Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition
Chapter 1 Setting the Stage
1) What do business enterprises have that NFPs do not have?
A) Specified products or services
B) Identifiable customers or clients
C) Employees
D) Boards of directors
Answer: B
Page Ref: 3
Learning Obj.: 1.1
Difficulty: Easy
2) Which of the following statements about the adoption of IFRS is true?
A) Many European countries adopted IFRS prior to 2011.
B) Canada adopted IFRS in 2012.
C) All European and North American countries adopted IFRS in 2011.
D) All European, Asian, and African countries adopted IFRS in 2011.
Answer: A
Page Ref: 3
Learning Obj.: 1.1
Difficulty: Easy
3) Why has the reputation of U.S. accounting standards decreased in recent years?
A) The U.S. deficit is at a record high.
B) Many U.S. businesses have declared bankruptcy.
C) There have been some notable American accounting scandals, such as Enron.
D) Lengthy prison sentences have been given to unethical American executives, such as Bernie Madoff.
Answer: C
Page Ref: 4
Learning Obj.: 1.2
Difficulty: Easy
4) Which of the following is true about the standards for publicly accountable enterprises in the CICA
Handbook, Part I?
A) The standards are similar to U.S. GAAP.
B) The standards are adaptations of IFRS that have been tailored to Canadian circumstances.
C) The standards are similar to ASPE.
D) The standards are identical, word for word, to IFRS.
Answer: D
Page Ref: 5
Learning Obj.: 1.2
Difficulty: Easy
Copyright © 2014 Pearson Canada Inc.
1-1
, Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition
Chapter 1 Setting the Stage
5) Which of the following private companies is required to use IFRS?
A) Investment companies
B) Import/export companies
C) Manufacturing companies
D) Accounting firms
Answer: A
Page Ref: 5
Learning Obj.: 1.2
Difficulty: Moderate
6) What accounting standards are private banks and investment funds required to follow for their
consolidated, general-purpose, publicly issued financial statements?
A) IFRS
B) ASPE
C) NFP accounting standards
D) PSAB recommendations
Answer: A
Page Ref: 5
Learning Obj.: 1.2
Difficulty: Moderate
7) Which of the following Canadian accounting standards are not included in the CICA Handbook?
A) Publicly accountable enterprises
B) Private enterprises
C) Not-for-profit organizations
D) Government
Answer: D
Page Ref: 5-6
Learning Obj.: 1.2
Difficulty: Easy
8) What accounting standards should government NFP organizations follow?
A) CICA Handbook, Part III only
B) CICA Public Sector Accounting Handbook only
C) Choice of CICA Handbook, Part III or CICA Public Sector Accounting Handbook
D) Choice of CICA Handbook, Part III; CICA Public Sector Accounting Handbook; or IFRS
Answer: C
Page Ref: 5, 7
Learning Obj.: 1.2
Difficulty: Moderate
Copyright © 2014 Pearson Canada Inc.
1-2
, Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition
Chapter 1 Setting the Stage
9) What accounting standards are contained in the CICA Handbook, Part III?
A) IFRS
B) ASPE
C) NFP
D) Government
Answer: C
Page Ref: 6
Learning Obj.: 1.2
Difficulty: Easy
10) NFP organizations can choose among reporting approaches contained within the framework
provided by the CICA Handbook. Which of the following is not a consideration in choosing the approach?
A) Nature of the NFP's operations
B) Sources of the NFP's funding
C) The NFP's reporting objectives
D) Whether or not the NFP uses the restricted fund method of accounting
Answer: D
Page Ref: 6
Learning Obj.: 1.2
Difficulty: Moderate
11) Which of the following is true about Canadian governmental reporting standards?
A) PSAB standards are recommendations only.
B) PSAB standards are rules that must be followed.
C) PSAB standards must be applied to all provincial public utilities.
D) PSAB standards were developed by the OSC.
Answer: A
Page Ref: 6
Learning Obj.: 1.2
Difficulty: Easy
12) A private company that is closely held and internally financed is most likely to report under ________.
