10/10/23,y8:37yPM TestybankyforyIntermediateyAccountingyVolumey1,y13thyCanadianyEditionyby…
TestyBankyforyIntermediate yAccounting,yThirteenthyCanadianyEditiony y Allychapterydownload
@qidiantiku.com
TestybankyforyIntermediateyAccountingyVolum
ey1,y13thyCanadianyEditionybyyDonaldyE.yKieso
Full y download y link: y https://qidiantiku.com
/ yt est- yb ank-for- y intermediate- ya ccounting-
volume-1-13th- y canadian- ye dition-by-
donald-e-y kieso.shtml
CHAPTER y 1
THEyCANADIANyFINANCIALyREPORTINGyENVIRONMENTyCHAPTE
RySTUDYyOBJECTIVES
1. Understandy they financialy reportingy environment.y Accountingy providesy reli
able,yrelevant,yandytimelyyinformationytoymanagers,yinvestors,yandycreditorsysoyt
hatyresourcesyareyallocatedytoytheymostyefficientyenterprises.yAccountingyalsoyp
rovidesymeasurementsyofyefficiencyy(profitability)yandyfinancialysoundness.yInve
stors,ycreditors,ymanagement,ysecuritiesycommissions,ystockyexchanges,yanalys
ts,ycredityratingyagencies,yauditors,yandystandardysettersyareysomeyofytheymajo
rystakeholders.yIllustrationy1-4yexplainsywhatyisyatystakeyforyeachyone.yThe
1-1
TestyBankyforyIntermediate yAccounting,yThirteenthyCanadianyEditiony y Allychapterydownload
@qidiantiku.com
objectiveyofyfinancialyreportingyisytoycommunicateyinformationythatyisyusefulytoyke
yydecisionymakersysuchyasyinvestorsyandycreditorsyinymakingyresourceyallocationyd
ecisionsy(includingyassessingymanagementystewardship)yaboutytheyresourcesyandyc
laimsytoyresourcesyofyanyentityyandyhowytheseyareychanging.yIdeally,yallystakehold
ersyshouldyhaveyaccessytoytheysameyinformationyinyorderytoyensureythatygoodydeci
sionsyareymadeyinytheycapitalymarketplace.y(Thisyisyknownyasyinformationysymmet
ry.)yHowever,ythisyisynotytheycase—
thereyisyoftenyinformationyasymmetry.yOfynecessity,ymanagementyhasyaccessytoym
oreyinformationysoythatyitycanyrunytheycompany.yItymustyalsoymakeysureythatyitydo
esynotygiveyawayyinformationythatymight
about:blank 1/47
,10/10/23,y8:37yPM TestybankyforyIntermediateyAccountingyVolumey1,y13thyCanadianyEditionyby…
1-1
TestyBankyforyIntermediate yAccounting,yThirteenthyCanadianyEditiony y Allychapterydownload
@qidiantiku.com
objectiveyofyfinancialyreportingyisytoycommunicateyinformationythatyisyusefulytoyke
yydecisionymakersysuchyasyinvestorsyandycreditorsyinymakingyresourceyallocationyd
ecisionsy(includingyassessingymanagementystewardship)yaboutytheyresourcesyandyc
laimsytoyresourcesyofyanyentityyandyhowytheseyareychanging.yIdeally,yallystakehold
ersyshouldyhaveyaccessytoytheysameyinformationyinyorderytoyensureythatygoodydeci
sionsyareymadeyinytheycapitalymarketplace.y(Thisyisyknownyasyinformationysymmet
ry.)yHowever,ythisyisynotytheycase—
thereyisyoftenyinformationyasymmetry.yOfynecessity,ymanagementyhasyaccessytoym
oreyinformationysoythatyitycanyrunytheycompany.yItymustyalsoymakeysureythatyityd
oesynotygiveyawayyinformationythatymightyharmytheycompany,ysuchyasyinyaylawsuit
ywhereydisclosureymightycauseytheycompanyytoylose.yAsideyfromythis,yinformationya
symmetryyexistsybecauseyofymanagementybiasywherebyymanagementyactsyinyitsyo
wnyself-
interest,ysuchyasywantingytoymaximizeymanagementybonuses.yThisyisyknownyasym
oralyhazardyinyaccountingytheory.
