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Questions and Answers
Which type of business structure is not mentioned in the text?
Which type of business structure is not mentioned in the text?
- Corporation
- Limited Liability Company (LLC) (correct)
- Sole Proprietorship
- Partnerships
What do financial statements provide insight into?
What do financial statements provide insight into?
- Future profitability (correct)
- Only past profitability
- Only current operations
- Taxation details
When did Canada transition from GAAP to IFRS?
When did Canada transition from GAAP to IFRS?
- January 1, 2009
- January 1, 2010
- January 1, 2012
- January 1, 2011 (correct)
What are the topics covered in the chapter?
What are the topics covered in the chapter?
What are the advantages of a sole proprietorship?
What are the advantages of a sole proprietorship?
What are the advantages of a partnership?
What are the advantages of a partnership?
What are the advantages of a corporation?
What are the advantages of a corporation?
What do common shareholders in corporations have?
What do common shareholders in corporations have?
Who uses financial statements of a corporation?
Who uses financial statements of a corporation?
What do International Financial Reporting Standards (IFRS) provide compared to GAAP?
What do International Financial Reporting Standards (IFRS) provide compared to GAAP?
What are the four financial statements of a corporation?
What are the four financial statements of a corporation?
What does the Statement of Financial Position show?
What does the Statement of Financial Position show?
What does Assets = Equity + Liabilities represent?
What does Assets = Equity + Liabilities represent?
Which accounting method is used to allocate the cost of intangible assets over their useful life?
Which accounting method is used to allocate the cost of intangible assets over their useful life?
Where do annual allowances for depreciation, amortization, and depletion appear in the financial statements?
Where do annual allowances for depreciation, amortization, and depletion appear in the financial statements?
What is the purpose of capitalization in accounting?
What is the purpose of capitalization in accounting?
How is goodwill defined in accounting?
How is goodwill defined in accounting?
At what ownership percentage is significant influence presumed to exist in accounting?
At what ownership percentage is significant influence presumed to exist in accounting?
What is the key measure of liquidity in accounting?
What is the key measure of liquidity in accounting?
How are inventories valued in changing price environments?
How are inventories valued in changing price environments?
What are prepaid expenses in accounting?
What are prepaid expenses in accounting?
When is significant influence presumed to exist in accounting?
When is significant influence presumed to exist in accounting?
What is the purpose of depletion in accounting?
What is the purpose of depletion in accounting?
What are trade receivables in accounting?
What are trade receivables in accounting?
What is the purpose of the cost method in accounting?
What is the purpose of the cost method in accounting?
In a distribution by way of a prospectus, what right do purchasers usually have within two business days after receiving a prospectus and any amendment?
In a distribution by way of a prospectus, what right do purchasers usually have within two business days after receiving a prospectus and any amendment?
In a distribution by way of a prospectus, when can purchasers rescind or cancel a contract for the purchase of securities?
In a distribution by way of a prospectus, when can purchasers rescind or cancel a contract for the purchase of securities?
Who may be liable for damages if a prospectus contains a material misrepresentation?
Who may be liable for damages if a prospectus contains a material misrepresentation?
What constitutes a takeover bid?
What constitutes a takeover bid?
Who are generally defined as insiders?
Who are generally defined as insiders?
What must insiders do regarding reporting trading activity?
What must insiders do regarding reporting trading activity?
What are a corporation's owners not personally liable for?
What are a corporation's owners not personally liable for?
How is a corporation taxed?
How is a corporation taxed?
What do a corporation’s financial statements show?
What do a corporation’s financial statements show?
What must a reporting issuer do after distributing securities to the public?
What must a reporting issuer do after distributing securities to the public?
What is the consequence of failing to file an insider report or giving false or misleading information?
What is the consequence of failing to file an insider report or giving false or misleading information?
Which financial statement shows the revenue and related expenses for a specific period?
Which financial statement shows the revenue and related expenses for a specific period?
What represents income tax payable in future periods due to temporary differences between book value of assets and liabilities and the amount used for income tax purposes?
What represents income tax payable in future periods due to temporary differences between book value of assets and liabilities and the amount used for income tax purposes?
Which item is not directly related to a company’s normal operating activities on the Statement of Comprehensive Income?
Which item is not directly related to a company’s normal operating activities on the Statement of Comprehensive Income?
What does the Statement of Cash Flows primarily evaluate?
What does the Statement of Cash Flows primarily evaluate?
What is the purpose of the Statement of Changes in Equity?
What is the purpose of the Statement of Changes in Equity?
What is the purpose of the notes to the financial statements in an Annual Report?
What is the purpose of the notes to the financial statements in an Annual Report?
What must a company do after distributing securities to the public?
What must a company do after distributing securities to the public?
What is the first paragraph of the Auditor’s Report in an Annual Report typically about?
What is the first paragraph of the Auditor’s Report in an Annual Report typically about?
What are the three statutory rights available to the purchaser of securities issued in Canada under prospectus requirements?
What are the three statutory rights available to the purchaser of securities issued in Canada under prospectus requirements?
What is the key measure of liquidity in accounting?
What is the key measure of liquidity in accounting?
What do the financial statements of a corporation provide insight into?
What do the financial statements of a corporation provide insight into?
What is the primary purpose of the Statement of Cash Flows?
What is the primary purpose of the Statement of Cash Flows?
Study Notes
Accounting Principles and Concepts
- Depreciation, amortization, and depletion are used to allocate assets' cost over their useful life and match revenues and expenses.
- Depreciation is the normal wearing out of the firm's capital assets, amortization is for intangible assets, and depletion is used by extractive industries.
- Annual allowances for depreciation, amortization, and depletion appear as non-cash expenses in the statement of comprehensive income.
- Capitalization involves recording an expenditure as an asset to spread the expense over multiple accounting periods.
- Goodwill is the probability that a regular customer will continue to return and appears as the excess of the amount paid for shares over their net asset value.
- Intangible assets include patents, copyrights, trademarks, and franchises.
- Significant influence is presumed to exist when a company owns 20% or more of the voting rights of another company.
- Different degrees of ownership require different accounting treatment, such as the cost method for little influence and the consolidated method for over 50% ownership.
- Current assets include cash, inventories, prepaid expenses, and trade receivables, and are a key measure of liquidity.
- Inventories are valued at original cost or net realizable value, with commonly used methods including weighted average and FIFO.
- The choice of inventory valuation method impacts the inventory value on the statement of financial position and profit in changing price environments.
- Prepaid expenses are payments for services to be received in the near future, while trade receivables are amounts owed to the company for goods or services provided.
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Description
Test your knowledge of accounting principles and concepts with this quiz. Explore topics such as depreciation, amortization, asset allocation, capitalization, goodwill, intangible assets, ownership influence, current assets, inventory valuation, and prepaid expenses. Perfect for brushing up on essential accounting knowledge.
