Understanding Financial Accounting, Canadian Edition, Burnley - Exam Preparation Test Bank (Downloadable Doc)

CHAPTER 1


OVERVIEW OF CORPORATE FINANCIAL REPORTING


SUMMARY OF QUESTION TYPES BY LEARNING OBJECTIVE
AND LEVEL OF DIFFICULTY


Item LO LOD Item LO LOD Item LO LOD Item LO LOD Item LO LOD

True-False Statements

1. 1 M 7. 4 E 13. 5 E 19. 5 E 25. 5 E

2. 1 E 8. 4 M 14. 5 E 20. 5 E 26. 5 M

3. 1,5 M 9. 4 M 15. 5 M 21. 5 M 27. 5 M

4. 2 E 10. 4 M 16. 5 E 22. 5 E 28. 5 E

5. 2 E 11. 4 E 17. 5 E 23. 5 E 29. 5 E

6. 2 E 12. 5 E 18. 5 E 24. 5 M 30. 5 M

Multiple Choice Questions

31. 1 M 41. 3 M 51. 4 M 61. 5 M 71. 5 M

32. 2 E 42. 4 M 52. 4 M 62. 5 M 72. 5 E

33. 2 E 43. 4 M 53. 5 E 63. 5 M 73. 5 M

34. 2 M 44. 4 M 54. 5 E 64. 5 H 74. 5 M

35. 2 E 45. 4 M 55. 5 M 65. 5 M 75. 5 E

36. 3 E 46. 4 E 56. 5 H 66. 5 M 76. 5 M

37. 3 E 47. 4 E 57. 5 E 67. 5 E 77. 5 E

38. 3 M 48. 4 E 58. 5 H 68. 5 M

39. 3 M 49. 4 M 59. 5 E 69. 5 E

, 40. 3 M 50. 4 M 60. 5 M 70. 5 M

Exercises

78. 5 E 79. 5 M 80. 5 M

Matching

81. 4 M 82. 5 M

Short-Answer Essay

83. 2 M 84. 3 H 85. 5 M 86. 5 H

Essay

87. 5 H 88. 5 H



Note: E = Easy M = Medium H = Hard

, SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE


Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Learning Objective 1
1. TF 2. TF 3. TF 31. MC

Learning Objective 2

4. TF 6. TF 33. MC 35. MC

5. TF 32. MC 34. MC 83. SAE

Learning Objective 3
36. MC 37. MC 38. MC 39. MC 40. MC 41. MC 84. SAE

Learning Objective 4

7. TF 10. TF 43. MC 46. MC 49. MC 52. MC

8. TF 11. TF 44. MC 47. MC 50. MC 81. Ma

9. TF 42. MC 45. MC 48. MC 51. MC

Learning Objective 5
12. TF 20. TF 28. TF 58. MC 66. MC 74. MC 85. SAE

13. TF 21. TF 29. TF 59. MC 67. MC 75. MC 86. SAE

14. TF 22. TF 30. TF 60. MC 68. MC 76. MC 87. Es

15. TF 23. TF 53. MC 61. MC 69. MC 77. MC 88. Es

16. TF 24. TF 54. MC 62. MC 70. MC 78. Ex

17. TF 25. TF 55. MC 63. MC 71. MC 79. Ex

18. TF 26. TF 56. MC 64. MC 72. MC 80. Ex

19. TF 27. TF 57. MC 65. MC 73. MC 82. Ma



Note: TF = True-False Ex = Exercise SAE = Short-Answer Essay

MC = Multiple Choice Ma = Matching Es = Essay

, CHAPTER LEARNING OBJECTIVES



1. Define financial accounting and understand its relationship to economic decision-
making.

• Financial accounting is the process by which information on the transactions of an
organization is captured, analyzed, and reported to external decision makers.

• These decision makers are referred to as financial statement users and include investors
and creditors.

• The primary purpose of financial accounting information is to aid these users in making
economic decisions related to the reporting organization, such as whether to invest in it or
lend it money.




2. Identify the main users of financial accounting information and explain how they use
this information.

• The main users of financial accounting information include shareholders, the board of
directors, potential investors, creditors (bankers and suppliers), regulators (stock
exchanges), taxing authorities (governments), securities analysts, and others.

• Shareholders, the board of directors, and potential investors will use financial accounting
information to enable them to assess how well management has run the company;
determine whether they should buy, sell, or continue to hold shares in the company; assess
the company’s share price relative to the financial accounting information; and so on.

• Creditors will use financial accounting information to determine whether they should lend
funds to the company, establish credit terms for it, assess a company’s ability to meets its
obligations, and so on.

• Regulators will use financial accounting information to determine whether a company has
met its listing requirements.

• Taxing authorities will use this information in assessing the taxes owed by the
organization.