Accounting for Decision Making Exam Bank
Course Introduction
Accounting for Decision Making introduces the fundamental concepts and techniques of accounting that are essential for informed business decision-making. The course covers the preparation and interpretation of financial statements, cost analysis, budgeting, and performance evaluation, exploring how accounting information supports managerial planning, control, and strategic choices. Students learn to analyze financial data, communicate insights to stakeholders, and apply accounting information to real-world scenarios, equipping them with the skills necessary to drive effective organizational decisions.
Recommended Textbook
Intermediate Accounting Volume 1 12th Canadian Edition by Donald E. Kieso
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13 Chapters
1318 Verified Questions
1318 Flashcards
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Page 2
Chapter 1: The Canadian Financial Reporting Environment
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74 Verified Questions
74 Flashcards
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Sample Questions
Q1) Stakeholders who help in the efficient allocation of resources include
A) investors and creditors.
B) financial analysts and regulators.
C) creditors and auditors.
D) management and auditors.
Answer: B
Q2) Information provided by accounting is important because it enables investors and creditors to
A) compare income and assets of companies.
B) assess the relative risks and returns of investment opportunities.
C) channel their resources more effectively.
D) all of the above
Answer: D
Q3) The preparation by some companies of biased information is sometimes referred to as
A) conservative financial reporting.
B) full disclosure of all material facts.
C) aggressive financial reporting.
D) stewardship.
Answer: C
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Chapter 2: Conceptual Framework Underlying Financial Reporting
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Sample Questions
Q1) Fraudulent financial reporting is a business reality. While it cannot be eliminated, the risk of fraudulent reporting can be decreased. Which of the following considerations is least likely to lessen that risk?
A) an independent audit committee
B) an internal audit function
C) vigilant management
D) an increased focus on tying bonuses to short-term company performance
Answer: D
Q2) Which of the following is NOT part of the conceptual framework for financial reporting?
A) elements of financial statements
B) qualitative characteristics of accounting information
C) notes to financial statements
D) foundational principles
Answer: C
Q3) Forms of business organization
Identify at least two (2) common forms of business organization. For each business structure name an associated pro and con.
Answer: 11ea833a_6541_94d3_b223_6fe87f6b4dda_TB6769_00
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Chapter 3: Measurement
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31 Flashcards
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Sample Questions
Q1) Raleigh Inc. is considering leasing a piece of equipment with a fair value of $108,000 for three years. The current market interest rate for financing the equipment is 5% compounded semi-annually. Calculate the semi-annual lease payment assuming that the payment is made at the end of the period (round to the nearest dollar).
Answer: Present value of an ordinary annuity of $108,000 for six periods at 2.5% ($108,000 / 5.50813) = $19,607.
Q2) Raleigh Inc. is considering leasing a piece of equipment with a fair value of $108,000 for three years. The current market interest rate for financing the equipment is 5% compounded semi-annually. Calculate the semi-annual lease payment assuming that the payment is made at the beginning of the period (round to the nearest dollar).
Answer: Present value of an annuity due of $108,000 for six periods at 2.5% ($108,000 / 5.64583) = $19,129.
Q3) In order to measure fair value under IFRS13, an entity must determine
A) the item being measured, and how the item could or would be used.
B) the market the item would be (or is) bought and sold in.
C) which fair value model is being used to value the item.
D) all of the above
Answer: D
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5
Chapter 4: Reporting Financial Performance
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125 Verified Questions
125 Flashcards
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Sample Questions
Q1) Danger of using non-GAAP earnings
Explain non-GAAP earnings and the danger of using these earnings to assess the results of operations and the financial position of a company.
Q2) Changes in accounting principle are allowed where
A) they are required by a primary source of GAAP.
B) they result in reliable and more relevant information.
C) the company reports less favourable results under the new policy.
D) both a and b are correct.
Q3) The statement of changes in shareholders' equity
A) is a required statement under ASPE.
B) is a required statement under IFRS.
C) is a required statement under both IFRS and ASPE.
D) is an optional statement under both IFRS and ASPE.
Q4) Assuming that none of the errors were detected or corrected, by what amount will retained earnings at December 31, 2020 be overstated or understated?
