geneva

In order to coordinate the provincial securities commissions, the Canadian Securities Administrators was formed and make all filings of Canadian listed companies available through:

1 A SEDAR

2 B EDGAR

3 C AcSB

4 D IASB

A tradeoff is often required between various degrees of:

1 A Matching and Materiality

2 B Timeliness and Neutrality

3 C Consistency and Comparability

4 D Relevance and Reliability

ABC Company charges all of their capital expenditures under $500 to

expense What principle is this policy based on?

1 A Matching

2 B Materiality

3 C Full Disclosure

4 D Comparability

The AcSB consists of a maximum of _members

4 D Approved exposure drafts

A sole proprietor of a convenience store has included his home on the balance sheet of his business This violates:

1 A Monetary unit assumption

2 B Going Concern Principle

3 C Periodicity assumption

4 D Economic entity assumption

Corporations provide shareholders quarterly and annual statements This is

an example of:

1 A Going Concern

2 B Monetary Unit

3 C Periodicity

4 D Relevance

The recognition of which of the following expenses exemplifies the

application of the matching principle?

1 A President's salary

2 B Research and development

3 C Cost of goods sold

The conceptual framework's qualitative characteristic of relevance includes:

1 A Going concern

2 B Historical cost

3 C Full disclosure

4 D Realization

The conceptual framework's recognition and measurement concepts recognize which of the following as a principle, rather than an

3 C Additional detailed statements

4 D All of the above

Financial accounting information should provide information about:

3 C Predictive value

4 D Neutrality

The main issue in the debate over accounting for employee stock options was:

1 A Which employees should receive options

2 B The amount of compensation expense that a company should recognize

3 C How many options should be granted to key executives

4 D The tax consequences of employee stock options

Net income equals:

1 A Assets minus liabilities

2 B Revenues minus cost of goods sold

3 C Revenues minus expenses

4 D Cash receipts minus cash payments

Financial reporting objectives state that financial statements should be comprehensible to:

Financial reporting objectives do not include providing information:

1 A About resources, obligations, and changes

2 B To determine market values, assess profit potential, and evaluate

management

3 C To assess the amounts and timing of prospective cash receipts

4 D To make rational investment, credit, and similar decisions

Primary qualitative characteristics of accounting information are:

1 A Relevance and comparability

2 B Comparability and consistency

3 C Reliability and relevance

4 D Reliability and consistency

Secondary qualitative characteristics of accounting information include:

1 A Relevance and comparability

2 B Comparability and consistency

3 C Reliability and relevance

4 D Reliability and consistency

Gains are:

1 A Inflows from selling a product or service to a customer

2 B Increases in equity resulting from transfers of assets to the company from owners

3 C Increases in equity from peripheral transactions of an entity

1 A Predicting cash flows.

2 B Determining taxable income

3 C Providing accountability

4 D Increasing future profits

Independent auditors express an opinion on the:

1 A Fairness of financial statements

2 B Accuracy of financial statements

3 C Soundness of a company's future

4 D Quality of a company's management

If an independent auditing firm is satisfied that statements are presented fairly in accordance with GAAP, they will express which of the following:

payment of $46,000 The land should be reported in the financial statements at:

1 A Comparability

2 B Consistency

3 C Relevance

4 D Reliability

Recognizing expected losses immediately, but deferring expected gains, is an example of:

4 D Gains and losses

The assumption that in the absence of contrary information a business entity will continue indefinitely is the:

1 A Periodicity assumption

2 B Entity assumption

3 C Going concern assumption

4 D Historical cost assumption

Which of the following Sections of the CICA handbook defines the 8 elements

of financial statements?

1 A CICA 1000

2 B CICA 1300, 3855

3 C CICA 1000, 3855

4 D CICA 1000, 1530

The possibility that the capital markets' focus on periodic profits may tempt a company's management to bend or even break accounting rules to inflate reported net income is an example of:

1 A An ethical dilemma

2 B An accounting theory issue

3 C A technical accounting issue

4 D None of these is correct

One of the elements that many believe distinguishes a profession from other occupations is the acceptance by its members of a responsibility for the interests of those it serves, often articulated in:

1 A Its conceptual framework

2 B Its code of ethics

3 C Federal laws

4 D State laws

Primecoat could get its annual financial statements two days earlier if it shifted substantial human resources from other operations to the annual report project Management decided the value of the earlier report was not worth the added commitment of resources The concept demonstrated is:

1 A Timeliness

2 B Materiality

3 C Relevance

4 D Cost effectiveness

Mega Loan Company has very stringent credit requirements and, accordingly, has negligible losses from uncollectible accounts The company's independent accountants did not protest when, contrary to GAAP, the company recorded bad debt expense only when specific accounts were determined to be

uncollectible, rather than use an allowance for uncollectible accounts The concept demonstrated is:

If a company has gone bankrupt, its financial statements likely violate:

1 A The matching principle

2 B The realization principle

3 C The stable monetary unit assumption

4 D The going concern assumption

Revenue should not be recognized until:

1 A The earnings process is complete and collection is reasonably assured

2 B Contracts have been signed and payment has been received.

3 C Work has been performed and customer has been billed

4 D Collection has been made and warrantees have expired

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 A Financial statements among companies should be more consistent and comparable

2 B Standard setting should be more consistent with the objectives of financial reporting

3 C Management should have greater latitude in choosing among accounting alternatives

4 D Users' understanding in financial statements should increase

Disclosure notes to a company's financial statements:

1 A Are relatively unimportant facts that don't belong in the basic financial statements

2 B Document the source of financial statement facts, like literary footnotes

3 C Are an integral part of a company's financial statements

4 D Are irrelevant facts that are immaterial in amount

Which of the following best demonstrates the full disclosure principle:

1 A The multi-step income statement

2 B The auditors' report

3 C The company's tax return

4 D Disclosure notes to financial statements

Four different competent accountants independently agree on the amount and method of reporting an economic event The concept demonstrated is:

2 B An expense recognition accounting principle

3 C A cash basis reporting principle

4 D An asset classification procedure

To meet the needs of full disclosure, companies use supplemental

Ford Motor Company purchases services from suppliers on account and sells its products to distributors on short-term credit As a result, do each of these affect net income faster than they affect net operating cash flows?

1 A Option A

2 B Option B

3 C Option C

4 D Option D