Corporate Financial Reporting
Study Guide Questions
Course Introduction
Corporate Financial Reporting is designed to provide students with a comprehensive understanding of the principles, standards, and processes involved in the preparation and analysis of financial statements for corporations. The course covers topics such as the framework of financial reporting, regulatory environment, measurement and recognition of assets and liabilities, revenue recognition, and equity accounting. Emphasis is placed on interpreting financial information for decision-making purposes and understanding how corporate reports communicate a companys financial position and performance to stakeholders. Students will engage with real-world case studies and apply accounting standards and analytical skills to complex corporate scenarios.
Recommended Textbook
Intermediate Accounting 6th Edition Volume 1 by Thomas H. Beechy
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10 Chapters
1408 Verified Questions
1408 Flashcards
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Chapter 1: The Framework for Financial Reporting
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79 Verified Questions
79 Flashcards
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Sample Questions
Q1) Do you think that most companies in the oil sector would adopt expanded disclosure policies or simply adhere to minimum compliance requirements? Explain.
Answer: Students' answers are sure to vary here,and for this reason this would be a good question for class-discussion purposes.While many responses may be valid,it can be argued that oil companies would be under enormous pressure to disclose as much information about their activities as possible.Rightly or wrongly,oil companies are often thought to be exploiting the environment for their own benefit.Moreover,many consumers still believe that they are being "gouged" by these companies.As a result,companies in the oil sector are not viewed favourably by many people.As a result of these negative perceptions,these companies would feel pressured to provide expanded disclosures in their annual reports,to show that they are good corporate citizens.
Q2) The Accounting Standards Board (ACSB) is an independent group established to promulgate accounting standards for governmental units such as provincial and civic entities.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Accounting Judgements
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) Information is neutral when it is free from bias that would lead users towards making decisions that are influenced by the way the information is measured or presented.
A)True
B)False
Answer: True
Q2) The continuity assumption holds that a business will carry on indefinitely.
A)True
B)False
Answer: False
Q3) Information is reliable when it is in agreement with the actual underlying transactions and events,the agreement is capable of independent verification and the information is reasonably free from error and bias.
A)True
B)False
Answer: True
Q4) Accounting transactions must always be realized prior to being recognized.
A)True
B)False Answer: False
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Chapter 3: Statements of Income and Comprehensive Income
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) A corporation had 20,000 shares of common stock outstanding from January 1,2010,through August 1,2010,on which date 10,000 additional shares were issued.If existed net income after taxes was $110,000,the calculated earnings per share (rounded to the nearest cent) would be:
A)$3.67
B)$4.26
C)$4.55
D)$5.50
Answer: A
Q2) Historical cost is more useful for measuring economic income than fair values.
A)True
B)False
Answer: False
Q3) Basic and diluted Earnings per share figures must be disclosed under both ASPE and IFRS.
Answer: FAL SE
Q4) A disposal group may include both current and non-current assets.
A)True
B)False
Answer: True
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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) Which of the following subsequent events would require an adjustment to the financial statements under IFRS?
A)The company issues shares shortly after year-end.
B)An uninsured fire loss occurred early in the subsequent year.
C)A major customer declares bankruptcy early in the New Year.
D)The company reaches an agreement early in the new year to refinance certain current liabilities over an additional two-year period.
Q2) Contingent losses should only be accrued if it is likely that a loss will arise due to events that existed at the date of the financial statements and the loss can be reasonably estimated.
A)True
B)False
Q3) Which item below is not a current asset?
A)Prepaid expense
B)Unearned revenue
C)Short-term investment
D)Work-in-process inventory
Q4) Define liability without using the word "liability".
Q5) Define current assets without using the word "asset."
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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) Which of the following would cause an inflow of cash?
A)Payment of a long-term debt
B)Purchase of inventory for cash
C)Sale of an asset for cash at less than its book value
D)Issuing common stock in payment for legal services already provided
Q2) Sale for cash of a short-term investment at its cost would cause an inflow of cash.
A)True
B)False
Q3) RLN received the following cash inflows during 2012. \(\begin{array} { l }
\text { Cash from customers.}&\$200,000 \\
\text { Sale of capital assets.}&50,000 \\
\text { Interest on loans receivable.}&10,000 \\
\text { Proceeds from sale of investments}&40,000 \\ \end{array}\)
What would be cash inflow from investing activities for 2012?
