Intermediate Accounting Volume 1, 13th Canadian Edition by Donald E. Kieso Test bank

Bloomcode: Knowledge
AACSB: Analytic
 
 
36. In order to ensure that funding does not result in politicization of standard setting, the IASB has committed to four principles. Which of the following is not one of these principles?
a) Funding should be broad-based.
b) Funding should be compelling.
c) Funding should be open-ended.
d) Funding should not be country specific.
 
Answer: d
 
Difficulty: Easy
Learning Objective: Explain the need for accounting standards and identify the major entities that influence standard setting and financial reporting.
Section Reference: Standard Setting
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
 
 
37. International Financial Reporting Standards (IFRS) are issued by the
a) FASB.
b) IASB.
c) SEC.
d) EU.
 
Answer: b
 
Difficulty: Easy
Learning Objective: Explain the need for accounting standards and identify the major entities that influence standard setting and financial reporting.
Section Reference: Standard Setting
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
 
 
38. The role of the provincial securities commissions in Canada in relation to financial reporting is to
a) ensure that investors have access to the information they need to make informed decisions.
b) make recommendations for financial accounting standards.
c) form professional judgements regarding overall adherence to GAAP.
d) develop standards for financial reporting by publicly traded companies.
 
Answer: a
 
Difficulty: Easy
Learning Objective: Explain the need for accounting standards and identify the major entities that influence standard setting and financial reporting.
Section Reference: Standard Setting
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
 
 
39. Under ASPE, the primary sources of GAAP include
a) accounting textbooks and journals.
b) International Financial Reporting Standards.
c) the CICA Handbook and appendices.
d) research studies.
 
Answer: c
 
Difficulty: Easy
Learning Objective: Explain the meaning of generally accepted accounting principles (GAAP) and the significance of professional judgement in applying GAAP.
Section Reference: Generally Accepted Accounting Principles
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
 
 
40. Under ASPE, the other (as opposed to primary) sources of GAAP include
a) the CICA Handbook and appendices.
b) Accounting Guidelines, including appendices.
c) pronouncements by accounting standard-setting bodes in other jurisdictions.
d) All of these are primary sources of GAAP.
 
Answer: c
 
Difficulty: Easy
Learning Objective: Explain the meaning of generally accepted accounting principles (GAAP) and the significance of professional judgement in applying GAAP.
Section Reference: Generally Accepted Accounting Principles
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
 
 
41. The exercise of professional judgement does NOT involve
a) the use of knowledge gained through education.
b) the application of knowledge gained through experience.
c) the use of ethical decision making.
d) aggressive accounting.
 
Answer: d
 
Difficulty: Easy
Learning Objective: Explain the meaning of generally accepted accounting principles (GAAP) and the significance of professional judgement in applying GAAP.
Section Reference: Generally Accepted Accounting Principles
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
 
 
42. In a rules-based approach (such as U.S. GAAP), compared to a principles-based approach (such as Canadian GAAP),
a) the body of knowledge is smaller.
b) the importance of communicating the best information to users is emphasized.
c) since it is more prescriptive, it may be easier to defend how to account for a particular item.
d) companies frequently do not interpret the rules literally.
 
Answer: c
 
Difficulty: Easy
Learning Objective: Explain the meaning of generally accepted accounting principles (GAAP) and the significance of professional judgement in applying GAAP.
Section Reference: Generally Accepted Accounting Principles
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
 
 
43. In a principles-based standard-setting system (such as Canadian GAAP), compared to a rules-based approach (such as U.S. GAAP),
a) which is more prescriptive, it may be easier to defend how to account for a particular item.