11) Materiality is a component of the faithful representation qualitative characteristic.
Answer: FALSE
Explanation: Materiality is a component of the relevance qualitative characteristic.
Diff: 2 Type: TF
L.O.: 1-4
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
12) Financial statement information that reflects the economic substance of a transaction is considered to be representationally faithful.
Answer: TRUE
Diff: 2 Type: TF
L.O.: 1-4
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
13) Choose the appropriate definition for the terms below.
a. professional guidelines followed by accountants
b. corporations that have issued shares in public markets
c. organizations that do not issue information used by the public
d. set of standards used by public corporations
e. the group responsible for Canadian GAAP
f. issues International Financial Reporting Standards
g. designates the CICPA Handbook as GAAP
h. this group was established to oversee accounting and reporting standards for both Canadian companies and not-for-profits
________ 1. International Accounting Standards Board
________ 2. Canadian Business Corporations Act
________ 3. publicly accountable enterprises
________ 4. Canadian Institute of Chartered Professional Accountants
________ 5. GAAP
________ 6. Accounting Standards Board
________ 7. International Financial Reporting Standards
________ 8. private enterprises
Answer:
1. f
2. g
3. b
4. e
5. a
6. h
7. d
8. c
Diff: 2 Type: ES
L.O.: 1-4
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting
1.5 Make ethical business decisions
1) All of the following are purposes of internal control except:
A) to safeguard assets
B) to ensure accurate and reliable accounting records
C) to encourage adherence to company policies
D) to promote operational inefficiency
Answer: D
Diff: 1 Type: MC
L.O.: 1-5
CPA COMPETENCIES: Chapter 1
1.1.1 Evaluates financial reporting needs
1.1.2 Evaluates the appropriateness of the basis of financial reporting
1.1.3 Evaluates reporting processes to support reliable financial reporting