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

E1-75                 Value creation
E1-76                 Standard setting in a political environment
 
PROBLEMS
 
Item               Description
P1-77                 Information Asymmetry
P1-78                 U.S. GAAP impact on Canadian GAAP
P1-79                 Challenges facing financial reporting
P1-80                 Shortcomings of rules-based approach
P1-81                 Sustainability reporting

 
MULTIPLE CHOICE
 
 
1. The essential characteristic(s) of accounting is (are)
a) communication of financial information to interested internal parties only.
b) communication of economic information to external parties.
c) identification and measurement of financial information only.
d) identification, measurement, and communication of financial information.
 
Answer: d
 
Difficulty: Easy
Learning Objective: Understand the financial reporting environment.
Section Reference: Financial Statements and Financial Reporting
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Communication
 
 
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.
 
Answer: a
 
Difficulty: Easy
Learning Objective: Understand the financial reporting environment.
Section Reference: Financial Statements and Financial Reporting
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
 
 
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 external users and Canada Revenue Agency.
 
Answer: c
 
Difficulty: Easy
Learning Objective: Understand the financial reporting environment.
Section Reference: Financial Statements and Financial Reporting
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic
 
 
4. Management accounting can be broadly defined as the area of accounting that communicates financial information
a) to investors only.
b) to parties internal to the business enterprise only.
c) to parties both internal and external to the business enterprise.
d) primarily to external users and Canada Revenue Agency.
 
Answer: b
 
Difficulty: Easy
Learning Objective: Understand the financial reporting environment.
Section Reference: Financial Statements and Financial Reporting
CPA: Financial Reporting
CPA: Management Accounting
Bloomcode: Knowledge
AACSB: Analytic
 
 
5. Whether a business is successful and thrives is determined by
a) free enterprise or competition.
b) competition and markets only.
c) markets and free enterprise only.
d) markets, competition, and free enterprise.
 
Answer: d
 
Difficulty: Easy
Learning Objective: Understand the financial reporting environment.
Section Reference: Financial Statements and Financial Reporting
CPA: Financial Reporting
CPA: Strategy & Governance
Bloomcode: Knowledge
AACSB: Analytic


 
6. Which of the following is correct?
a) Reported accounting numbers do not affect the transfer of resources.
b) Credit rating agencies use accounting information to assess only assets.
c) Efficient capital markets promote productivity and encourage innovation.
d) Efficient capital markets promote productivity but do not encourage innovation.
 
Answer: c
 
Difficulty: Easy
Learning Objective: Understand the financial reporting environment.
Section Reference: Financial Statements and Financial Reporting
CPA: Financial Reporting