Financial Accounting: A Critical Approach 2013, 4th Edition Test Bank

Name: Financial Accounting: A Critical Approach 2013, 4th Edition Test Bank
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Financial Accounting: A Critical Approach 2013, 4th Edition Test Bank helps you familiarize yourself with exam formats and key concepts.

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1.
TB 01-01 The cost-benefit trade-off is best summarize...
The cost-benefit trade-off is best summarized as:
→ the concept of comparing the benefits of an action with the costs of the action.
the concept of measuring all costs and benefits in dollars.
the concept of recording all necessary costs to obtain the desired benefits.
the cost of ensuring that costs are always equal to benefits.
Multiple Choice TB 01-01 The cost-benefit
trade-off is best summarize...
2.
TB 01-02 You have decided to spend $75 on a Guide to...
You have decided to spend $75 on a "Guide to Caribbean Cruises" before booking your winter cruise holiday.
This is an example of which of the following principles?
Relevance
Reliability
→ Cost/benefit trade-off
Comparability
Multiple Choice TB 01-02 You have decided to
spend $75 on a Guide to...

3.
TB 01-03 A new shareholder of a small company is conc...
A new shareholder of a small company is concerned about being able to adequately monitor their investment
and has asked management to provide them with weekly financial statements. From the company's point of view
this would violate which of the following concepts?
Privacy
Reliability
IFRS
→ Cost/benefit trade-off
Multiple Choice TB 01-03 A new shareholder of a
small company is conc...
4.
TB 01-04 Financial accounting would be used to make w...
Financial accounting would be used to make which of the following decisions?
Deciding if the company should expand.
Determining which products are successful.
Determining the price of a product.
→ Deciding whether to invest in the company.
Multiple Choice TB 01-04 Financial accounting
would be used to make w...
5.
TB 01-05 Which of the following users would rely on m...
Which of the following users would rely on management accounting information?
Taxation authorities
→ Managers
Lenders
Investors
Multiple Choice TB 01-05 Which of the following
users would rely on m...

6.
TB 01-06 Which of the following statements about user...
Which of the following statements about users of financial accounting information is true?
Users of financial accounting information are the same as the preparers.
Users of financial accounting information normally work for the entity.
→ Users of financial accounting information are normally external to the firm.
Users of financial accounting information normally have direct access to the information about
the entity.
Multiple Choice TB 01-06 Which of the following
statements about user...
7.
TB 01-07 Why is it impossible for a single accounting...
Why is it impossible for a single accounting report to be appropriate for all situations?
Due to the diverse backgrounds of the people preparing accounting reports.
→ Due to the diverse accounting environment in which entities operate.
Due to the conflicting objectives of preparers and users.
Due to lack of laws defining a single accounting report.
Multiple Choice TB 01-07 Why is it impossible for
a single accounting...
8.
TB 01-08 What are the four key components of the acco...
What are the four key components of the accounting environment?
→ Entities, constraints, stakeholders, environmental factors
Entities, constraints, stakeholders,

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9.
TB 01-09 Which type of organization files a business ...
Which type of organization files a business tax return?
Proprietorship
Partnership
→ Corporation
Government
Multiple Choice TB 01-09 Which type of
organization files a business ...
10.
TB 01-10 Which of the following is the most important...
Which of the following is the most important feature of a corporation?
It is taxable.
→ It provides limited liability to its shareholders.
It can have more than one owner.
It has a limited life span.
Multiple Choice TB 01-10 Which of the following
is the most important...
11.
TB 01-11 Which of the following statements about priv...
Which of the following statements about private corporations is true?
Private corporations trade on the stock exchange.
Private corporations have only one shareholder.
Private corporations are the same as proprietorships.
→ Private corporations' shares are not available for sale unless the shareholders agree.
Multiple Choice TB 01-11 Which of the following
statements about priv...

