TESTBANK FOR Intermediate Accounting 14e Canadian Volume 2 Kieso

, TESTBANK FOR Intermediate Accounting 14e
Canadian Volume 2 Kieso
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,Intermediate Accounting, 14Ce (Kieso)
Chapter 13 Non-Financial and Current Liabilities

1) According to the new Conceptual Framework and under ASPE in the CPA Canada Handbook
Part II, which of the following is NOT an essential characteristic of a liability?
A) It embodies a duty or responsibility.
B) The transaction or event that obliges the entity has occurred.
C) The obligation is enforceable on the other party.
D) The entity has little or no discretion to avoid the duty.
Answer: C
Diff: 1
Learning Objective: Define liabilities, distinguish financial liabilities from other liabilities, and
identify how they are measured.
Section Reference: Recognition and Measurement
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

2) A constructive obligation arises when
A) the entity is legally obligated to honour the obligation.
B) the entity makes an unconditional promise to pay money in the future.
C) past or present company practice reveals the entity acknowledges a potential economic
burden.
D) the entity has a conditional obligation that becomes unconditional if an uncertain future event
occurs.
Answer: C
Diff: 1
Learning Objective: Define liabilities, distinguish financial liabilities from other liabilities, and
identify how they are measured.
Section Reference: Recognition and Measurement
CPA: Financial Reporting
Bloomcode: Comprehension
AACSB: Analytic




1

, 3) Which of the following statements is NOT true about recognition and subsequent accounting
for financial liabilities?
A) They are initially recognized at their fair value.
B) After acquisition, they continue to be accounted for at fair value.
C) After acquisition, they are generally accounted for at amortized cost.
D) Short-term liabilities, such as accounts payable, are usually recorded at their maturity value.
Answer: B
Diff: 1
Learning Objective: Define liabilities, distinguish financial liabilities from other liabilities, and
identify how they are measured.
Section Reference: Recognition and Measurement
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

4) Which of the following characteristics of non-financial liabilities is NOT correct?
A) The exact timing of these obligations is generally not known.
B) Non-financial obligations are generally easier to measure.
C) Non-financial obligations are subject to different measurement standards than financial
obligations.
D) Non-financial obligations are satisfied with goods and services.
Answer: B
Diff: 1
Learning Objective: Define liabilities, distinguish financial liabilities from other liabilities, and
identify how they are measured.
Section Reference: Recognition and Measurement
CPA: Financial Reporting
Bloomcode: Knowledge
AACSB: Analytic

5) Among Oslo Corp.'s short-term obligations, on its most recent statement of financial position
date, are notes payable totalling $250,000 with the Provincial Bank. These are 90-day notes,
renewable for another 90-day period. These notes should be classified on Oslo's statement of
financial position as
A) current liabilities.
B) deferred charges.
C) long-term liabilities.
D) shareholders' equity.
Answer: A
Diff: 2
Learning Objective: Define current liabilities and identify and account for common types of
current liabilities.
Section Reference: Common Current Liabilities
CPA: Financial Reporting
Bloomcode: Application
AACSB: Analytic


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