Intermediate Accounting Volume 1, 11th Canadian Edition By Bruce J. McConomy Donald E. Kieso-Test Bank

Test Bank For Intermediate Accounting Volume 1, 11th Canadian Edition By Bruce J. McConomy Donald E. Kieso

ISBN-10:1119048532 , ISBN-13:978-1119048534

CHAPTER 1: THE CANADIAN FINANCIAL REPORTING ENVIRONMENT

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: Explain how accounting makes it possible to use scarce resources more efficiently.
Section Reference: Accounting and Capital Allocation
CPA: Financial Reporting
Bloomcode: Knowledge

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: Explain how accounting makes it possible to use scarce resources more efficiently.
Section Reference: Accounting and Capital Allocation
CPA: Financial Reporting
Bloomcode: Knowledge

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: Medium
Learning Objective: Explain how accounting makes it possible to use scarce resources more efficiently.
Section Reference: Accounting and Capital Allocation
CPA: Financial Reporting
Bloomcode: Knowledge

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: Explain how accounting makes it possible to use scarce resources more efficiently.
Section Reference: Accounting and Capital Allocation
CPA: Financial Reporting
CPA: Management Accounting
Bloomcode: Knowledge

5. Whether a business is successful and thrives is determined by
a) free enterprise or competition.
b) competition and markets only.
c) markets and competition only.
d) markets, competition and free enterprise.

Answer: d

Difficulty: Medium
Learning Objective: Explain how accounting makes it possible to use scarce resources more efficiently.
Section Reference: Accounting and Capital Allocation
CPA: Financial Reporting
CPA: Strategy & Governance
Bloomcode: Knowledge

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 their assets.
c) Efficient capital markets promote productivity and encourage innovation.
d) Efficient capital markets promote productivity but do not encourage innovation.

Answer: c

Difficulty: Medium
Learning Objective: Explain how accounting makes it possible to use scarce resources more efficiently.
Section Reference: Accounting and Capital Allocation
CPA: Financial Reporting
CPA: Strategy & Governance
Bloomcode: Knowledge

7. Information provided by accounting is important because it enables investors and creditors to
a) compare income and assets of companies.
b) assess the relative risks and returns of investment opportunities.
c) channel their resources more effectively.
d) all of the above

Answer: d

Difficulty: Easy
Learning Objective: Explain how accounting makes it possible to use scarce resources more efficiently.
Section Reference: Accounting and Capital Allocation
CPA: Financial Reporting
CPA: Strategy & Governance
Bloomcode: Knowledge

8. In Canada, the primary exchange mechanism(s) for allocating resources is (are)
a) debt & equity markets.
b) financial Institutions such as banks.
c) government authorities such as the Canada Revenue Agency (CRA).
d) both a & b

Answer: d

Difficulty: Medium
Learning Objective: Explain how accounting makes it possible to use scarce resources more efficiently.
Section Reference: Accounting and Capital Allocation
CPA: Financial Reporting
Bloomcode: Knowledge

9. Which of the following is/are major factors in the rapidly changing financial reporting environment in Canada?
a) increased demand for accountants and the impact of technology
b) globalization and the unethical actions of accountants
c) the growing number of institutional investors who want more information regarding environmental and social issues
d) increased use of the Internet

Answer: c

Difficulty: Easy
Learning Objective: Explain how accounting makes it possible to use scarce resources more efficiently.
Section Reference: Accounting and Capital Allocation
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

10. Stakeholders who help in the efficient allocation of resources include
a) investors and creditors.
b) financial analysts and regulators.
c) creditors and auditors.
d) management and auditors.

Answer: b

Difficulty: Easy
Learning Objective: Explain the meaning of “stakeholder” and identify key stakeholders in financial reporting, explaining what is at stake for each one.
Section Reference: Stakeholders
CPA: Financial Reporting
Bloomcode: Knowledge

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