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12.
TB 01-12 An unincorporated entity operated by two or ...
An unincorporated entity operated by two or more people is what form of business?
A proprietorship
→ A partnership A
corporation An
income trust
Multiple Choice TB 01-12 An unincorporated
entity operated by two or ...
13.
TB 01-13 James and Nicholas are roommates at universi...
James and Nicholas are roommates at university and plan to run a painting business for the summer. Which is
the most likely form of organization of their business?
A proprietorship
→ A partnership A
corporation An
income trust
Multiple Choice TB 01-13 James and Nicholas
are roommates at universi...
14.
TB 01-14 After completing an accounting course Jessic...
After completing an accounting course Jessica decided to offer her services as a bookkeeper to friends and
neighbours. What is the most likely form of organization of her business?
→ A proprietorship
A partnership A
corporation An
income trust
Multiple Choice TB 01-14 After completing an
accounting course Jessic...

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15.
TB 01-15 What type of organization trades its shares ...
What type of organization trades its shares on the Toronto Stock Exchange?
A partnership
A private corporation
→ A public corporation
A not-for-profit organization
Multiple Choice TB 01-15 What type of
organization trades its shares ...
16.
TB 01-16 Which of the following types of organization...
Which of the following types of organization includes all of the business's income in the owner's personal tax
return?
→ A proprietorship
A private corporation
A public corporation
An income trust
Multiple Choice TB 01-16 Which of the following
types of organization...
17.
TB 01-17 Which of the following is the most attractiv...
Which of the following is the most attractive feature of a proprietorship?
The only tax return required is the owner's personal tax return.
The owner can pledge his/her personal assets against bank loans.
Proprietorships are not separate legal entities.
→ Proprietorships are easy and inexpensive to set up.
Multiple Choice TB 01-17 Which of the following
is the most attractiv...

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TB 01-20 What are the owners of
a corporation called?
Multiple Choi c e
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18.
TB 01-18 The CICA is the governing organization of ch...
The CICA is the governing organization of chartered accountants in Canada. What is the most likely form of
organization of the CICA?
Partnership
Corporation
Income trust
→ Not-for-profit
Multiple Choice TB 01-18 The CICA is the
governing organization of ch...
19.
TB 01-19 Which one of the following is most likely or...
Which one of the following is most likely organized as a public corporation?
Jason's Computer Consulting
Smith and Smith, Partners in Law
→ International Tire Inc.
Manitoba Health Board
Multiple Choice TB 01-19 Which one of the
following is most likely or...
20.
TB 01-20 What are the owners of a corporation called?
What are the owners of a corporation called?
Auditors
Stakeholders
→ Shareholders
Managers

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21.
TB 01-21 Which of the following statements about stak...
Which of the following statements about stakeholders is true?
→ Stakeholders are individuals that have an interest in an entity.
All stakeholders have the same perspective on an entity.
Stakeholders normally have unrestricted access to an entity's records.
Every entity has the same stakeholders.
Multiple Choice TB 01-21 Which of the following
statements about stak...
22.
TB 01-22 Who is responsible for deciding what, how an...
Who is responsible for deciding what, how and when information is presented in the financial statements?
Stakeholders
Accountants
→ Management
Government
Multiple Choice TB 01-22 Who is responsible for
deciding what, how an...
23.
TB 01-23 Which of the following statements about prep...
Which of the following statements about preparers is true?
Preparers are neutral providers of accounting information.
→ Preparers may not be the people who physically prepare the financial statements.
Preparers have the same perspective as stakeholders.
Preparers decide what information is going to be presented in the financial statements, but not
when it is presented.
Multiple Choice TB 01-23 Which of the following
statements about prep...

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24.
TB 01-24 Sandy's Sandwiches is a small business owned and operated by Sandy Southerly that
is not publicly...
Sandy's Sandwiches is a small business owned and operated by Sandy Southerly that is not publicly traded and
has never borrowed any money. Which of the following would be a constraint in the preparation of its financial
statements?
Canada Business Corporations Act
CICA
IFRS
→ The Income Tax Act
Multiple Choice
TB 01-24 Sandy's Sandwiches is
a small business owned and
operated by Sandy Southerly that
is not publicly...
25.
TB 01-25 Why are there different acceptable ways to a...
Why are there different acceptable ways to account for similar transactions?
→ To allow flexibility to deal with different economic circumstances.
To allow managers to enhance their bonuses.
To confuse the stakeholders.
Because the rule makers cannot agree on one best method.
Multiple Choice TB 01-25 Why are there different
acceptable ways to a...