Q4) Salary expense plus amortization of deferred compensation expense for the year would equal cash paid for salaries.
A)True
B)False
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Chapter 7: Financial Assets: Cash and Receivables
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Sample Questions
Q1) The reported net carrying amount of a non-interest-bearing note payable recorded on a gross basis will increase as time goes by.
A)True
B)False
Q2) With compounding,the interest earned each period on an amount invested at a fixed rate of interest increases over time.
A)True B)False
Q3) The time value of money is measured by the excess of resources received,or paid over the amount of resources lent or borrowed at a different date.
A)True
B)False
Q4) There are fewer note disclosures required under ASPE than under IFRS for financial instruments.
A)True B)False
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Page 8
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) The retail inventory method may be used for all of the following except:
A)Cost the raw materials inventory in a production facility.
B)Used to provide a means of converting a physical inventory, at retail, to a cost basis.
C)Adapted to approximate both lower-of-cost or market and FIFO cost.
D)Used to provide estimated inventory valuations when a physical inventory count is impracticable.
Q2) Which of the following is not relevant to the gross margin method of inventory valuation?
A)Gross margin percentage
B)Mark-up on cost
C)Cost percentage
D)Profit margin
Q3) Many department stores allow their employees to purchase goods from the store at a discount.Explain the treatment and rationale for such sales in the retail method (average,LCM).
Q4) When the moving-average inventory costing method is used,how long does the unit cost of any individual item of inventory remain in the average? Explain in terms of how the method calculates each moving average M1,M2 and so forth.
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Page 9
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) Company B acquired a capital asset,terms 1 percent discount if paid within 30 days.The invoice cost was $5,000.The asset should be recorded by Company B at:
A)$4,950 if this is the amount of cash paid.
B)$5,000 if this is the amount of cash paid.
C)$4,950 regardless of whether the discount is taken.
D)$5,000 regardless of whether the discount is taken.
Q2) Plant assets may properly include:
A)property held for investment purposes.
B)land held for possible use as a future plant site.
C)deposits on machinery purchased and not yet received.
D)idle equipment awaiting sale.
E)self-constructed assets currently in use.
Q3) CT has been using the "expense as incurred" approach in recording ordinary repairs.For 2013,CT decided to use the allocation approach on an annual basis.Estimated expenditures for ordinary repairs for the year 2013 were $6,000.Actual cash expenditures for ordinary repairs for January 2013 were $550.Give the indicated journal entries for January 2013.
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Page 10
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,REP replaced a major component in Plant A,which had been operating for 10 years (from construction date of the plant); its original cost as a part of the plant was $36,000.The replacement component cost $40,000 (cash) and has an estimated life of 25 years.Plant A is depreciated as one unit on the straight-line basis (not group or composite amortization system) and has an estimated life of 30 years (total).All residual values were zero.REP has a December 31 year-end and only accounts for amortization at year-end.
(a) Give the entry (entries) on January 1,2014.
(b) At the end of 2014,what amount of amortization should be recorded on the replacement item? $____________________.
Q2) An asset's recoverable amount is the higher of its value-in-use or fair value less costs to sell.
A)True
B)False
Q3) Any impairment losses to a CGU's group assets are generally prorated among the CGU's long-lived assets including Goodwill.
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
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Sample Questions
Q1) Assuming that ABC adheres to IFRS,what would be the balance in the Investment in Associate - DEF Inc.account on December 31<sup>st</sup>,2012?
A)$600,000.
B)$675,000.
C)$720,000.
D)$630,000.
Q2) The equity method has all the following characteristics except:
A)Treats all dividends as liquidating
B)Values investments at market value
C)Treats the investor and the portion of investee owned by investor as a single economic entity
D)Removes the incentive for investor to force investee dividends in order to increase investor income
Q3) Gains and losses realized from the sale of FVTOCI investments are transferred from OCI to earning when the sale occurs.
A)True
B)False
Q4) List 3 factors that exhibit evidence of the existence of significant influence.
Page 12
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