1. Financial statements are prepared for the user. Which of the following best describes the responsibility for the preparation of financial statements? a) They are the responsibility of management. b) They are the responsibility of external auditors. c) They are the responsibility of shareholders. d) They are the responsibility of standard setters. e) None of the above. 2. Financial accounting is concerned with the process that culminates in a) the preparation of financial reports. b) specialized reports for inventory management and control. c) specialized reports for income tax calculation and recognition. d) reports on changes in stock prices and future estimates of market position. e) none of the above 3. A local businessman owns several different companies. His accountant prepares separate annual financial statements for each of these businesses. This is an application of which of the following principle or assumption? a) full disclosure b) periodicity c) economic entity d) matching e) none of the above 4. The adoption of International Financial Reporting Standards in Canada is an example of a) the impact of technology on user's needs. b) the impact of globalization on capital markets. c) ethical behaviour. d) the desire of most private companies to expand internationally. e) none of the above. 5. Which of the following is true about understandability as a qualitative characteristic of financial statements? a) The onus to prepare understandable statements and to be able to understand them lies with the preparer. b) Where the underlying transactions or economic events are more complex, the user is expected to understand them without the assistance of an advisor. c) Users with no knowledge of business and financial accounting matters are expected to understand the financial statements. d) The onus to prepare understandable statements and to be able to understand them lies with the preparer and the user. e) None of the above