A) $4,000 understated
B) $5,000 overstated
C) $8,500 understated
D) $11,500 understated
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Chapter 5: Financial Position and Cash Flows
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) When current debt is refinanced by the issue date of financial statements, it may generally be presented as non-current
A) if the company follows IFRS.
B) under either ASPE or IFRS.
C) if the company follows ASPE.
D) only if the company is a subsidiary.
Q2) Working capital is
A) capital which has been reinvested in the business.
B) cash invested by owners.
C) cash and receivables less current liabilities.
D) current assets less current liabilities.
Q3) Which of the following is a limitation of the balance sheet?
A) Many items that are of financial value are omitted.
B) Judgements and estimates are used.
C) Current fair value is not reported.
D) All of these answer choices are correct.
Q4) Liquidity, solvency, and financial flexibility
Explain the relation between the concepts of liquidity, solvency and financial flexibility.
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Page 7
Chapter 6: Revenue Recognition
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117 Verified Questions
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Sample Questions
Q1) Which of the following should be shown on the statement of financial position at December 31, 2020 related to Contract 2?
A) inventory, $ 272,000
B) inventory, $ 328,000
C) liability, $ 272,000
D) liability, $ 600,000
Q2) Risks & rewards of ownership
Describe the factors one must consider in determining who has the risk and rewards of ownership and, therefore, whether a sale has occurred at the point of delivery, under the earnings approach.
Q3) The journal entries to recognize the revenue from a consignment sale would likely be identical under the earnings and the contract-based approaches assuming
A) the contract is entered into at the same time as when control over the goods is passed to the customer.
B) the underlying goods or services are valued under the residual value method.
C) the completed contract method is used.
D) the percentage-of-completion method is used.
Q4) Explain the advantages and disadvantages of the completed-contract method.
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Page 8
Chapter 7: Cash and Receivables
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114 Flashcards
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Sample Questions
Q1) Presentation and disclosure of receivables
When financial statements are prepared, the presentation of and disclosures related to receivables have to be addressed. What is the objective of these disclosures?
Q2) In preparing its bank reconciliation for the month of April 2020, Henke Inc. has the following information available: \(\begin{array}{llcc}
\text { Balance per bank statement, \( 4 / 30 / 20 \) } &&\$34,140 \\
\text {NSF cheque returned with \( 4 / 30 / 20 \) bank statement }& &450\\
\text {Deposits in transit, \( 4 / 30 / 20 \) } &&5,000\\
\text {Outstanding cheques, 4/30/20 } &&5,200\\
\text { Bank service charges for April } &&20\\
\end{array}\)
What should be the correct balance of cash at April 30, 2020?
A) $34,370
B) $33,940
C) $33,490
D) $33,470
Q3) Secured borrowings vs. factoring of receivables
Explain the difference between secured borrowings and factoring.
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Page 9
Chapter 8: Inventory
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Sample Questions
Q1) The inventory turnover ratio is calculated by dividing the cost of goods sold by
A) beginning inventory.
B) ending inventory.
C) average inventory.
D) number of days in the year.
Q2) In a periodic inventory system, if the beginning inventory is overstated
A) net income is understated.
B) working capital is understated.
C) the current ratio is overstated.
D) cost of goods sold is understated.
Q3) When inventory declines in value below original (historical) cost, and this decline is considered other than temporary, what is the maximum amount that the inventory can be valued at?
A) net realizable value
B) selling price
C) historical cost
D) net realizable value reduced by a normal profit margin
Q4) What is the specific identification cost flow method?
Q5) What is a perpetual inventory system?
Q6) What is the average cost inventory cost flow method?
10
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Chapter 9: Investments
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127 Flashcards
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Sample Questions
Q1) How much income from its investment in Davel should Ryan report in 2020?
A) $ 45,000
B) $ 15,000
C) $ 13,500
D) $ 22,500
Q2) Assuming the revised amount and timing of cash flows for an investment can be reasonably determined, the incurred loss impairment model uses which discount rate?
A) the investor's internal rate of return
B) the historical interest rate
C) the current market rate
D) either the historical rate or the current market rate
Q3) Under the cost/amortized cost model, holding gains are
A) recognized in net income only when realized.