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26.
TB 01-26 Who are the people who examine an entit
Who are the people who examine an entity's financial information on behalf of external stakeholders?
Accountants
Internal auditors
→ External auditors
Preparers
Multiple Choice TB 01-26 Who are the people
who examine an entit
27.
TB 01-27 Which of the following is an important featu...
Which of the following is an important feature of external auditors?
→ They are independent of the entity.
They have previous experience managing the entity.
They have an ownership interest in the entity.
They provide many other services to the entity while engaged as auditors.
Multiple Choice TB 01-27 Which of the following
is an important featu...
28.
TB 01-28 External auditors are hired by which one of ...
External auditors are hired by which one of the following groups?
Management
Internal auditors
→ Shareholders

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29.
TB 01-29 Because managers can exercise professional j...
Because managers can exercise professional judgment when preparing the financial statements for their
company, the stakeholder should:
read the report of the external auditor.
place complete confidence in the financial data.
→ understand that management can be motivated to act in its own self-interests.
place no confidence in the financial data.
Multiple Choice TB 01-29 Because managers can
exercise professional j...
30.
TB 01-30 In a public corporation, which of the follow...
In a public corporation, which of the following stakeholders would be the most interested in the financial
statements of the entity?
→ Shareholders
Managers
Employees
Auditors
Multiple Choice TB 01-30 In a public corporation,
which of the follow...
31.
TB 01-31 MC In a public corporation, which of the follow...
In a public corporation, which of the

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35.
TB 01-35 The critical approach to accounting is neces...
The critical approach to accounting is necessary primarily because:
various levels of authorization are desirable to enhance separation of duties.
management compensation would be even more excessive without it.
revenue Canada requires it.
→ a company's stakeholders and management have differing information needs and interests.
Multiple Choice TB 01-35 The critical approach to
accounting is neces...
36.
TB 01-36 What does ASPE stands for?
What does ASPE stands for?
Acceptable Standards for Private Enterprises
Accounting for Shareholders of Private Entities
Accountants and Shareholders for Private Enterprises
→ Accounting Standards for Private Enterprises
Multiple Choice TB 01-36 What does ASPE
stands for?
37.
TB 01-37 What does IFRS stands for?
What does IFRS stands for?
International Fraud Reporting Standards
Integrated Financial Reporting Standards
International Forensic Reporting Standards
→ International Financial Reporting Standards
Multiple Choice

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38.
TB 01-38 Which of the following statements about IFRS...
Which of the following statements about IFRS is true?
IFRS is an international set of accounting policies.
All entities in Canada prepare their financial statements in accordance with IFRS.
Statements prepared according to IFRS are not easily compared.
→ The flexibility of IFRS requires users to apply critical thinking when using financial statements.
Multiple Choice TB 01-38 Which of the following
statements about IFRS...
39.
TB 01-39 International Financial Reporting Standards ...
International Financial Reporting Standards are:
→ mandatory for public companies only.
mandatory for

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51.
TB 01-51 What would be the most likely form of busine...
What would be the most likely form of business organization for each of the following?
i) A small bookkeeping business run by an individual from his/her home
ii) A national bank
iii) Two brothers operating a landscape business together
iv) A firm of twenty lawyers
v) A family business operating a small chain of bookstores
i) Proprietorship
ii) Corporation
iii) Partnership
iv) Partnership
v) Corporation
Essay TB 01-51 What would be the
most likely form of busine...

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58.
TB 01-58 Chris has just finished his first month at c...
Chris has just finished his first month at college and wants to estimate his costs for the rest of the year to ensure
that the money he makes at his part-time job will cover all of his expenses. He has recorded all his cash inflows
and outflows for the month as follows:
Required:
Prepare a statement that organizes Chris' information is a useful way.
Summary of Earnings and Expenses for Chris for September:
Essay TB 01-58 Chris has just finished
his first month at c...

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Financial Accounting: A Critical Approach 2013, 4th Edition Test Bank

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