A) IFRS
B) ASPE
C) NFP
D) PSAB recommendations
Answer: B
Page Ref: 6
Learning Obj.: 1.2
Difficulty: Moderate
Copyright © 2014 Pearson Canada Inc.
1-3
, Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition
Chapter 1 Setting the Stage
13) Assume that a nation has fully adopted IFRS. Which of the following statements is true?
A) Since the nation has fully adopted IFRS, all standards will be applied in the same way as other nations
that have fully adopted IFRS.
B) Since the nation has fully adopted IFRS, IFRS must be applied to all business enterprises in the nation.
C) Although the nation has fully adopted IFRS, standards may be applied in different ways to suit the
local environment.
D) Although the nation has fully adopted IFRS, business enterprises can choose to opt out as long as they
have government approval to do so.
Answer: C
Page Ref: 8
Learning Obj.: 1.3
Difficulty: Easy
14) Which nation does not require a cash flow statement in its financial reporting?
A) United States
B) United Kingdom
C) Australia
D) Japan
Answer: D
Page Ref: 8
Learning Obj.: 1.3
Difficulty: Easy
15) When the International Accounting Standards Board amends a standard, what must a code-law
country do to adopt the amendment?
A) The country's securities regulators must approve the amendment.
B) The country's professional accounting body must approve the amendment.
C) The country must pass new legislation to adopt the amendment.
D) The country's financial institution regulators must approve the amendment.
Answer: C
Page Ref: 9
Learning Obj.: 1.3
Difficulty: Moderate
16) Which of the following statements about the adoption of IFRS is true?
A) Code-law countries that adopt IFRS must adopt it completely, but common-law countries can choose
to partially adopt IFRS.
B) Common-law countries that adopt IFRS must adopt it completely, but code-law countries can choose
to partially adopt IFRS.
C) Both code-law and common-law countries can choose to partially adopt IFRS.
D) Both code-law and common-law countries that choose to adopt IFRS must adopt it in its entirety.
Answer: C
Page Ref: 9
Learning Obj.: 1.3
Difficulty: Easy
Copyright © 2014 Pearson Canada Inc.
1-4
Chapter 1 Setting the Stage
1) What do business enterprises have that NFPs do not have?
A) Specified products or services
B) Identifiable customers or clients
C) Employees
D) Boards of directors
Answer: B
Page Ref: 3
Learning Obj.: 1.1
Difficulty: Easy
2) Which of the following statements about the adoption of IFRS is true?
A) Many European countries adopted IFRS prior to 2011.
B) Canada adopted IFRS in 2012.
C) All European and North American countries adopted IFRS in 2011.
D) All European, Asian, and African countries adopted IFRS in 2011.
Answer: A
Page Ref: 3
Learning Obj.: 1.1
Difficulty: Easy
3) Why has the reputation of U.S. accounting standards decreased in recent years?
A) The U.S. deficit is at a record high.
B) Many U.S. businesses have declared bankruptcy.
C) There have been some notable American accounting scandals, such as Enron.
D) Lengthy prison sentences have been given to unethical American executives, such as Bernie Madoff.
Answer: C
Page Ref: 4
Learning Obj.: 1.2
Difficulty: Easy
4) Which of the following is true about the standards for publicly accountable enterprises in the CICA
Handbook, Part I?
A) The standards are similar to U.S. GAAP.
B) The standards are adaptations of IFRS that have been tailored to Canadian circumstances.
C) The standards are similar to ASPE.
D) The standards are identical, word for word, to IFRS.
Answer: D
Page Ref: 5
Learning Obj.: 1.2
Difficulty: Easy
Copyright © 2014 Pearson Canada Inc.
1-1
, Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition
Chapter 1 Setting the Stage
5) Which of the following private companies is required to use IFRS?
A) Investment companies
B) Import/export companies
C) Manufacturing companies
D) Accounting firms
Answer: A
Page Ref: 5
Learning Obj.: 1.2
Difficulty: Moderate
6) What accounting standards are private banks and investment funds required to follow for their
consolidated, general-purpose, publicly issued financial statements?
A) IFRS
B) ASPE
C) NFP accounting standards
D) PSAB recommendations
Answer: A
Page Ref: 5
Learning Obj.: 1.2
Difficulty: Moderate
7) Which of the following Canadian accounting standards are not included in the CICA Handbook?
