BU127 Final Exam UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Statement of financial position - CORRECT ANSWER reports the financial position (assets,
liabilities, and shareholders' equity) of an accounting entity at a point in time
Accounting entity - CORRECT ANSWER the organization for which financial data are to be
collected
Liabilities - CORRECT ANSWER the entity's obligations that result from past business events
Shareholders' equity - CORRECT ANSWER the amount of financing provided by owners of
the business as well as earnings over time
Contributed capital - CORRECT ANSWER the investment of cash and other assets in the
business by the owners
Retained earnings - CORRECT ANSWER amount of earnings reinvested in the business (thus
not distributed to shareholders in the form of dividends)
Statement of comprehensive income - CORRECT ANSWER reports the change in shareholders'
equity during a period from business activities, excluding exchanges with shareholders
Statement of earnings - CORRECT ANSWER reports the revenues and expenses of the
accounting period
International Financial Reporting Standards - CORRECT ANSWER guidelines for the
measurement rules used to develop the information in financial statements
Securities and Exchange Commission - CORRECT ANSWER the US government agency that
determines the financial statements that public companies must provide to shareholders and the
measurement rules that they must use in producing those statements
, Ontario securities commission - CORRECT ANSWER the most influential Canadian regulator
of the flow of financial information provided by publicly traded companies in Canada
Accounting standards board - CORRECT ANSWER the private sector body given the primary
responsibility to set the detailed rules that become accepted accounting standards
Relevance - CORRECT ANSWER can influence a decision it has predictive and/or
confirmatory value
Material amounts - CORRECT ANSWER are amount that are large enough to influence a user's
decision
Faithful representation - CORRECT ANSWER suggests that information provided in the
financial statements must reflect the substance of the underlying transactions which may differ from
their legal form
Comparability - CORRECT ANSWER accounting information across businesses is enhanced
when similar accounting methods have been applied
Verifiable - CORRECT ANSWER if independent accountants can agree on the nature and
amount of a transaction
Timely - CORRECT ANSWER information enhances the information's ability to predict future
values and to confirm past values
Understandability - CORRECT ANSWER the quality of information that enables users to
comprehend its meanings
Cost constraint - CORRECT ANSWER suggests that information should be produced only if
the perceived benefits of increased decision usefulness exceed the expectation costs of providing that
information
Separate entity assumption - CORRECT ANSWER states that each business must be accounted
for separately from the activities of its owners
QUESTIONS AND CORRECT ANSWERS
Statement of financial position - CORRECT ANSWER reports the financial position (assets,
liabilities, and shareholders' equity) of an accounting entity at a point in time
Accounting entity - CORRECT ANSWER the organization for which financial data are to be
collected
Liabilities - CORRECT ANSWER the entity's obligations that result from past business events
Shareholders' equity - CORRECT ANSWER the amount of financing provided by owners of
the business as well as earnings over time
Contributed capital - CORRECT ANSWER the investment of cash and other assets in the
business by the owners
Retained earnings - CORRECT ANSWER amount of earnings reinvested in the business (thus
not distributed to shareholders in the form of dividends)
Statement of comprehensive income - CORRECT ANSWER reports the change in shareholders'
equity during a period from business activities, excluding exchanges with shareholders
Statement of earnings - CORRECT ANSWER reports the revenues and expenses of the
accounting period
International Financial Reporting Standards - CORRECT ANSWER guidelines for the
measurement rules used to develop the information in financial statements
Securities and Exchange Commission - CORRECT ANSWER the US government agency that
determines the financial statements that public companies must provide to shareholders and the
measurement rules that they must use in producing those statements
, Ontario securities commission - CORRECT ANSWER the most influential Canadian regulator
of the flow of financial information provided by publicly traded companies in Canada
Accounting standards board - CORRECT ANSWER the private sector body given the primary
responsibility to set the detailed rules that become accepted accounting standards
Relevance - CORRECT ANSWER can influence a decision it has predictive and/or
confirmatory value
Material amounts - CORRECT ANSWER are amount that are large enough to influence a user's
decision
Faithful representation - CORRECT ANSWER suggests that information provided in the
financial statements must reflect the substance of the underlying transactions which may differ from
their legal form
Comparability - CORRECT ANSWER accounting information across businesses is enhanced
when similar accounting methods have been applied
Verifiable - CORRECT ANSWER if independent accountants can agree on the nature and
amount of a transaction
Timely - CORRECT ANSWER information enhances the information's ability to predict future
values and to confirm past values
Understandability - CORRECT ANSWER the quality of information that enables users to
comprehend its meanings
Cost constraint - CORRECT ANSWER suggests that information should be produced only if
the perceived benefits of increased decision usefulness exceed the expectation costs of providing that
information
Separate entity assumption - CORRECT ANSWER states that each business must be accounted
for separately from the activities of its owners
