11The main purpose of financial accounting

Topics: International Financial Reporting Standards, Financial statements, Financial Accounting Standards Board Pages: 71 (7960 words) Published: November 25, 2014
1
1.
The main purpose of financial accounting is to communicate useful financial information to decision-makers both inside and outside of the business organization.   
True    False
 
2.
The Canadian Business Corporations Act mandates that all incorporated companies in Canada follow IFRS.   
True    False
 
3.
Private companies in Canada may choose between IFRS or ASPE.   
True    False
 
4.
Canada has adapted its own pre-existing standards for public companies to IFRS, while the U.S has adopted IFRS completely.   
True    False
 
5.
External users of a company's financial statements may have conflicting objectives.   
True    False
 
6.
A company's functional currency is always the currency in which the financial statements are presented.   
True    False
 
7.
In Canada, almost all equity financing for both public and private companies is done through private placements.   
True    False
 
8.
IFRS standards may be modified to allow for a disclosed basis of accounting (DBA).   
True    False
 
9.
Privately held, publicly accountable companies with a fiduciary responsibility must comply with IFRS.   
True    False
 
10.
Mutual fund companies, which may be privately held, are deemed to have a fiduciary responsibility and must therefore comply with IFRS.   
True    False
 
11.
Canadian companies must always present their financial results in Canadian dollars.   
True    False
 
12.
In North America, the principal stakeholder to whom general-purpose financial statements are geared is the shareholder.   
True    False
 
13.
Canadian corporations are prohibited from using U.S. GAAP.   
True    False
 
14.
A company's functional currency is the currency in which it conducts most of its business.   
True    False
 
15.
The disclosed basis of accounting (DBA) refers to the use of Non-GAAP accounting policies by private companies.   
True    False
 
16.
A wholly-owned subsidiary of a multinational corporation is essentially a private corporation.   
True    False
 
17.
The accounting standards for private enterprises (ASPE) are essentially a scaled-down version of the CICA handbook, which is available to all small and medium sized enterprises with no fiduciary responsibility.   

True    False
 
18.
Different stakeholders have different reporting requirements with respect to general-purpose financial statements. A lender will be more interested in a company's cash flows while an investor will likely be more interested in a company's earnings.   

True    False
 
19.
The influence of tax rules when selecting appropriate accounting treatment for a transaction is particularly strong with public companies.   
True    False
 
20.
Due to the excellent work of the ACSB, there are very few choices among alternative accounting policies today.   
True    False
 
21.
Cash flow prediction is a common internal user reporting objective.   
True    False
 
22.
Disclosure notes facilitate the evaluation of enterprise position and performance because they include information, which helps to explain qualitative aspects of earnings.   
True    False
 
23.
A company whose net income is highly correlated to its operating cash flows is said to have a high quality of earnings.   
True    False
 
24.
Maximization of net income is a common motivation of managers.   
True    False
 
25.
Developments in accounting standards have not addressed the problem of using accounting techniques to smooth earnings.   
True    False
 
26.
The Federal Accounting Standards Board (FASB) is a branch of the CICA.   
True    False
 
27.
The CICA Handbook is the most important primary source of GAAP.   
True    False
 
28.
The various provincial securities commissions do not exert influence on the development of accounting standards.   
True    False
 
29.
FASB and International Accounting Standards are secondary sources of GAAP.   
True    False
 
30.
The CICA...
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