Question Bank in line with Modern Advanced Accounting in Canada,Hilton,8e
Test Bank for Modern Advanced Accounting In Canada 9th Edition By Hilton Murray, Herauf Darrell
Solution Manual for Modern Advanced Accounting in Canada Canadian 8th Edition Hilton Herauf.
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,MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Which of the following would NOT be a reason to obtain a greater understanding of accounting
practices in other nations?
A) Departures from the historical cost principle may be possible in other nations.
B) Financial results are disclosed in different currencies.
C) Income-smoothing may have affected a foreign subsidiary's results; such smoothing practices
are not permitted in North America.
D) One needs to be aware of differing disclosure requirements from nation to nation, as this
impacts the preparation of financial statements.
Answer: B
2) Which of the following would be most affected by financial statements being prepared under
different accounting principles?
A) Reduced comparability. B) Increased complexity.
C) Reduced reliability. D) Inaccurate asset valuations.
Answer: A
3) The CPA Canada Handbook -- Accounting is the handbook of Canadian accounting standards. Why
do companies in Canada ensure that their financial reporting is consistent with Canadian GAAP?
A) Their bank requires them to do so.
B) Compliance with the CPA Canada Handbook - Accounting pronouncements is usually required
by many legal statutes.
C) Reporting under the CPA Canada Handbook - Accounting is required by public companies'
boards of directors.
D) Their auditors require them to do so.
Answer: B
4) Which decision has Canada made with respect to financial reporting for private enterprises?
A) To adopt the IFRS standards for small and medium-sized enterprises.
B) To look to US GAAP for standards.
C) To retain the current standards.
D) To develop and maintain its own standards for private enterprises.
Answer: D
5) Starting in 2011, what is the definition of a private enterprise (PE) under Canadian GAAP?
A) A corporation that has less than 500 shareholders and is not listed on a stock exchange.
B) A corporation that has no public shareholders.
C) A corporation which is not profit oriented.
D) A profit oriented enterprise that has none of its issued and outstanding financial instruments
traded in a public market and does not hold assets in a fiduciary capacity for a broad group of
outsiders as one of its primary businesses.
Answer: D
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,6) Which enterprises must report under IFRS in Canada?
A) Public companies, private companies and not-for-profit organizations.
B) All corporations, government agencies and private companies.
C) Public companies and private companies whose shareholders' equity is in excess of
$500,000,000 at any particular year end.
D) Publicly accountable enterprises.
Answer: D
7) What approach did Canada first decide to take with respect to convergence with IFRS?
A) Harmonization of CPA Canada Handbook with IFRS.
B) Substituting IFRS for Canadian GAAP when approved by the IASB.
C) Reviewing them with all publically accountable entities to see which ones would be acceptable.
D) Adopting some but not necessarily all IFRSs by reviewing them on a case by case basis.
Answer: A
8) What choice(s) do private enterprises have in their financial reporting in Canada?
A) They may adopt accounting principles that are appropriate to the circumstances.
B) They may elect to continue with differential reporting.
C) They have no choice at all; they will need to report under IFRS.
D) They may elect to report under either IFRS or ASPE.
Answer: D
9) For which of the following types of organizations does the CPA Canada Handbook not provide
specific accounting standards?
A) Proprietorships. B) Private enterprises.
C) Publicly accountable enterprises. D) Not-for-profit organizations.
Answer: A
10) Which of the following is NOT a reason why a Canadian private company would elect to report
under IFRS?
A) It is likely to be less expensive than reporting under ASPE.
B) The company seeks comparability with public companies of a similar size.
C) The company is a subsidiary of a Canadian public company.
D) The company is planning to go public in the near future.
Answer: A
11) The current ratio measures:
A) profitability of assets. B) solvency.
C) liquidity. D) profitability of owners' investment.
Answer: C
12) The formula for the current ratio is:
A) current assets / current liabilities B) net income / shareholders' equity
C) total debt / shareholders' equity D) current assets - current liabilities
Answer: A
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, 13) The debt-to-equity ratiomeasures:
A) profitability of owners' investment. B) liquidity.
C) solvency. D) profitability of assets.
Answer: C
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
14) One of the underlying assumptions of the Historical Cost Principle is that a stable unit of measure
(currency) should be used for Financial Reporting. Is this always the case?
Answer: The Historical Cost Principle is not very useful when inflation rates are high. As a result of the
eroding purchase power associated with periods of high inflation, many countries have had to
experiment with price-level adjustments. These adjustments often include asset revaluations to
reflect their current values.
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