FA4 Past Exam Questions
Barbara M. Wyntjes, B.Sc., CGA
Module 1: FA4 Past Exam Questions:
PART 6:
NOTE: I do NOT know the contents of the exam
Notes:
1. All calculations must be shown in an orderly manner to obtain part marks.
2. Round all calculations to the nearest dollar.
3. Narratives for journal entries are not required unless specifically asked for.
4. Assume a December 31 fiscal year-end unless specifically stated otherwise.
5. Assume all amounts are material unless directed otherwise.
6. Assume all companies are public companies unless otherwise noted.
7. Assume no companies use differential reporting unless otherwise noted.
(30 marks) Question 1
Select the best answer for each of the following unrelated items. Answer each of these
items in your examination booklet by giving the number of your choice. For example, if
(1) is the best answer for item (a), write (a)(1) in your examination booklet. If more than
one answer is given for an item, that item will not be marked. Incorrect answers will be
marked as zero. No account will be taken of any explanations you offer.
a. Which of the following statements is not a source of generally accepted accounting
principles (GAAP) in Canada?
1) Emerging issues committee abstracts
2) CGA-Canada GAAP Guide
3) Canada Business Corporations Act
4) Standards published by the international Accounting Standards Board
b. Which of the following is not an important characteristic of relevant financial
information according to the CICA Handbook?
1) Usefulness in predicting future events
2) Consistency from year to year
3) Providing feedback on the past
4) Timeliness
c. Which of the following is permitted for qualifying enterprises under the differential
reporting provisions of the CICA Handbook?
1) Using the equity method of accounting for portfolio investments
2) Using the cost method of accounting for joint ventures
3) Disclosing only basic earnings per share, not diluted earnings per share
4) Testing for goodwill impairment every 3 years, rather than annually
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FA4 Past Exam Questions
Barbara M. Wyntjes, B.Sc., CGA
d. Which of the following is not a user objective of financial reporting?
1) To predict the ability of the entity to earn income and generate cash flows
2) To appraise management’s ability to maintain and use the assets with which they are
entrusted
3) To assess the company’s compliance with legal and other business contracts
4) To legitimately defer income tax payments for as long as possible.
e. Which of the following does not describe professional judgment?
1) Involves consultation with other accountants
2) Is based on the experience of the accountant
3) Is used to select among accounting policy alternatives
4) Requires no knowledge of accounting standards.
f. Which of the following does not represent a description of an accountant’s professional
judgment?
1) It includes adherence to ethical considerations.
2) It is best learned by reading textbooks at college or university.
3) It includes the ability to understand the consequences of recommending one
accounting policy over another.
4) It is derived from an individual’s knowledge and experience of the profession.
g. Fair presentation in accordance with GAAP includes providing financial statements
that give a faithful representation of the substance of transactions and events. Fair
presentation is achieved by 3 of the following. Which is not one of the key elements of
fair presentation according to the CICA Handbook?
1) Applying GAAP as established by the Accounting Standards Board
2) Providing information in a clear and readily understandable manner
3) Providing information in the notes to the financial statements to explain any departures
from GAAP
4) Providing sufficient information about transactions or events having an effect on the
balance sheet
Solutions to Multiple Choices:
a. 3
b. 2
c. 2
d. 4
e. 4
f. 2
g. 3
Studying tools: Learn by doing! Try the full question BEFORE looking at the answer as
you learn by doing the past exam questions. Make the mistake now and learn from it
versus on the exam.
: Reads all 4 answers on multiple choice questions as understanding why
the answer is correct and why the other answers are incorrect can teach you alot.
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