Informationyasymmetryycausesymarketsytoybeylessyefficient.yItymayycauseystockypr
icesytoybeydiscountedyorycostsyofycapitalytoyincrease.yInyaddition,yitymightydetracty
goodycompaniesyfromyraisingycapitalyinytheyparticularymarketywhereyrelevantyinfor
mationyisynotyavailabley(referredytoyasyadverseyselectionyinyaccountingytheory).yTh
eyefficientymarketsyhypothesisyisyfeltytoyexistyonlyyinyaysemi-
strongyform,ymeaningythatyonlyypubliclyyavailableyinformationyisyassimilatedyintoyst
ockyprices.
2. Explainy they needy fory accountingy standardsy andy identifyy they majory enti
tiesy thaty influencey standardy settingy andy financialy reporting.y They accountingy
professionyhasytriedytoydevelopyaysetyofystandardsythatyisygenerallyyacceptedyandy
universallyypractised.yThisyisyknownyasyGAAPy(generallyyacceptedyaccountingyprinc
iples).yWithoutythisysetyofystandards,yeachyenterpriseywouldyhaveytoydevelopyitsyo
wnystandards,yandyreadersyofyfinancialystatementsywouldyhaveytoybecomeyfamiliar
ywithyeveryycompany’syparticularyaccountingyandyreportingy practices.yAsyayresult,
yitywouldybeyalmostyimpossibleytoyprepareystatementsythatycouldybeycompared.yIny
addition,yaccountingystandardsyhelpydealywithytheyinformationyasymmetryyproblem.
TheyCanadianyAccountingyStandardsyBoardy(AcSB)yisytheymainystandard-
settingybodyyinyCanadayforyprivateycompanies,ypensionyplans,yandynot-for-
profityentities.yItsymandateycomesyfromytheyCanadayBusinessyCorporationsyActyand
yRegulationsyasywellyasyprovincialyactsyofyincorporation.yForypublicycompanies,yGAA
PyisyInternationalyFinancialyReportingyStandardsy(IFRS)yasyestablishedybyytheyInter
nationalyAccountingyStandardsyBoardy(IASB).yPublicycompaniesyareyrequiredytoyfoll
owyGAAPyinyorderytoyaccessycapitalymarkets,ywhichyareymonitoredybyyprovincialyse
curitiesycommissions.yTheyFinancialyAccountingyStandardsyBoardy(FASB)yisyalsoyim
portantyasyityinfluencesyIFRSystandardysetting.yPrivateycompaniesymayychooseytoyf
ollowyIFRS.yPublicycompaniesythatylistyonyU.S.ystockyexchangesymayychooseytoyfoll
owyU.S.yGAAP.
3. Explainy they meaningy ofy generallyy acceptedy accountingy principlesy (GAAP)
y andy they significancey ofy professionaly judgementy iny applyingy GAAP.y Generall
yy acceptedyaccountingyprinciplesyareyeitheryprinciplesythatyhaveysubstantialyautho
ritativeysupport,ysuchyasytheyCPAyCanadayHandbook,yorythoseyarrivedyatythroughy
theyuseyofyprofessionalyjudgementyandytheyconceptualyframework.yProfessionalyju
dgementyplaysyanyimportantyroleyinyAccountingyStandardsyforyPrivateyEnterprisesy
(ASPE)yandyIFRSysinceymuchyofyGAAPyisybasedyonygeneralyprinciples,
1-2
TestyBankyforyIntermediate yAccounting,yThirteenthyCanadianyEditiony y Allychapterydownload
@qidiantiku.com
whichyneedytoybeyinterpreted.
