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CANADIAN ACCOUNTING
STANDARDS PRACTICE QUESTIONS
WITH ACCURATE ANSWERS
Which of the following does the IFRS Conceptual Framework for Financial Reporting provide a solid foundation for? A. External users of financial statements B. The basis of accounting standards C. Management bias in preparing financial statements D. Economic resources of entities B. The basis of accounting standards Which of the following statements describes the going-concern assumption? A. It assumes that different users have different concerns and uses of the financial statements. B. It is the assumption that a business will continue to operate for the foreseeable future. C. It is the assumption that refers to the ability to compare one set of financial statements with another. D. It relates to the assumption that the financial statements are free from material error. B. It is the assumption that a business will continue to operate for the foreseeable future.
Which of the following describes faithful representation in financial reporting? A. The financial information is reported soon enough for it to be useful to the decision makers. B. The financial information provided is capable of making a difference in the decisions made by users. C. The financial statements provide information that is useful to users in making their resource allocation decisions. D. The accounting information best reflects the transactions undertaken by the entity. D. The accounting information best reflects the transactions undertaken by the entity. Which of the following describes how an entity can ensure that its general-purpose financial statements satisfy the needs of the maximum number of primary users? A. The company should choose accounting policies and present its financial information in a manner that best reflects the results of its operations and net assets. B. The company should tailor the financial statements to meet the needs of the internal users over the needs of the external users. C. The company should consult all users on their needs and tailor the financial statements to those needs. D. The company should choose the same accounting policies as its competitors. A. The company should choose accounting policies and present its financial information in a manner that best reflects the results of its operations and net assets.
A. The ASPE framework is part of the ASPE governing standards. B. The two frameworks are developed with different user requirements. C. The IFRS framework is a preamble to the IFRSs. D. The ASPE framework applies to both public and private entities, whereas the IFRS framework applies only to public entities. B. The two frameworks are developed with different user requirements. Which of the following is a main qualitative characteristic in the ASPE framework? A. Verifiability B. Timeliness C. Neutrality D. Relevance D. Relevance Which of the following is a sub-characteristic of reliability in the ASPE framework? A. Understandability B. Comparability C. Predictive and feedback value D. Conservatism D. Conservatism
Which of the following is the objective of financial statements of private enterprises? A. To allow an entity to obtain loans from creditors B. To provide management and employees with data needed to operate the entity C. To provide information to users about the entity that is useful in making investment decisions and/or assessing management stewardship D. To present the financial results of the entity in both the ASPE and IFRS financial reporting frameworks C. To provide information to users about the entity that is useful in making investment decisions and/or assessing management stewardship Which of the following statements describes the IFRS conceptual framework and not the ASPE framework? A. Timeliness is a distinct and separate enhancing characteristic. B. When there are competing qualitative characteristics, a trade-off must be made between competing characteristics. C. Representational faithfulness is a sub-characteristic of reliability. D. Materiality is a separate principle outside of qualitative characteristics. A. Timeliness is a distinct and separate enhancing characteristic. Which of the following statements best describes the purpose of the Canadian AcSB? A. To establish accounting standards for all Canadian entities outside the public sector
Which of the following describes how XBRL is used in financial reporting? A. It facilitates the storage of audit trails. B. It allows the financial statements and notes to be uploaded and searched in a common format. C. It ensures that the reporting entity operates in accordance with CSA regulations. D. It provides real-time data to all users. B. It allows the financial statements and notes to be uploaded and searched in a common format. Which of the following IFRS standards will be replacing IFRS 4? A. IAS 16 Property, Plant and Equipment B. Section 3041 Agriculture C. IAS 37 Provisions, Contingent Liabilities and Contingent Assets D. IFRS 17 Insurance Contracts D. IFRS 17 Insurance Contracts Which of the following new standards is being added to ASPE for reporting periods beginning on or after January 2022? A. Insurance contracts B. Revenue C. Employee Future Benefits D. Agriculture
D. Agriculture Which of the following is the general reason the IASB and AcSB create new standards and revise existing standards? A. To ensure that the marketplace is fair, with each participant having equitable access to information to make informed decisions B. To ensure that financial statements continue to provide useful information for decision-making C. To help achieve consensus on policy decisions affecting the Canadian capital market D. To ensure the IASB and AcSB remain relevant to the accounting profession B. To ensure that financial statements continue to provide useful information for decision-making Which of the following statements is true about the CSA? A. The CSA helps achieve consensus on policy decisions related to security regulations in Canada. B. The CSA's membership includes only selected provincial and territorial securities regulators. C. The CSA's objective is to differentiate regulation of the Canadian capital markets based on different needs of different jurisdictions. D. The CSA directly regulates the Canadian capital markets. A. The CSA helps achieve consensus on policy decisions related to security regulations in Canada.
C. ASPE
D. ASNPO
A. CPA Canada Public Sector Accounting Handbook Zookie Co. is a Canadian private company. Which of the following parts of the CPA Canada Handbook - Accounting (Handbook) must Zookie follow? A. Either ASPE or IFRS B. IFRS only C. ASPE only D. Either ASPE or ASPE supplemented with IFRS A. Either ASPE or IFRS Financial statements for pension plans must be prepared in accordance with which of the following parts of the CPA Canada Handbook - Accounting? A. Part I B. Part IV C. Part II D. Part III B. Part IV Which of the following is an attribute of a publicly accountable enterprise? A. It is owned privately by a small group of individuals.
