31. Marvin holds 10% of the common shares of Pink Limited. For the 2017 fiscal year end, all shareholders received a cash payment to represent their share in the net income of Pink Limited. How would this cash payment be reported in the equity section of Pink Limited’s financial statements?
a) as a reduction in the Owner’s Equity account
b) as an owner withdrawal, reducing Shareholder’s Equity of Pink Limited
c) as a dividend, reducing Shareholder’s Equity of Pink Limited
32.An unearned revenue can best be described as an amount
a) collected and currently matched with expenses.
b) collected and not currently matched with expenses.
c) not collected and currently matched with expenses.
d) not collected and not currently matched with expenses.
33.Which type of account is always debited during the closing process?
d) retained earnings
34.Which of the following statements is INCORRECT regarding fair value adjustments for investments?
a) Both FV–NI investments and FV–OCI investments could include equity investments orinvestments in debt securities.
b) FV–OCI investments exclude debt securities.
c) At each period end, an estimate is made of the fair value of both FV–NI and FV–OCI investments.
d) An adjusting entry is required to record a holding gain or loss on FV–NI investments.
35.In the closing process, all the revenue and expense accounts are transferred to a clearing or suspense account called
a) Other Comprehensive Income.
b) Common Shares.
c) Retained Earnings.
d) Income Summary.
36.A corporation’s net income or loss is closed at year end to
a) Accumulated Other Comprehensive Income.
b) Common Shares.
c) Retained Earnings.
d) Other Comprehensive Income.
37.A post-closing trial balance
a) includes temporary accounts only.
b) includes permanent accounts only.
c) includes both temporary and permanent accounts.
d) may include expense accounts.
38.Which of the following statements about the trial balanceis correct?
a) The debits and credits must balance.
b) The equality of credits and debits ensures that no errors were made.
c) The post-closing trial balance includes temporary accounts only.
d) The post-closing trial balance is used to prepare the financial statements.
39.If the inventory account at the end of the year is understated, the effect will be to
a) overstate the cost of goods sold.
b) understate the net purchases.
c) overstate the gross profit on sales.
d) overstate the goods available for sale.
40. Which of the following is true regarding the traditional discounted cash flow approach?
a) The discount rate is adjusted to accommodate the riskiness of the cash flows.
b) The cash flows have been adjustment to accommodate their riskiness.
c) This model is best used where cash flows are fairly uncertain.
d) Both a) and c) are correct.
41. A fair value measure under IFRS 13 is based on which view of fair value?
a) market participant view
b) shareholder view
c) fair value view
d) unbiased view
42. 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
43. Under ASPE, Other Comprehensive Income (OCI) and Accumulated Other Comprehensive Income (AOCI) accounts
a) appear as separate line items, the same as under IFRS.
b) are part of accounts such as Fair Value–OCI Investments.
c) are not included in financial statements.
d) are measured differently than under IFRS.
44. The main difference in the accounting for measurement issues between IFRS and ASPE is that
a) IFRS has a well-developed framework for measuring fair values (IFRS13), whereas ASPE does not.
b) there is no difference between accounting for measurement issues between these standards.
c) guidance under ASPE is concentrated in a single area of the ASPE body of knowledge.
d) IFRS requires explicit disclosure of fair value amounts, whereas these disclosures under ASPE are optional.