1. Which of the following is correct?
a. In Canada, GAAP is contained in the Canadian Institute of Chartered Accountants Handbook.
b. The differences between Canadian GAAP and American GAAP have become more important in the past two decades.
c. Canadian GAAP is issued by the International Accounting Standards Board (IASB).
d. Canada has adopted US GAAP.

2. What is the correct book entry when a firm increases its inventories by using its sound credit with the supplier?
a. Credit inventories and debit cash.
b. Credit inventories and debit accounts payable.
c. Debit inventories and credit cash.
d. Debit inventories and credit accounts payable.

3. The CICA Handbook contains the accounting principles of:
a. Canada
b. The United States
c. All countries
d. Canada and the United States

4. Which of the following is not a GAAP principle?
a. The entity concept
b. A period of analysis
c. The idea that revenues must be matched against the costs that generated those revenues
d. The idea that revenues are only recognized when cash is collected

5. Which of the following assets does not qualify for capital cost allowance (CCA)?
a. Land
b. Manufacturing equipment
c. Building
d. Computer

6. Which of the following is a source of cash inflows?
a. Decrease of property, plant, and equipment
b. Increase of accounts receivable
c. Payment of dividends
d. Decrease of accounts payable

7. Which of the following is a non-cash item?
a. Receipt of dividends
b. Payment of interest
c. Amortization
d. Purchase of inventory

8. Which of the following equations represents free cash flow?
a. Net income + Depreciation + Deferred income taxes
b. Net income + Depreciation + Deferred income taxes +/– Change in working capital
c. Net income + Depreciation + Deferred income taxes +/– Change in working capital –
Capital expenditures
d. Net income + Depreciation + Deferred income taxes +/– Change in working capital –
Capital expenditures +/– Financing cash flows