4. Discussy somey ofy they challengesy andy opportunitiesy fory accounting.y Some
y ofytheychallengesyfacingyaccountingyareytheyimpactyofytechnology,ysustainability
yreporting,yoversightyinytheycapitalymarkets,ycentralityyofyethics,ystandardysettingyi
about:blank 2/47
,10/10/23,y8:37yPM TestybankyforyIntermediateyAccountingyVolumey1,y13thyCanadianyEditionyby…
nyaypoliticalyenvironment,yandyprinciples-yversusyrules-
basedystandardysetting.yAllyofytheseyrequireytheyaccountingyprofessionytoycontinue
ytoystriveyforyexcellenceyandytoyunderstandyhowyaccountingyaddsyvalueyinytheycap
italymarketplace.
about:blank 3/47
, 10/10/23,y8:37yPM TestybankyforyIntermediateyAccountingyVolumey1,y13thyCanadianyEditionyby…
1-2
TestyBankyforyIntermediate yAccounting,yThirteenthyCanadianyEditiony y Allychapterydownload
@qidiantiku.com
whichyneedytoybeyinterpreted.
4.y Discussy somey ofy they challengesy andy opportunitiesy fory accounting.y Some
y ofytheychallengesyfacingyaccountingyareytheyimpactyofytechnology,ysustainability
yreporting,yoversightyinytheycapitalymarkets,ycentralityyofyethics,ystandardysettingyi
nyaypoliticalyenvironment,yandyprinciples-yversusyrules-
basedystandardysetting.yAllyofytheseyrequireytheyaccountingyprofessionytoycontinue
ytoystriveyforyexcellenceyandytoyunderstandyhowyaccountingyaddsyvalueyinytheycap
italymarketplace.
1-3
TestyBankyforyIntermediate yAccounting,yThirteenthyCanadianyEditiony y Allychapterydownload
@qidiantiku.com
MULTIPLEyCHOICEyQUESTIONS
Answer No. Description
d 1. Accountingycharacteristics
a 2. Natureyofyfinancialyaccounting
c 3. Definitionyofyfinancialyaccounting
b 4. Definitionyofymanagementyaccounting
d fl. Efficientyuseyofyresources
about:blank 4/47
TestyBankyforyIntermediate yAccounting,yThirteenthyCanadianyEditiony y Allychapterydownload
@qidiantiku.com
TestybankyforyIntermediateyAccountingyVolum
ey1,y13thyCanadianyEditionybyyDonaldyE.yKieso
Full y download y link: y https://qidiantiku.com
/ yt est- yb ank-for- y intermediate- ya ccounting-
volume-1-13th- y canadian- ye dition-by-
donald-e-y kieso.shtml
CHAPTER y 1
THEyCANADIANyFINANCIALyREPORTINGyENVIRONMENTyCHAPTE
RySTUDYyOBJECTIVES
1. Understandy they financialy reportingy environment.y Accountingy providesy reli
able,yrelevant,yandytimelyyinformationytoymanagers,yinvestors,yandycreditorsysoyt
hatyresourcesyareyallocatedytoytheymostyefficientyenterprises.yAccountingyalsoyp
rovidesymeasurementsyofyefficiencyy(profitability)yandyfinancialysoundness.yInve
stors,ycreditors,ymanagement,ysecuritiesycommissions,ystockyexchanges,yanalys
ts,ycredityratingyagencies,yauditors,yandystandardysettersyareysomeyofytheymajo
rystakeholders.yIllustrationy1-4yexplainsywhatyisyatystakeyforyeachyone.yThe
1-1
TestyBankyforyIntermediate yAccounting,yThirteenthyCanadianyEditiony y Allychapterydownload
@qidiantiku.com
objectiveyofyfinancialyreportingyisytoycommunicateyinformationythatyisyusefulytoyke
yydecisionymakersysuchyasyinvestorsyandycreditorsyinymakingyresourceyallocationyd
