11. For interim reporting, IFRS does NOT require a
a) comprehensive income statement.
b) statement of shareholders’ equity.
c) statement of cash flows.
d) detailed statement of financial position.
12. When using the discrete view to prepare interim statements, two exceptions that are permitted deal with the calculation of
a) depreciation and income tax expense.
b) income tax expense and employer’s payroll tax expense.
c) depreciation and unearned revenue.
d) unearned revenue and employer’s payroll tax expense.
13. Which of the following statements is INCORRECT regarding IFRS requirements for interim reporting?
a) Only a statement of financial position and statement of comprehensive income are required.
b) The same accounting policies should be used as for the annual statements.
c) When an accounting change is applied retrospectively, the enterprise must present a statement of financial position for the beginning of the earliest comparative period.
d) Condensed financial statements are permitted.
14. Problems with interim reporting include
a) how to record depreciation.
b) inventory valuation.
c) how to present a change in accounting policy/principle.
d) revenue recognition.
15. Regarding related-party transactions,
a) transactions between related parties are usually presumed to take place at arms length.
b) related parties do not include members of the immediate family of company management.
c) both IFRS and ASPE deal only with disclosure requirements for such transactions.
d) ASPE requires that some related-party transactions be remeasured.
16. Which of the following subsequent events (post-statement of financial position events) would require adjustment of the accounts before issuance of the financial statements?
a) major losses as a result of a fire in the company’s plant
b) decline in the fair value of investments
c) loss on an account receivable (on the books at statement of financial position date) resulting from a customer’s bankruptcy
d) lawsuit arising from a customer’s injury due to a defective product
17. Which of the following subsequent events (post-statement of financial position events) would generally require disclosure in the financial statement notes, but NOT adjustment of the accounts?
a) retirement of the company president
b) settlement of a lawsuit when the event that gave rise to the action occurred prior to the statement of financial position date
c) strike by the company’s unionized workers
d) issue of a significant number of common shares
18. Accounting issues involved for unincorporated businesses include
a) the definition of the economic entity.
b) who owns the issued shares.
c) segregating the salaries expense for the owner(s) from the salaries expense for the employees.
d) provision for income taxes.
19. In which order of preference are a company’s creditors paid in the event of bankruptcy?
a) Secured first, then preferred, then unsecured
of the above
b) Preferred first, then secured, then unsecured
c) Secured first, then unsecured, then preferred
d) Any may be applied, according to agreements among the creditors.
20. When an auditor expresses an unqualified opinion about a company’s financial statements, it means that the financial statements
a) are free from error.
b) present fairly the financial position, results of operations, and cash flows in accordance with GAAP.
c) indicate that the company is doing well and would make a good investment.
d) contain exceptions due to a departure from GAAP.