ACCT 3310 Ch.1&2 Quiz

Information provided by accounting is important because it enables investors and creditors to

• assess the risks and returns of investment opportunities.

• channel their resources more effectively.

• compare income and assets of companies.

• all of the above.

Which of the following does not describe a cause of management bias?

• The desire to give stakeholders access to all information

• The need to comply with contracts, such as debt covenants

• The desire to meet financial analysts’ expectations

• The tendency to downplay negative events

​ Which one of the following organizations is primarily responsible for developing IFRSs?

• FASB (Financial Accounting Standards Board)

• CRA (Canada Revenue Agency)

• AcSB (Accounting Standards Board)

• IASB (International Accounting Standards Board)

The most authoritative primary source of GAAP for private companies in Canada is

• historical practices.

• industry practices.

• CPA Canada Handbook

• professional judgement.

Which of the following is not one of the major financial statements?

• Statement of Financial Position

• Statement of Comprehensive Income

• Statement of Cash Flows

• Statement of Historical Gains (Losses)

What are two fundamental qualities that make accounting information useful for decision-making?

• relevance and representational faithfulness.

• comparability and understandability.

• matching and control.

• cost-benefit relationship and materiality.

Assets, liabilities, equity, revenues and expenses are examples of:

• qualitative characteristics.

• elements of financial statements.

• foundational principles.

• peripheral transactions.

Including all relevant information in the financial statements is required by the:

• full disclosure principle.

• going concern assumption.

• historical cost principle.

• revenue recognition principle.

Which of the following is an enhancing qualitative characteristic in the conceptual framework?

• Relevance

• Effectiveness

• Timeliness

• Representational Faithfulness

"A business enterprise will continue to operate in the foreseeable future," describes:

• Economic Entity Assumption

• Going Concern Assumption

• Historical Cost Principle

• Future Value Principle