11) What is the qualitative characteristic that states that accounting records and statements are based on the most reliable data available so they are as accurate and useful as possible?

A) Reliability

B) Relevance

C) Comparability

D) Understandability

12) The relevant measure of value of the assets of a company that is going out of business is:

A) their current market value.

B) their book value.

C) their historical cost.

D) the higher of their historical cost or current market value.

13) Which of the following statements is true?

A) The value of a dollar changes over time.

B) German accountants record transactions in dollars.

C) The stable-monetary-unit concept requires adjustments to the accounting records for the effects of inflation.

D) High inflation rates indicate a dollar's purchasing power is stable.

14) Which of the following statements is correct?

A) Businesses classified as publicly accountable enterprises must use IFRS and other businesses must use ASPE.

B) Businesses classified as publicly accountable enterprises may use IFRS or ASPE depending on their size.

C) Businesses not classified as publicly accountable enterprises may not use IFRS.

D) Businesses classified as publicly accountable enterprises must use IFRS and other businesses may use IFRS or ASPE.

15) Both IFRS and ASPE:

A) provide the detailed accounting treatment for every business transaction.

B) are principles based.

C) are specific guidelines that never require professional interpretation.

D) are designed to meet the needs of publicly accountable enterprises in Canada.

Match the following terms and definitions:

 

A) account receivable

B) proprietorship

C) earnings estimate

D) transaction

E) generally accepted accounting principles

F) corporation

G) asset

H) expense

I) accounting

J) liability

K) limited-liability partnership

L) revenue

M) capital

 

16) Guidelines that govern how businesses report their financial statements to the public

Match the assumption, principle, or constraint description with the appropriate term.

 

A) understandability characteristic

B) stable-monetary unit assumption

C) cost/benefit constraint

D) materiality constraint

E) relevance principle

F) cost principle of measurement

G) recognition principle

H) going-concern assumption

I) reliability characteristic

J) economic-entity assumption

 

17) Benefits of the information produced by an accounting system must be greater than the costs

18) Amounts may be ignored if the effect on a decision maker's decision is not significant

19) Transactions are recorded based on the cash amount received or paid

20) Transactions are expressed using units of money

21) Assumes that a business is going to continue operations indefinitely

22) Business must keep its accounting records separate from its owner's accounting records