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CGA-CANADA FINANCIAL ACCOUNTING 4 EXAMINATION December 2003 Marks Time: 4 Hours Notes: 1. All calculations must be shown in an orderly manner to obtain part marks. 2. Round all calculations to the nearest dollar. 3. Narratives for journal entries are not required unless specifically asked for. 4. Assume a December 31 fiscal year end unless specifically stated otherwise. 5. Assume all amounts are material unless directed otherwise. 6. Assume all companies are public companies unless otherwise noted. 7. Assume no companies use differential reporting unless otherwise noted. 30 Question 1 Select the best answer for each of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if (1) is the best answer for item (a), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. No account will be taken of any explanations you offer. Note: 2 marks each a. Daytona Private School, a not-for-profit organization, received a $25,000 truck as a donation from a former student. The school decided to record the donated truck by debiting a capital asset and crediting deferred revenue. Which of the following reporting objectives best supports this accounting practice? 1) Stewardship 2) Income prediction 3) Evaluation of management performance 4) Income tax planning b. When preparing consolidated financial statements, part of the purchase price discrepancy would be allocated to capital assets if the fair value of the subsidiary’s capital assets were greater than book value. Which of the following financial statement concepts best supports this accounting practice? 1) Materiality 2) Full disclosure 3) Matching 4) Historical cost c. Which of the following is the most authoritative source of generally accepted accounting principles in Canada? 1) The CICA’s Abstracts of Issues Discussed by the Emerging Issues Committee 2) The CICA’s research studies 3) Pronouncements of the Financial Accounting Standards Board (FASB) in the United States 4) The CICA Handbook recommendations Continued. .. EFA4D03 ©CGA-Canada, 2003 Page 1 of 9
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d. Which of the following best describes the standard-setting process for accounting practices in Canada? 1) Standards are determined primarily by academics and are based on a generally accepted conceptual framework. 2) Standards are determined primarily by government regulators and are based on government-sponsored referendums. 3) Standards are determined primarily by the accounting profession and are influenced by the views of those commenting on proposed standards. 4) Standards are determined primarily by auditors and are based on the ability to audit the financial information required by the standards. Note:
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This note was uploaded on 05/08/2010 for the course BUSINESS AIT 707 taught by Professor Raminrezaeinia during the Spring '09 term at Seneca.

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