ecisionsy(includingyassessingymanagementystewardship)yaboutytheyresourcesyandyc
laimsytoyresourcesyofyanyentityyandyhowytheseyareychanging.yIdeally,yallystakehold
ersyshouldyhaveyaccessytoytheysameyinformationyinyorderytoyensureythatygoodydeci
sionsyareymadeyinytheycapitalymarketplace.y(Thisyisyknownyasyinformationysymmet
ry.)yHowever,ythisyisynotytheycase—
thereyisyoftenyinformationyasymmetry.yOfynecessity,ymanagementyhasyaccessytoym
oreyinformationysoythatyitycanyrunytheycompany.yItymustyalsoymakeysureythatyitydo
esynotygiveyawayyinformationythatymight
about:blank 1/47
,10/10/23,y8:37yPM TestybankyforyIntermediateyAccountingyVolumey1,y13thyCanadianyEditionyby…
1-1
TestyBankyforyIntermediate yAccounting,yThirteenthyCanadianyEditiony y Allychapterydownload
@qidiantiku.com
objectiveyofyfinancialyreportingyisytoycommunicateyinformationythatyisyusefulytoyke
yydecisionymakersysuchyasyinvestorsyandycreditorsyinymakingyresourceyallocationyd
ecisionsy(includingyassessingymanagementystewardship)yaboutytheyresourcesyandyc
laimsytoyresourcesyofyanyentityyandyhowytheseyareychanging.yIdeally,yallystakehold
ersyshouldyhaveyaccessytoytheysameyinformationyinyorderytoyensureythatygoodydeci
sionsyareymadeyinytheycapitalymarketplace.y(Thisyisyknownyasyinformationysymmet
ry.)yHowever,ythisyisynotytheycase—
thereyisyoftenyinformationyasymmetry.yOfynecessity,ymanagementyhasyaccessytoym
oreyinformationysoythatyitycanyrunytheycompany.yItymustyalsoymakeysureythatyityd
oesynotygiveyawayyinformationythatymightyharmytheycompany,ysuchyasyinyaylawsuit
ywhereydisclosureymightycauseytheycompanyytoylose.yAsideyfromythis,yinformationya
symmetryyexistsybecauseyofymanagementybiasywherebyymanagementyactsyinyitsyo
wnyself-
interest,ysuchyasywantingytoymaximizeymanagementybonuses.yThisyisyknownyasym
oralyhazardyinyaccountingytheory.
Informationyasymmetryycausesymarketsytoybeylessyefficient.yItymayycauseystockypr
icesytoybeydiscountedyorycostsyofycapitalytoyincrease.yInyaddition,yitymightydetracty
goodycompaniesyfromyraisingycapitalyinytheyparticularymarketywhereyrelevantyinfor
mationyisynotyavailabley(referredytoyasyadverseyselectionyinyaccountingytheory).yTh
eyefficientymarketsyhypothesisyisyfeltytoyexistyonlyyinyaysemi-
strongyform,ymeaningythatyonlyypubliclyyavailableyinformationyisyassimilatedyintoyst
ockyprices.
2. Explainy they needy fory accountingy standardsy andy identifyy they majory enti
tiesy thaty influencey standardy settingy andy financialy reporting.y They accountingy
professionyhasytriedytoydevelopyaysetyofystandardsythatyisygenerallyyacceptedyandy
universallyypractised.yThisyisyknownyasyGAAPy(generallyyacceptedyaccountingyprinc
iples).yWithoutythisysetyofystandards,yeachyenterpriseywouldyhaveytoydevelopyitsyo
wnystandards,yandyreadersyofyfinancialystatementsywouldyhaveytoybecomeyfamiliar
ywithyeveryycompany’syparticularyaccountingyandyreportingy practices.yAsyayresult,
yitywouldybeyalmostyimpossibleytoyprepareystatementsythatycouldybeycompared.yIny
addition,yaccountingystandardsyhelpydealywithytheyinformationyasymmetryyproblem.
