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York University (35,141)
ADMS 2511 (179)
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Department
Administrative Studies
Course
ADMS 2511
Professor
Songlan Peng
Semester
Fall

Description
CHAPTER 1 THE CANADIAN FINANCIAL REPORTING ENVIRONMENT MULTIPLE CHOICE —Conceptual Answer No. Description d 1. Accounting characteristics. a 2. Nature of financial accounting. c 3. Definition of financial accounting. a 4. Financial reporting entity. d 5. Efficient use of resources. d 6. Capital allocation process. c 7. Assessing management stewardship. c 8. Objectives of financial reporting. a 9. Role of AcSB. c 10. Body responsible for setting GAAP. b 11. Preparation of biased information. d 12. Parties instrumental in development of reporting standards. d 13. Stakeholders in the financial reporting environment.. a 14. “Due process”. d 15. Causes of subprime lending crisis. d 16. Management bias. b 17. Adoption of IFRS. c 18. Role of OSC. d 19. Definition of GAAP. b 20. Changing nature of the economy. d 21. Exercise of professional judgement. c 22. Major factors in the reporting environment. a 23. Impact of technology on financial reporting. b 24. Nature of the “Balanced Scorecard”. a 25. Responsibility for financial statements. d 26. GAAP for private enterprises. d 27. Reporting principles b 28. SOX. a 29 AcSB’s standard setting process Test Bank Chapter 1 Copyright © 2010 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited 1 - 2 Test Bank for Intermediate Accounting, Ninth Canadian Edition EXERCISES Item Description E1-30 Objectives of financial reporting. E1-31 Role of securities commissions and stock exchanges. E1-32 User needs. E1-33 Sources of GAAP. E1-34 Standard Setting. E1-35 Challenges facing financial reporting. E1-36 Stakeholders in the financial reporting environment. Test Bank Chapter 1 Copyright © 2010 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited The Canadian Financial Reporting Environment 1 - 3 MULTIPLE CHOICE —Conceptual 1. 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. all of these. 2. Financial accounting is concerned with the process that culminates in 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. 3. Financial accounting can be broadly defined as the area of accounting that prepares financial statements to be used a by parties internal to the business enterprise only. b. by investors only. c. by parties both internal and external to the business enterprise. d. primarily by management. 4. The information provided by financial reporting pertains to a. individual business enterprises, rather than to industries or an economy as a whole or to members of society as consumers. b. business industries, rather than to individual enterprises or an economy as a whole or to members of society as consumers. c. individual business enterprises, industries, and an economy as a whole, rather than to members of society as consumers. d. an economy as a whole and to members of society as consumers, rather than to individual enterprises or industries. 5. Whether a business is successful and thrives is determined by a. free enterprise. b. competition. c. markets. d. all of these. 6. An effective capital allocation process a. encourages innovation. b. promotes productivity. c. provides an efficient and liquid market for buying and selling securities. d. all of these. Test Bank Chapter 1 Copyright © 2010 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited 1 - 4 Test Bank for Intermediate Accounting, Ninth Canadian Edition 7. In assessing management stewardship, users traditionally refer to a. non-financial measurements. b. forward-looking data. c. historical data . d. none of these. 8. Which of the following statements is not an objective of financial reporting? a. Provide information that is useful to users in making resource allocation decisions. b. Provide information about an entity’s economic resources, obligations, and equity/net assets. c. Provide information on the liquidation value of an enterprise. d. Provide information about changes in an entity’s economic resources, obligations, and equity/net assets. 9. 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. 10. The body that has the responsibility to set generally accepted accounting principles in Canada is the a. FASB. b. IASB. c. AcSB. d. OSC. 11. The preparation by some companies of biased information is sometimes referred to as a. conservative financial reporting. b. aggressive financial reporting. c. full disclosure of all material facts. d. management stewardship. 12. Which of the following parties is not instrumental in the development of financial reporting standards in Canada? a. the Financial Accounting Standards Board (FASB) b. the Provincial Securities Commissions c. the International Accounting Standards Board (IASB) d. the American Institute of Certified Public Accountants 13. Which of the following is not a stakeholder in the Canadian Financial Reporting Environment? a. Investors b. Creditors c. Auditors d. All of these are stakeholders Test Bank Chapter 1 Copyright © 2010 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited The Canadian Financial Reporting Environment 1 - 5 14. In establishing financial accounting standards, “due process” refers to a. the process of giving interested parties ample opportunity to express their views. b. the practice of researching, creating a task force, issuing an exposure draft and establishing the new GAAP. c. the researching of the legal implications of proposed new accounting standards. d. the requirement that all accountants must receive a copy of financial standards. 15. The widely publicized subprime lending crisis was not caused by a. Capital market participants who acted in their own self-interest. b. A lack of transparency. c. A lack of investor understanding of the investment's true risk. d. The practice of securitizing assets. 16. Which of the following describes one of the causes of management bias? a. The need to comply with contracts, such as debt covenants. b. The desire to meet financial analyst's expectations. c. The tendency to emphasize positive events only. d. All of these 17. The adoption of International Financial Reporting Standards is an example of a. The impact of technology on user's needs. b. The impact of globalization on capital markets c. Ethical behaviour. d. None of the above 18. Which of the following statements does not describe the activities and authority of the Ontario Securities Commission (OSC)? a. The OSC reviews and monitors the financial statements of companies whose shares are listed on the Toronto Stock Exchange b. The OSC issues its own disclosure requirements for listed companies. c. The OSC has the ability to fine or delist companies. d. The OSC issues financial accounting standards for Canadian companies. 19. Generally accepted accounting principles include a. specific rules, practices and procedures. b. broad principles and conventions of general applications including underlying concepts. c. pronouncements by the Emerging Issues Committee. d. all of these. 20. Which of the following aspects is often described as one of the main issues of measuring performance in the “knowledge-based” economy? a. "Knowledge-based" assets are mostly linked to physical assets. b. The success of "knowledge-based" companies includes non-financial components. c. "Knowledge-based" companies are dominating the market. d. All of these. Test Bank Chapter 1 Copyright © 2010 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibited 1 - 6 Test Bank for Intermediate Accounting, Ninth Canadian Edition 21. The exercise of professional judgement does not involve which of the following: a. the use of knowledge gained through education. b. the application of knowledge gained through experience. c. the use of ethical decision making. d. none of these. 22. Which of the following are major factors in the rapidly changing financial reporting environment in Canada? a. Increased demand for accountants and the impact of technology b. Globalization and the unethical actions of accountants c. The growing number of institutional investors and the knowledge based economy d. All of these 23. Which of the following is NOT likely a drawback of the dramatic advancement of technology on financial reporting? a. Users of financial information have access to more information. b. Quality and reliability may be compromised c. Equal and fair access may be at issue. d. None of these are drawbacks 24. The business strategy model called the “Balanced Scorecard” a. ensures that all of the
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