CH2: Analyzing Transactions and Their Effects on Financial Statements

Question 1

What are accounting standards for

Answer 1

-When a company begins its task of measuring, collecting, recording, and reporting financial information for users
-Needs guidelines to present info in standardized way
-Provides companies with a broad set of rules to be followed when preparing their financial statements
-Enhances usefulness of financial information (so users can understand the information there and can be compared with other companies)

Question 2

Do all Canadian companies use the same accounting standards?

Answer 2

No.

ALL Canadian public companies (shares trade on a Canadian public stock exchange) must prepare financial statements with International Financial Reporting Standards (IFRS).

Private companies can use Accounting Standards for Private Enterprises (ASPE) or IFRS.

Question 3

Elaborate on IFRS

Answer 3

-International standard
-Keeps financial reporting the same across countries
-Accepted on all stock exchanges

Question 4

Elaborate on ASPE

Answer 4

-Canadian simplified standards to reduce financial reporting burden for private companies
-Usually preferred

Question 5

Is ASPE or IFRS GAAP?

Answer 5

Both are GAAP (generally accepted accounting principles)

Question 6

Interlisted/cross-listed means

Answer 6

Listed on stock exchanges inside and outside of Canada

When a company is listed on multiple stock exchanges, meaning its shares trade on more than one stock exchange, such as the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE). (p. 2-3)