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Unformatted text preview: EFA3J09 ©CGA-Canada, 2009 Page 1 of 8 CGA-CANADA FINANCIAL ACCOUNTING: LIABILITIES & EQUITIES [FA3] EXAMINATION June 2009 Marks Time: 3 Hours Notes: 1. All calculations must be shown in an orderly manner to obtain part marks. 2. Round all calculations to the nearest dollar, except for EPS and financial ratios where two decimal places should be used. 3. Unless otherwise indicated, use straight-line amortization. 4. Assume a December 31 fiscal year end for all questions, unless otherwise indicated. 5. If a test of materiality is required, use 5%. 6. Narratives for journal entries are not required. When preparing journal entries, be careful to select account titles that clearly indicate where the item will appear in the financial statements. For example, if something is to be on the income statement, it should be labelled as a revenue, expense, or extraordinary item. 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 the best answer for item (a) is (1), 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. Marks will not be awarded for explanations. Note: 2 marks each a. Which of the following best defines a partnership? 1) An agreement between persons to create a partnership, (usually) setting out the terms of the relationship 2) The relationship between two or more persons carrying on a business with a view to profit 3) The situation in which each of a number of persons is personally liable for the full amount of a debt 4) A business venture undertaken jointly by two or more parties b. Assume a Certified General Accountant (CGA) has decided to not apply a specific Handbook section to a given transaction, because it would produce misleading financial information to the users of the financial statements. Which of the following best describes the action by the CGA? 1) This action is acceptable if the amount involved is material. 2) This action is acceptable as long as the users are informed of the unique treatment. 3) This action is unacceptable; all transactions must be recorded in accordance with GAAP. 4) This action is unacceptable, as it violates the Code of Ethical Principles and Rule of Conduct. c. CAM Corporation issued 20-year bonds 3 years ago. Currently, interest rates in the bond market have been increasing. How does the increase in interest rates affect CAM? 1) There is an economic loss to CAM, but it is not reported in the financial statements. 2) There is an economic loss to CAM, and the change is reported in the financial statements....
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This note was uploaded on 06/10/2011 for the course ACCT 1204 taught by Professor Chang during the Spring '11 term at Nanjing University.
- Spring '11
- Financial Accounting