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

b) there is a rule for every situation.
c) accountants either apply specific standards based on the conceptual framework, or, professional judgement consistent with the framework.
d) it is expected that professional accountants might encounter situations where they are unable to apply the principles appropriately.
 
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
Learning Objective: Discuss some of the challenges and opportunities for accounting.
Section Reference: Challenges and Opportunities for the Accounting Profession
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
 
 
44. Which of the following is NOT a primary source of GAAP for Canadian private companies?
a) Handbook Sections 1400 to 3870
b) Accounting guidelines
c) Appendices to Handbook Sections 1400 to 3870 and Accounting guidelines
d) Pronouncements by accounting standard-setting bodies in other jurisdictions
 
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
Learning Objective: Discuss some of the challenges and opportunities for accounting.
Section Reference: Challenges and Opportunities for the Accounting Profession
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
 
 
45. Which of the following is NOT true of “professional judgement”?
a) It plays an especially important role in ASPE and IFRS .
b) It is important where standards are based primarily on general principles.
c) It is used in conjunction with the conceptual framework in the absence of specific standards.
d) It requires a rules-based system to be fully utilized.
 
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
Learning Objective: Discuss some of the challenges and opportunities for accounting.
Section Reference: Challenges and Opportunities for the Accounting Profession
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
 
 
46. The Sarbanes-Oxley Act (SOX) was NOT enacted to
a) help prevent fraud and poor financial reporting practices.
b) ensure the act was applied internationally.
c) enable the SEC to increase its policing efforts.
d) introduce new independence rules for auditors.
 
Answer: b
 
Difficulty: Easy
Learning Objective: Discuss some of the challenges and opportunities for accounting.
Section Reference: Challenges and Opportunities for the Accounting Profession
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
 
 
47. Which of the following is likely to be an advantage of the advancement of technology on financial reporting?
a) Users of financial information will have access to more information.
b) The quality and reliability of the information may be compromised.
c) Equal and fair access may be at issue.
d) Internet reporting will increase costs.
 
Answer: a
 
Difficulty: Easy
Learning Objective: Discuss some of the challenges and opportunities for accounting.
Section Reference: Challenges and Opportunities for the Accounting Profession
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Technology
 
 
48. One political factor influencing the standard-setting process is how the standard-setting bodies are financed. Which of the following is NOT an IASB principle regarding the nature and amount of funding?
a) Closed-loop: Financial commitments for funding should be contingent upon particular outcomes.
b) Broad-based: It should not rely on one or a few sources.
c) Compelling: Constituents should not be allowed to benefit from the standards without contributing to the process of standard setting.
d) Country-specific: Funding should be shared by the major economies on a proportionate basis.
 
Answer: a
 
Difficulty: Easy
Learning Objective: Discuss some of the challenges and opportunities for accounting.
Section Reference: Challenges and Opportunities for the Accounting Profession
CPA: Financial Reporting
Bloomcode: Knowledge
Feedback: Funding must be open-ended.