B) recognized in other comprehensive income.
C) recognized depending on management's intention.
D) not recognized at all.
Q4) Shares acquired on margin
What does it mean when an investment in shares is acquired on margin and how is the asset recorded?
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Chapter 10: Property, Plant, and Equipment: Accounting Model Basics
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99 Flashcards
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Sample Questions
Q1) When using the revaluation model of accounting for PP&E assets (asset-adjustment or elimination method),
A) the related Accumulated Depreciation account is closed to OCI.
B) depreciation continues to be charged in the original pattern.
C) the difference between fair value and book value is always debited to Revaluation Surplus (OCI).
D) a new depreciation rate must be calculated.
Q2) Dinga Corp. exchanged similar pieces of equipment with Elongo Corp. No cash was exchanged. Since this exchange will not significantly change the economic position of either company, this transaction lacks commercial substance. At this time, the net book value of Dinga's asset is $ 36,000, while the net book value of Elongo's asset on their books is $ 33,300. However, it has been reliably determined that the fair value of Dinga's asset is $ 36,900, while the fair value of Elongo's asset is $ 34,200. Given these facts, at what amount should Dinga record the asset it receives from Elongo?
A) $ 36,900
B) $ 36,000
C) $ 34,200
D) $ 33,300
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Chapter 11: Depreciation, Impairment, and Disposition
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Sample Questions
Q1) A graph is set up with "yearly depreciation expense" on the vertical axis and "time" on the horizontal axis. Assuming linear relationships, how would the graphs for straight-line and declining-balance depreciation, respectively, be drawn?
A) vertically and sloping down to the right
B) vertically and sloping up to the right
C) horizontally and sloping down to the right
D) horizontally and sloping up to the right
Q2) On September 25, 2019, Panther Corp. purchased machinery for $336,000. Residual value was estimated to be $15,000. The machinery will be depreciated over eight years using the double-declining-balance method. If depreciation is calculated on the basis of the nearest full month, Panther should record depreciation expense for calendar 2020 on this machinery of
A) $78,750.
B) $63,000.
C) $60,000.
D) $42,000.
Q3) What should a company do if an asset's carrying value exceeds its recoverable amount due to poor estimates? How can companies keep such instances to a minimum?
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Page 13
Chapter 12: Intangible Assets and Goodwill
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104 Flashcards
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Sample Questions
Q1) Criteria for capitalization of development costs
List the criteria that must be met before development costs of a project may be capitalized.
Q2) An "indefinite life" for an intangible asset means that
A) the asset will last forever.
B) unlimited amortization may be recorded for the asset.
C) amortization is only recorded if future economic benefits can be determined.
D) there appears to be no foreseeable limit to how long the asset will generate positive future cash flows.
Q3) Intangible assets and goodwill
Explain the three main characteristics of intangible assets. Is goodwill an intangible asset? Why, or why not? Explain.
Q4) The reason that the revaluation model is NOT widely used for measuring intangible assets after initial recognition is that A) it is not allowed under IFRS.
B) the cost method is easier to use.
C) it can be applied only to intangible assets with a fair value determined in an active market.
D) it requires an extensive internal investigation to determine fair value.
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Chapter 13: Accounting Information Systems and Adjusting
Entries: A Comprehensive Guide
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Sample Questions
Q1) Adjusting entries are necessary to
1. obtain a proper matching of revenue and expense.
2. achieve an accurate statement of assets and equities.
3. adjust assets and liabilities to their fair market value.
A) 1
B) 2
C) 3
D) 1 and 2
Q2) Calculation of expense
The records for Jay Inc. showed the following for 2020: \(\begin{array}{cccc} &\underline{\text {Jan 1 }} &\underline{ \text {Dec 31} } \\ \text { Accrued expenses............................... } &\$2,000&\$3,600\\
\text { Prepaid expenses................................... } &900&800\\
\text {Cash paid during the year for expenses...... } &&\$55,000\\ \end{array}\)
Instructions
Calculate the total amount of expenses that should be reported on the 2020 statement of comprehensive income.
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