Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition Test Bank All Chapters

Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition (Test Bank All Chapters) Chapter 1 Setting the Stage Copyright © 2014 Pearson Canada Inc.1-1

1) What do business enterprises have that NFPs do not have?

• Specified products or services
• Identifiable customers or clients
• Employees
• Boards of directors

Answer: B

Page Ref: 3

Learning Obj.: 1.1

Difficulty: Easy

2) Which of the following statements about the adoption of IFRS is true?

• Many European countries adopted IFRS prior to 2011.
• Canada adopted IFRS in 2012.
• All European and North American countries adopted IFRS in 2011.
• All European, Asian, and African countries adopted IFRS in 2011.

Answer: A

Page Ref: 3

Learning Obj.: 1.1

Difficulty: Easy

3) Why has the reputation of U.S. accounting standards decreased in recent years?

• The U.S. deficit is at a record high.
• Many U.S. businesses have declared bankruptcy.
• There have been some notable American accounting scandals, such as Enron.
• Lengthy prison sentences have been given to unethical American executives, such as Bernie Madoff.

Answer: C

Page Ref: 4

Learning Obj.: 1.2

Difficulty: Easy

4) Which of the following is true about the standards for publicly accountable enterprises in the CICA Handbook, Part I?

• The standards are similar to U.S. GAAP.
• The standards are adaptations of IFRS that have been tailored to Canadian circumstances.
• The standards are similar to ASPE.
• The standards are identical, word for word, to IFRS.

Answer: D

Page Ref: 5

Learning Obj.: 1.2

Difficulty: Easy 1 / 4

Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition Chapter 1 Setting the Stage Copyright © 2014 Pearson Canada Inc.1-2

5) Which of the following private companies is required to use IFRS?

• Investment companies
• Import/export companies
• Manufacturing companies
• Accounting firms

Answer: A

Page Ref: 5

Learning Obj.: 1.2

Difficulty: Moderate

6) What accounting standards are private banks and investment funds required to follow for their consolidated, general-purpose, publicly issued financial statements?

A) IFRS

B) ASPE

• NFP accounting standards
• PSAB recommendations

Answer: A

Page Ref: 5

Learning Obj.: 1.2

Difficulty: Moderate

7) Which of the following Canadian accounting standards are not included in the CICA Handbook?

• Publicly accountable enterprises
• Private enterprises
• Not-for-profit organizations
• Government

Answer: D

Page Ref: 5-6

Learning Obj.: 1.2

Difficulty: Easy

8) What accounting standards should government NFP organizations follow?

• CICA Handbook, Part III only
• CICA Public Sector Accounting Handbook only
• Choice of CICA Handbook, Part III or CICA Public Sector Accounting Handbook
• Choice of CICA Handbook, Part III; CICA Public Sector Accounting Handbook; or IFRS

Answer: C

Page Ref: 5, 7

Learning Obj.: 1.2

Difficulty: Moderate

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Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition Chapter 1 Setting the Stage Copyright © 2014 Pearson Canada Inc.1-3

9) What accounting standards are contained in the CICA Handbook, Part III?

A) IFRS

B) ASPE

C) NFP

• Government

Answer: C

Page Ref: 6

Learning Obj.: 1.2

Difficulty: Easy

10) NFP organizations can choose among reporting approaches contained within the framework provided by the CICA Handbook. Which of the following is not a consideration in choosing the approach?

• Nature of the NFP's operations
• Sources of the NFP's funding
• The NFP's reporting objectives
• Whether or not the NFP uses the restricted fund method of accounting

Answer: D

Page Ref: 6

Learning Obj.: 1.2

Difficulty: Moderate

11) Which of the following is true about Canadian governmental reporting standards?

• PSAB standards are recommendations only.
• PSAB standards are rules that must be followed.
• PSAB standards must be applied to all provincial public utilities.
• PSAB standards were developed by the OSC.

Answer: A

Page Ref: 6

Learning Obj.: 1.2

Difficulty: Easy

12) A private company that is closely held and internally financed is most likely to report under ________.

A) IFRS

B) ASPE

C) NFP

• PSAB recommendations

Answer: B

Page Ref: 6

Learning Obj.: 1.2

Difficulty: Moderate

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Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition Chapter 1 Setting the Stage Copyright © 2014 Pearson Canada Inc.1-4

13) Assume that a nation has fully adopted IFRS. Which of the following statements is true?

• Since the nation has fully adopted IFRS, all standards will be applied in the same way as other nations

that have fully adopted IFRS.

• Since the nation has fully adopted IFRS, IFRS must be applied to all business enterprises in the nation.
• Although the nation has fully adopted IFRS, standards may be applied in different ways to suit the

local environment.

• Although the nation has fully adopted IFRS, business enterprises can choose to opt out as long as they

have government approval to do so.

Answer: C

Page Ref: 8

Learning Obj.: 1.3

Difficulty: Easy

14) Which nation does not require a cash flow statement in its financial reporting?

• United States
• United Kingdom
• Australia
• Japan

Answer: D

Page Ref: 8

Learning Obj.: 1.3

Difficulty: Easy

15) When the International Accounting Standards Board amends a standard, what must a code-law country do to adopt the amendment?

• The country's securities regulators must approve the amendment.
• The country's professional accounting body must approve the amendment.
• The country must pass new legislation to adopt the amendment.
• The country's financial institution regulators must approve the amendment.

Answer: C

Page Ref: 9

Learning Obj.: 1.3

Difficulty: Moderate

16) Which of the following statements about the adoption of IFRS is true?

• Code-law countries that adopt IFRS must adopt it completely, but common-law countries can choose

to partially adopt IFRS.

• Common-law countries that adopt IFRS must adopt it completely, but code-law countries can choose

to partially adopt IFRS.

• Both code-law and common-law countries can choose to partially adopt IFRS.
• Both code-law and common-law countries that choose to adopt IFRS must adopt it in its entirety.

Answer: C

Page Ref: 9

Learning Obj.: 1.3

Difficulty: Easy

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