Question type: Multiple Choice
1) The financial statements most frequently provided include all of the following except the:
a) balance sheet.
b) cash flow statement
c) statement of surplus.
d) income statement.
2) The term GAAP means:
a) generally accepted accounting practices.
b) generally accepted accounting principles.
c) generally accepted auditing practices.
d) generally accepted accounting purposes.
3) Which of the following statements is not consistent with the practice of accounting?
a) Accounting theory and practice have remained static since their inception hundreds of years ago.
b) The responsibility placed on the accounting profession is greater today than ever before.
c) Accounting is largely a product of its environment.
d) Accounting has three essential characteristics.
4) Financial accounting and managerial accounting have which common characteristic?
a) Both culminate in the preparation of financial statements.
b) Both focus on preparation of information for use by internal and external stakeholders.
c) Both are concerned with communication of financial information.
d) Both require financial information prepared in accordance with GAAP.
5) Which of the following statements accurately describes the accounting professions role in the capital allocation process?
a) Accounting rules are set by banks and other lending institutions which provide capital.
b) Company performance is measured by accountants and communicated to investors.
c) Only public companies are affected by the capital allocation process.
d) The capital allocation process is regulated by the Financial Accounting Standards Board (FASB).
6) All of the following are objectives of financial reporting except to provide information:
a) about entity resources, claims to those resources, and changes to them.
b) that is useful in capital allocation decisions.
c) about the major shareholders of an entity.
d) that is useful in assessing management stewardship.
7) Which of the following stakeholders do not typically rely on the financial statements to make resource allocation decisions?
a) Investors
b) Creditors
c) Analysts
d) Standard-setters
8) By virtue of the Canadian Business Corporations Act, which organization has primary responsibility for setting GAAP for private companies in Canada?
a) Accounting Standards Board
b) Accounting Standards Oversight Council
c) Canadian Public Accountability Board
d) Financial Accounting Standards Board