B. It plans to issue equity instruments on a domestic stock exchange in the future. C. It can be, but does not have to be, an NPO. D. It has debt instruments that are traded in a public market in a foreign country. D. It has debt instruments that are traded in a public market in a foreign country. Which of the following is the first step in locating information in the CPA Canada Handbook - Accounting (Handbook)? A. Locate the correct part of the Handbook. B. Determine the accounting framework. C. Locate the applicable standard within the chosen part of the Handbook. D. Find the appropriate reference within the applicable standard. B. Determine the accounting framework. Which of the following is the purpose of bold text in the IFRSs? A. To highlight the interpretation of pronouncements under IFRS B. To identify discussion of pronouncements under IFRS C. To highlight accounting policy pronouncements under IFRS D. To show where a definition is included C. To highlight accounting policy pronouncements under IFRS Which of the following statements is true regarding Part I (IFRS)?
D. IAS 40
C. IFRS 6
Karl, a CPA student, is researching initial measurement of intangible assets under ASPE in his spare time. In which of the following paragraphs of the CPA Handbook - Accounting should Karl start his research? A. Section 3064, paragraph 18 B. IAS 38, paragraph 24 C. Section 3064, paragraph 24 D. Section 1000, paragraph 48 C. Section 3064, paragraph 24 Rap Co. is a private company that reports under ASPE. Rap now receives franchise royalty revenue and the finance manager wishes to determine when to recognize the revenue in income. Which of the following paragraphs of the CPA Handbook - Accounting will the finance manager reference? A. Section 3400, paragraph 12 B. Section 3400, paragraph 33 C. Section 1520, paragraph 3 D. Section 3800, paragraph 17 A. Section 3400, paragraph 12
Under IFRS, which of the following sections provides the standards for the measurement of fair value? A. IFRS 9 B. IFRS 13 C. IAS 32 D. IAS 28 B. IFRS 13 Foot by Foot is an NPO that has annual revenues less than $500,000. Assuming Foot by Foot follows ASNPO and elects to expense its tangible capital assets as a small organization, which of the following paragraphs contains the disclosure requirements for its tangible capital assets? A. Section 4433, paragraph 22 B. Section 4433, paragraph 26 C. Section 3061, paragraph 24 D. Section 1401, paragraph 17 B. Section 4433, paragraph 26 Which of the following are the sections of the SCF? A. Direct, financing, and capital B. Direct, indirect, and capital expenditures C. Operating, investing, and financing D. Operating, capital expenditures, and financing
B. Cash equivalents are assets that are held for the purpose of meeting long-term commitments. C. The SCF presents the change in cash, but does not include cash equivalents. D. Investments in non-redeemable guaranteed investment certificates (GICs) qualify as cash equivalents. A. To qualify as a cash equivalent, the asset must be readily convertible to a known amount of cash. Which of the following statements best describes how investing cash flows arise? A. They are the result of the monies expended and received from the purchase and sale of the infrastructure necessary to operate the business. B. They are the result of a business's normal, day-to-day operations. C. They are the result of the monies expended and received with creditors and owners such as taking out a bank loan or the payment of dividends to the owner. D. They are the result of the monies expended and received only from the purchase and sale of the tangible capital assets used to operate the business. A. They are the result of the monies expended and received from the purchase and sale of the infrastructure necessary to operate the business. Which of the following transactions would be considered a financing activity? A. Cash payments made to employees for salaries B. Cash payments to acquire or redeem the entity's shares C. Cash payments to purchase manufacturing equipment D. Cash receipts from royalties
B. Cash payments to acquire or redeem the entity's shares Which of the following statements regarding dividend and interest payments under IFRS is true? A. Dividend payments can be classified as either a financing activity or an operating activity, but interest payments must be classified as a financing activity. B. They must both be classified as operating activities. C. They must both be classified as financing activities. D. They can both be classified as either financing activities or operating activities. D. They can both be classified as either financing activities or operating activities. Which of the following statements regarding the usefulness of the SCF is true? A. The SCF can be used to assess how the entity's cash flows will change in the future. B. The main use of the SCF is to determine the cash inflows and outflows of an entity over a period of time. C. The SCF allows users to assess the liquidity and solvency of the entity. D. The SCF allows users to measure the economic performance of the company. B. The main use of the SCF is to determine the cash inflows and outflows of an entity over a period of time. Which of the following sections of the SCF will be impacted when choosing between the direct and indirect method of preparation?
Which of the following statements describes how to calculate cash received from customers under the direct method? A. Adjust the sales figure from the SCI for the change in deferred revenue only. B. Adjust the sales figure from the SCI for the change in accounts payable and deferred revenue. C. Adjust the sales figure from the SCI for the change in accounts receivable only. D. Adjust the sales figure from the SCI for the changes in accounts receivable and deferred revenue. D. Adjust the sales figure from the SCI for the changes in accounts receivable and deferred revenue. Which of the following cash inflows and outflows is included when preparing the investing section of the SCF? A. Purchase of long-term assets B. Repayment of long-term liabilities C. Increase in current assets D. Issuance of shares A. Purchase of long-term assets Which of the following sources of information will be required to complete the financing activities section of the SCF? A. Long-term assets
B. Current liabilities, excluding short-term borrowings C. Non-current liabilities D. Current assets C. Non-current liabilities Which of the following transactions should NOT be included on the SCF? A. A dividend is declared and paid in the year to shareholders. B. A company purchases a car for the company. C. A company completes a 4:1 stock split during the year. D. A company issues new bonds to its existing bondholders. C. A company completes a 4:1 stock split during the year. Which of the following is an advantage for using the direct method of preparing the SCF as opposed to the indirect method? A. The direct method displays the operating cash receipts and payments of the business. B. The direct method more accurately displays the change in cash flows. C. It provides a useful link between the SFP, SCI, and SCF. D. It focuses on the differences between profit or loss and cash flow from operations. A. The direct method displays the operating cash receipts and payments of the business.