TheyCanadianyAccountingyStandardsyBoardy(AcSB)yisytheymainystandard-
settingybodyyinyCanadayforyprivateycompanies,ypensionyplans,yandynot-for-
profityentities.yItsymandateycomesyfromytheyCanadayBusinessyCorporationsyActyand
yRegulationsyasywellyasyprovincialyactsyofyincorporation.yForypublicycompanies,yGAA
PyisyInternationalyFinancialyReportingyStandardsy(IFRS)yasyestablishedybyytheyInter
nationalyAccountingyStandardsyBoardy(IASB).yPublicycompaniesyareyrequiredytoyfoll
owyGAAPyinyorderytoyaccessycapitalymarkets,ywhichyareymonitoredybyyprovincialyse
curitiesycommissions.yTheyFinancialyAccountingyStandardsyBoardy(FASB)yisyalsoyim
portantyasyityinfluencesyIFRSystandardysetting.yPrivateycompaniesymayychooseytoyf
ollowyIFRS.yPublicycompaniesythatylistyonyU.S.ystockyexchangesymayychooseytoyfoll
owyU.S.yGAAP.
3. Explainy they meaningy ofy generallyy acceptedy accountingy principlesy (GAAP)
y andy they significancey ofy professionaly judgementy iny applyingy GAAP.y Generall
yy acceptedyaccountingyprinciplesyareyeitheryprinciplesythatyhaveysubstantialyautho
ritativeysupport,ysuchyasytheyCPAyCanadayHandbook,yorythoseyarrivedyatythroughy
theyuseyofyprofessionalyjudgementyandytheyconceptualyframework.yProfessionalyju
dgementyplaysyanyimportantyroleyinyAccountingyStandardsyforyPrivateyEnterprisesy
(ASPE)yandyIFRSysinceymuchyofyGAAPyisybasedyonygeneralyprinciples,
1-2
TestyBankyforyIntermediate yAccounting,yThirteenthyCanadianyEditiony y Allychapterydownload
@qidiantiku.com
whichyneedytoybeyinterpreted.
4. Discussy somey ofy they challengesy andy opportunitiesy fory accounting.y Some
y ofytheychallengesyfacingyaccountingyareytheyimpactyofytechnology,ysustainability
yreporting,yoversightyinytheycapitalymarkets,ycentralityyofyethics,ystandardysettingyi
about:blank 2/47
,10/10/23,y8:37yPM TestybankyforyIntermediateyAccountingyVolumey1,y13thyCanadianyEditionyby…
nyaypoliticalyenvironment,yandyprinciples-yversusyrules-
basedystandardysetting.yAllyofytheseyrequireytheyaccountingyprofessionytoycontinue
ytoystriveyforyexcellenceyandytoyunderstandyhowyaccountingyaddsyvalueyinytheycap
italymarketplace.
about:blank 3/47
, 10/10/23,y8:37yPM TestybankyforyIntermediateyAccountingyVolumey1,y13thyCanadianyEditionyby…
1-2
TestyBankyforyIntermediate yAccounting,yThirteenthyCanadianyEditiony y Allychapterydownload
@qidiantiku.com
whichyneedytoybeyinterpreted.
4.y Discussy somey ofy they challengesy andy opportunitiesy fory accounting.y Some
y ofytheychallengesyfacingyaccountingyareytheyimpactyofytechnology,ysustainability
yreporting,yoversightyinytheycapitalymarkets,ycentralityyofyethics,ystandardysettingyi
nyaypoliticalyenvironment,yandyprinciples-yversusyrules-
basedystandardysetting.yAllyofytheseyrequireytheyaccountingyprofessionytoycontinue
ytoystriveyforyexcellenceyandytoyunderstandyhowyaccountingyaddsyvalueyinytheycap
italymarketplace.
1-3
TestyBankyforyIntermediate yAccounting,yThirteenthyCanadianyEditiony y Allychapterydownload
@qidiantiku.com
MULTIPLEyCHOICEyQUESTIONS
Answer No. Description
d 1. Accountingycharacteristics
a 2. Natureyofyfinancialyaccounting
c 3. Definitionyofyfinancialyaccounting
b 4. Definitionyofymanagementyaccounting
d fl. Efficientyuseyofyresources
about:blank 4/47
