Course Introduction
Accounting Theory Exam Preparation
Guide
Accounting Theory explores the fundamental principles, concepts, and frameworks that underpin the practice and development of accounting. This course examines the evolution of accounting thought, the rationale behind accounting standards, and the social, economic, and ethical considerations that influence accounting policy decisions. Students will analyze various accounting models, interpret relevant literature, and critically assess contemporary issues such as measurement, disclosure, and regulation. By integrating both academic research and real-world case studies, the course aims to provide a deeper understanding of how accounting theory shapes and responds to changing business environments.
Recommended Textbook
Intermediate Accounting 6th Edition Volume 1 by Thomas H. Beechy
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10 Chapters
1408 Verified Questions
1408 Flashcards
Source URL: https://quizplus.com/study-set/3044
Page 2
Chapter 1: The Framework for Financial Reporting
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79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/60490
Sample Questions
Q1) Which of the following financial statements are required for companies adhering to IFRS but NOT ASPE (private entity GAAP)?
A)Statement of Comprehensive income.
B)Statement of financial position.
C)Statement of Cash Flows.
D)Statement of Retained Earnings.
Answer: A
Q2) The organization created to develop accounting standards in Canada,the AcSB,is NOT concerned about:
A)reported cash flows.
B)reported earnings.
C)reported comparability of results.
D)reporting financial position.
E)all of these answers are correct.
Answer: C
Q3) Canadian companies must always present their financial results in Canadian dollars.
A)True
B)False Answer: False
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Chapter 2: Accounting Judgements
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) Which of the following distinguishes the personal transactions of business owners from business transactions?
A)Unit-of-measure assumption
B)Full-disclosure principle
C)Materiality constraint
D)Separate entity assumption
Answer: D
Q2) Relevance is of primary importance in financial reporting,whereas comparability is of secondary importance.
A)True
B)False
Answer: True
Q3) Preparation of financial statements with adequate notes is primarily based on the: A)separate entity assumption.
B)full-disclosure principle.
C)cost principle.
D)cost/benefit constraint.
E)reliability quality.
Answer: B
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Page 4
Chapter 3: Statements of Income and Comprehensive Income
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) Constructive obligations:
A)Arise from a reasonable expectation that a company will honour certain obligations based on past practices or events.
B)May result from legal requirements.
C)May or may not be legally enforceable.
D)Arise from a reasonable expectation that a company will honour certain obligations based on past practices or events and may or may not be legally enforceable.
Answer: D
Q2) Historical cost is more useful for measuring economic income than fair values.
A)True
B)False Answer: False
Q3) Once an asset has been designated as held for sale it must be re measured to the lower of its carrying value and its fair value less costs to sell.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Statements of Financial Position and Changes in Equity;
Disclosure Notes
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) Most balance sheets do not have a separate caption "Deferred Credits" because they are disclosed under liabilities or owners' equity.
A)True
B)False
Q2) A corporation paid a six-year insurance premium on January 1,year 1,for $12,000.It recorded the prepayment in two asset accounts--one with a $2,000 debit balance and one with a $10,000 debit balance.Under which of the following captions should the account be with the $10,000 balance be classified on a balance sheet dated January 1,year 1?
A)Capital assets
B)Other assets
C)Deferred charges
D)Current assets
Q3) Which of the following must a company NOT disclose with regards to any financial instruments which it may possess?
A)Amortized cost.
B)Accounting policy used for reporting purposes.
C)The fair value of each class of financial asset or liability.
D)The nature and extent of risks arising from the instruments.
Page 6
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Chapter 5: The Statement of Cash Flows
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177 Verified Questions
177 Flashcards
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Sample Questions
Q1) The Statement of Cash Flows can be based on (a) cash only or (b) cash plus cash equivalents.
A)True
B)False
Q2) DBB reported cost of goods sold for 2013 of $600,000; merchandise inventory increased by $20,000 during the year and accounts payable decreased by $30,000 during the year.What would be DBB's cash paid to suppliers for 2013?
A)$550,000
B)$590,000
C)$600,000
D)$610,000
E)$650,000
Q3) For which of the following accounts would the change during the year in that account not be found the reconciliation of net income and net operating cash flow?
A)Dividends payable
B)Interest payable
C)Prepaid rent
D)Wages payable
E)Short-term notes payable to supplier
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Page 7
Chapter 7: Financial Assets: Cash and Receivables
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) During 2001,a corporation recorded sales as follows: Cash sales,$300,000,and credit sales,$150,000.At 12/31/01,before the adjusting entries,Accounts receivable showed a debit balance of $90,000 and Allowance for Doubtful Accounts showed a credit balance of $600.