A) Publicly accountable enterprises
B) Private enterprises
C) Not-for-profit organizations
D) Government
Answer: D
Page Ref: 5-6
Learning Obj.: 1.2
Difficulty: Easy
8) What accounting standards should government NFP organizations follow?
A) CICA Handbook, Part III only
B) CICA Public Sector Accounting Handbook only
C) Choice of CICA Handbook, Part III or CICA Public Sector Accounting Handbook
D) Choice of CICA Handbook, Part III; CICA Public Sector Accounting Handbook; or IFRS
Answer: C
Page Ref: 5, 7
Learning Obj.: 1.2
Difficulty: Moderate
Copyright © 2014 Pearson Canada Inc.
1-2
, Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition
Chapter 1 Setting the Stage
9) What accounting standards are contained in the CICA Handbook, Part III?
A) IFRS
B) ASPE
C) NFP
D) Government
Answer: C
Page Ref: 6
Learning Obj.: 1.2
Difficulty: Easy
10) NFP organizations can choose among reporting approaches contained within the framework
provided by the CICA Handbook. Which of the following is not a consideration in choosing the approach?
A) Nature of the NFP's operations
B) Sources of the NFP's funding
C) The NFP's reporting objectives
D) Whether or not the NFP uses the restricted fund method of accounting
Answer: D
Page Ref: 6
Learning Obj.: 1.2
Difficulty: Moderate
11) Which of the following is true about Canadian governmental reporting standards?
A) PSAB standards are recommendations only.
B) PSAB standards are rules that must be followed.
C) PSAB standards must be applied to all provincial public utilities.
D) PSAB standards were developed by the OSC.
Answer: A
Page Ref: 6
Learning Obj.: 1.2
Difficulty: Easy
12) A private company that is closely held and internally financed is most likely to report under ________.
A) IFRS
B) ASPE
C) NFP
D) PSAB recommendations
Answer: B
Page Ref: 6
Learning Obj.: 1.2
Difficulty: Moderate
Copyright © 2014 Pearson Canada Inc.
1-3
, Beechy, Trivedi, MacAulay Advanced Financial Accounting, Seventh Edition
Chapter 1 Setting the Stage
13) Assume that a nation has fully adopted IFRS. Which of the following statements is true?
A) Since the nation has fully adopted IFRS, all standards will be applied in the same way as other nations
that have fully adopted IFRS.
B) Since the nation has fully adopted IFRS, IFRS must be applied to all business enterprises in the nation.
C) Although the nation has fully adopted IFRS, standards may be applied in different ways to suit the
local environment.
D) Although the nation has fully adopted IFRS, business enterprises can choose to opt out as long as they
have government approval to do so.
Answer: C
Page Ref: 8
Learning Obj.: 1.3
Difficulty: Easy
14) Which nation does not require a cash flow statement in its financial reporting?
A) United States
B) United Kingdom
C) Australia
D) Japan
Answer: D
Page Ref: 8
Learning Obj.: 1.3
Difficulty: Easy
15) When the International Accounting Standards Board amends a standard, what must a code-law
country do to adopt the amendment?
A) The country's securities regulators must approve the amendment.
B) The country's professional accounting body must approve the amendment.
C) The country must pass new legislation to adopt the amendment.
D) The country's financial institution regulators must approve the amendment.
Answer: C
Page Ref: 9
Learning Obj.: 1.3
Difficulty: Moderate
16) Which of the following statements about the adoption of IFRS is true?
A) Code-law countries that adopt IFRS must adopt it completely, but common-law countries can choose
to partially adopt IFRS.
B) Common-law countries that adopt IFRS must adopt it completely, but code-law countries can choose
to partially adopt IFRS.
C) Both code-law and common-law countries can choose to partially adopt IFRS.
D) Both code-law and common-law countries that choose to adopt IFRS must adopt it in its entirety.
Answer: C
Page Ref: 9
Learning Obj.: 1.3
Difficulty: Easy
Copyright © 2014 Pearson Canada Inc.
1-4
