ACCO 310 FINANCIAL REPORTING I MID TERM EXAMINATION JOHN
MOLSON SCHOOL OF BUSINESS DEPARTMENT OF ACCOUNTING
QUESTIONS AND ANSWERS LATEST UPDATE 2026
Multiple Choice Questions (18 questions, 2 marks each-36 marks)
Instructions: Choose the best answer for each question and write the corresponding letter in your
answer booklet.
1) Which of the following financial statements are required for companies adhering to IFRS but not
ASPE?
A) Statement of Comprehensive Income
B) Statement of Financial Position
C) Statement of Cash Flows
D) Statement of Retained Earnings
2) If an item is incomplete, it is said that it is not:
A) verifiable.
B) comparable.
C) representationally faithful.
D) relevant.
E) understandable.
3) J. Green is the sole owner and manager of the ABC Lawn and Grass Service. Green purchased a new
station wagon only for personal use. Green uses a dump truck in the business. Which of the
following assumptions, principles, or constraints would be violated if Green recorded the cost of the
station wagon as an asset of the business?
A) Materiality constraint
B) Conservatism constraint
C) Continuity assumption
D) Full-disclosure principle
E) Separate entity assumption
4) Financial information exhibits the characteristic of comparability when:
A) expenses are reported as charges against revenue in the period in which they are paid.
B) accounting entities give "accountable" events the same accounting treatment from period
to period.
C) unusual or infrequent gains and losses are not included on the income statement.
D) accounting procedures are adopted which give a consistent rate of net income.
, 5) Which of the following accounting concepts states that before a transaction is recorded, sufficient
evidence must exist to allow two or more knowledgeable individuals to reach essentially the same
conclusion about the transaction?
A) Continuity assumption
B) Separate entity assumption
C) Cost principle
D) Verifiability principle
E) Materiality constraint
6) A firm's accounting policy is to immediately expense the cost of metal wastebaskets it purchases for
use by its employees at their desks. The total cost of wastebaskets in any year is $1,000 and the firm
has $6 billion in total assets. The firm expects the wastebaskets to last indefinitely. The firm:
A) is violating GAAP.
B) is invoking the materiality concept.
C) is invoking the conservatism constraint.
D) is violating the relevance principle.
E) None of these answers are correct.
7) The underlying concept that the value of accounting information must exceed the expenditures
incurred to provide it is called the:
A) substance over form.
B) cost/benefit trade-off.
C) conservatism.
D) full-disclosure principle.
8) Which of the following is INCORRECT? Earnings per share reporting:
A) is mandatory for public corporations but optional for private corporations.
B) requires those companies to disclose basic and diluted EPS for both continuing and discontinued
operations.
C) requires disclosure of weighted average number of shares outstanding.
D) is based on comprehensive income.
9) A corporation decides to classify its building as held for sale. IFRS requires it to:
A) separate out this building from the rest of the assets.
B) write up the asset if the fair value is greater than book value.
C) record the building as non-current assets.
D) continue to depreciate.
MOLSON SCHOOL OF BUSINESS DEPARTMENT OF ACCOUNTING
QUESTIONS AND ANSWERS LATEST UPDATE 2026
Multiple Choice Questions (18 questions, 2 marks each-36 marks)
Instructions: Choose the best answer for each question and write the corresponding letter in your
answer booklet.
1) Which of the following financial statements are required for companies adhering to IFRS but not
ASPE?
A) Statement of Comprehensive Income
B) Statement of Financial Position
C) Statement of Cash Flows
D) Statement of Retained Earnings
2) If an item is incomplete, it is said that it is not:
A) verifiable.
B) comparable.
C) representationally faithful.
D) relevant.
E) understandable.
3) J. Green is the sole owner and manager of the ABC Lawn and Grass Service. Green purchased a new
station wagon only for personal use. Green uses a dump truck in the business. Which of the
following assumptions, principles, or constraints would be violated if Green recorded the cost of the
station wagon as an asset of the business?
A) Materiality constraint
B) Conservatism constraint
C) Continuity assumption
D) Full-disclosure principle
E) Separate entity assumption
4) Financial information exhibits the characteristic of comparability when:
A) expenses are reported as charges against revenue in the period in which they are paid.
B) accounting entities give "accountable" events the same accounting treatment from period
to period.
C) unusual or infrequent gains and losses are not included on the income statement.
D) accounting procedures are adopted which give a consistent rate of net income.
, 5) Which of the following accounting concepts states that before a transaction is recorded, sufficient
evidence must exist to allow two or more knowledgeable individuals to reach essentially the same
conclusion about the transaction?
A) Continuity assumption
B) Separate entity assumption
C) Cost principle
D) Verifiability principle
E) Materiality constraint
6) A firm's accounting policy is to immediately expense the cost of metal wastebaskets it purchases for
use by its employees at their desks. The total cost of wastebaskets in any year is $1,000 and the firm
has $6 billion in total assets. The firm expects the wastebaskets to last indefinitely. The firm:
A) is violating GAAP.
B) is invoking the materiality concept.
C) is invoking the conservatism constraint.
D) is violating the relevance principle.
E) None of these answers are correct.
7) The underlying concept that the value of accounting information must exceed the expenditures
incurred to provide it is called the:
A) substance over form.
B) cost/benefit trade-off.
C) conservatism.
D) full-disclosure principle.
8) Which of the following is INCORRECT? Earnings per share reporting:
A) is mandatory for public corporations but optional for private corporations.
B) requires those companies to disclose basic and diluted EPS for both continuing and discontinued
operations.
C) requires disclosure of weighted average number of shares outstanding.
D) is based on comprehensive income.
9) A corporation decides to classify its building as held for sale. IFRS requires it to:
A) separate out this building from the rest of the assets.
B) write up the asset if the fair value is greater than book value.
C) record the building as non-current assets.
D) continue to depreciate.