Required:
(a) Assuming a bad debt of $150 is to be written off,give the journal entry on 12/31/01.
(b) Give the adjusting entry for bad debt expense at 12/31/01,assuming bad debt losses are estimated to be 1 percent of credit sales.
(c) Give the adjusting entry for bad debt expense at 12/31/01,assuming instead that bad debt losses are estimated to be 2 percent of the balance in the Accounts receivable account (take transaction (a) into account).
Q2) Which of the following would be classified as a trade receivable?
A)Cash dividends receivable
B)Amounts due from customers
C)Claims in litigation
D)Loans to employees
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Chapter 8: Cost-Based Inventories and Cost of Sales
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169 Verified Questions
169 Flashcards
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Sample Questions
Q1) Which of the following note disclosure are NOT required under ASPE with respect to inventories?
A)Accounting policies and cost flows.
B)Inventory write-downs.
C)Amount of inventory expensed through cost of sales.
D)Carrying values of inventory by category.
Q2) Bargain Bins Ltd.had a beginning inventory of $20,000 and purchases for the period amounted to $110,000.Merchandise customarily sells at a 25 percent mark-up on cost.Sales revenue for the period was $150,000.Therefore,the ending inventory can be reliably estimated to be $________.
Q3) The difference between the gross margin percentage and cost ratio is usually called the mark-up rate.
A)True
B)False
Q4) The same inventory costing method must be used on the income tax return,on the income statement,and in the ledger accounts of the company.
A)True
B)False
Q5) Compare and contrast the gross margin method and the retail inventory method.
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Chapter 9: Property,Plant,and Equipment; Intangibles; and Goodwill
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191 Verified Questions
191 Flashcards
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Sample Questions
Q1) EC exchanged an old widget-making machine (Model A) that originally cost $46,000 (accumulated amortization,$37,400) plus $10,000 cash for an improved widget-making machine (model B) owned by IC.IC originally acquired the Model B machine for $77,000 (accumulated amortization to date,$42,000).EC's machine has a current market value of $5,000 and IC's has a current market value of $20,000.These are similar assets.EC should record the cost of the Model B widget-making machine acquired at:
A)$15,000.
B)$17,600.
C)$18,600.
D)$20,000.
Q2) Land excavation costs incurred with the intention of constructing a building on the site would be added to the cost of the Land.
A)True
B)False
Q3) All of the following items are identifiable intangible assets,except: A)trade names.
B)copyrights.
C)patents.
D)goodwill.
Page 10
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Chapter 10: Depreciation,Amortization,and Impairment
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165 Verified Questions
165 Flashcards
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Sample Questions
Q1) On January 1,2014,CT purchased a machine that had a list price of $24,960.CT paid cash $12,000 and executed a one-year note for the balance.No interest was specified in the note; however,the going rate of interest was 8 percent.Assume an estimated life of six years and no estimated residual value.Straight-line amortization is used.Amortization expense for the year ending December 31,2014,would be $___________________.
Q2) Accumulated amortization,as used in accounting,represents:
A)funds set aside to replace assets.
B)the portion of asset cost written off as an expense since the acquisition date.
C)earnings retained in the business that will be used to purchase another capital asset when the relating asset becomes fully depreciated.
D)an income on the income statement.
Q3) Gains or losses upon the retirement of individual asset units are not recognized when the assets concerned are natural resources
A)True
B)False
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11
Chapter 11: Financial Instruments: Investments in Debt and Equity Securities
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118 Verified Questions
118 Flashcards
Source URL: https://quizplus.com/quiz/60488
Sample Questions
Q1) Fair-value-through-profit-and-loss (FVTPL) investments are usually held for the purpose of resale in the near-term.
A)True
B)False
Q2) Using the cost method,an investment in a subsidiary is shown as an asset,while using the equity method,it is shown as part of shareholders' equity.
A)True
B)False
Q3) Assuming that ABC adheres to ASPE and opts to use the cost method,what effect (if any) would there be as on ABC's 2011 income as a result of this investment?
A)No effect.
B)$6,000 of dividend income.
C)$6,000 of investment income.
D)$20,000 of dividend income.
E)$30,000 of investment income.
Q4) Unrealized holding gains flow through income or OCI for FVTOCI investments.
A)True
B)False
Page 12
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