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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.1)Conceptually, liabilities constitute a present obligation as a result of a past event and entail an expected future sacrifice of assets or services.A)True B)False
Answer:B
2)Under ASPE, only legal obligations are recognized.A)True B)False
Answer:B
3)A reasonable expectation on the part of a company's stakeholders arising from a company's past practices or behaviour may constitute a constructive obligation in certain instances.A)True B)False
Answer:B
4)A contingency may become a provision if the likelihood of the contingent event greatly increases.A)True B)False
Answer:B
5)Under IFRS, most financial liabilities are valued at Fair Value.A)True B)False
Answer:B
6)An improvement to a company's credit rating under IFRS will lead to a reduction in the carrying amount of any financial liabilities and a gain being reported in OCI.A)True B)False
Answer:B
7)Loan guarantees are only recorded if they are likely to be paid.A)True B)False
Answer:B
8)Accrued liabilities made due to routine operating expenses are not normally discounted.A)True B)False
Answer:B
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9)For a small population, the best estimate for the amount of a provision that must be recognized is the expected value of the possible outcomes.A)True B)False
Answer:B
10)Under IFRS, provisions are always recorded at their expected value.A)True B)False
Answer:B
11)For a large population, the best estimate for the amount of a provision that must be recognized is the most likely outcome with respect to the expected value and cumulative probabilities.A)True B)False
Answer:B
12)Under ASPE, contingent liabilities which are more likely than not, are accrued at the lowest end of the range.A)True B)False
Answer:B
13)Contingent assets may be recorded under ASPE but not under IFRS.A)True B)False
Answer:B
14)Executory contracts seldom require a journal entry, while onerous contracts do.A)True B)False
Answer:B
15)Discounting is not required when the time value of money is immaterial or if the amount and timing of cash flows is highly uncertain.A)True B)False
Answer:B
16)Financial liabilities are initially recognized at fair value and at cost, amortized cost or fair value post-acquisition.A)True B)False
Answer:B
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17)A company decides to relocate a group from a discontinued business segment to a division with ongoing operations. The expenses incurred in doing so would qualify as a restructuring charge.A)True B)False
Answer:B
18)Under the warranty expense approach, there should be no income statement effects for warranty repairs performed after the year of sale (assuming that accrued warranty expenses and expenditures equal one another).A)True B)False
Answer:B
19)Under the warranty revenue approach, there should be no income statement effects for warranty repairs performed after the year of sale (assuming that accrued warranty expenses and expenditures equal one another).A)True B)False
Answer:B
20)An onerous contract is one where the unavoidable costs of meeting the contract may or may not exceed the benefits derived from the contract.A)True B)False
Answer:B
21)A lawsuit in progress wherein the defendant will probably be found guilty would likely be accounted for as a provision.A)True B)False
Answer:B
22)Warranties provisions may arise from legal or constructive obligations.A)True B)False
Answer:B
23)Once a company has formally decided to restructure its operations, a provision must be made for the restructuring.A)True B)False
Answer:B
24)Loyalty points are provided (accrued) for and reversed once the points are redeemed.A)True B)False
Answer:B
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25)Self-insurance costs for expected losses must never be provided for.A)True B)False
Answer:B
26)Current liabilities are usually discounted.A)True B)False
Answer:B
27)A decline in value of a company's reporting currency relative to the foreign currency in which it has payables will result in a foreign exchange gain on the reporting company's books.A)True B)False
Answer:B
28)Adjustments to fair value relating to FVTPL liabilities will always flow through earnings.A)True B)False
Answer:B
29)Loan guarantees must be provided for; the amount of the provision is the probability of payout multiplied by the fair value of the loan guarantee.A)True B)False
Answer:B
30)A company may reclassify a current financial liability to a long-term one only if there is a contractual agreement in place by the reporting date to replace the financing.A)True B)False
Answer:B
31)Debt issue costs may be expensed or included in the cost of the debt.A)True B)False
Answer:B
32)Normal business risks that are insured must be provided for.A)True B)False
Answer:B
33)An administrative fee pertaining to an unsuccessful loan application is to be immediately expensed.A)True B)False
Answer:B
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