ca_exm_fa2_2009-12 - CGA-CANADA FINANCIAL ACCOUNTING:...

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EFA2D09 ©CGA-Canada, 2009 Page 1 of 7 CGA-CANADA FINANCIAL ACCOUNTING: ASSETS [FA2] EXAMINATION December 2009 Marks Time: 3 Hours 28 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 is true regarding recognition of an item in a company’s financial statements? 1) Recognition means disclosing an item somewhere in the financial statements. 2) An item must be legally enforceable to be recognized as an asset. 3) Recognition refers to the process of measuring and including an item in the financial statements. 4) Recognition refers to the decision of whether to value an item at historical cost or fair value. b. BKR is a public company that produces electric power. Who decides what to include in BKR’s financial statements? 1) BKR’s auditors 2) BKR’s management 3) BKR’s shareholders 4) BKR’s regulators c. KFE is a Canadian public company that specializes in importing and distributing coffee beans to major food retailers. Which of the following would be considered the most authoritative source of generally accepted accounting principles for KFE? 1) Emerging issues committee abstracts issued for public companies 2) Accounting guidelines issued by the Canadian Accounting Standards Board 3) Financial accounting standards board (FASB) standards 4) The accounting sections of the CICA Handbook d. Otto produces small energy-efficient cars for sale to consumers who value sustainable development. Each car comes with a two-year warranty. Which of the following is the key measurement concept in accounting for the warranty? 1) Matching principle 2) Full disclosure 3) Historical cost 4) Revenue recognition e. DB issued bonds to help finance the acquisition of land for a plant expansion. At the time of issuance the market rate of interest was 7%, but the bonds were issued with a nominal interest rate of 6%. Which of the following would be the best way to present the resulting discount or premium on the bonds on DB’s balance sheet? 1) The discount would be a contra account in long-term assets. 2) The discount would be a contra account in long-term liabilities. 3) The premium should be shown separately in long-term assets. 4) The premium should be shown separately in long-term liabilities. Continued. ..
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EFA2D09 ©CGA-Canada, 2009 Page 2 of 7 f. You have been asked to be a guest speaker at a high school accounting class. A student has asked you to identify the critical event when recognizing revenue using the cost recovery method. Which of the following would you consider the critical event? 1)
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This note was uploaded on 03/30/2012 for the course ACCOUNTING 1204 taught by Professor Chang during the Spring '11 term at Nanjing University.

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ca_exm_fa2_2009-12 - CGA-CANADA FINANCIAL ACCOUNTING:...

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