(Test Bank) Intermediate Accounting, Canadian Edition, (Volume 1)

Kieso,Weygandt,Warfield,Wiecek,Mcconomy, 13

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Test Bank for Intermediate Accounting, Canadian Edition, (Volume 1), The downloadable file consists of 921 pages, and the total size of the file is 6.46 MB. Purchase now only for highly discounted price.

Author(s): Kieso, Weygandt, Warfield, Wiecek, Mcconomy

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Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 1 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d CHAPTER 1 THE CANADIAN FINANCIAL REPORTING ENVIRONMENT CHAPTER STUDY OBJECTIVES 1 . Understand the financial reporting environment. Accounting provides reliable, relevant, and timely information to managers, investors, and creditors so that resources are allocated to the most efficient enterprises. Accounting also provides measurements of efficiency (profitability) and financial soundn ess. Investors, creditors, management, securities commissions, stock exchanges, analysts, credit rating agencies, auditors, and standard setters are some of the major stakeholders. Illustration 1 . 4 explains what is at stake for each one . The objective of financial reporting is to communicate information that is useful to key decision - makers such as investors and creditors in making resource allocation decisions (including assessing management stewardship) about the resources and claims to resources of an entity and how these are changing. Ideally, all stakeholders should have access t o the same information in order to ensure that good decisions are made in the capital marketplace. This is known as information symmetry. However, this is not the case — there is often information asymmetry. Of necessity, management has access to more inform ation so that it can run the company. It must also make sure that it does not give away information that might harm the company, such as in a lawsuit where disclosure might cause the company to lose. Aside from this, information asymmetry exists because of management bias whereby management acts in its own self - interest, such as wanting to maximize management bonuses. This is known as moral hazard in accounting theory. Information asymmetry causes markets to be less efficient. It may cause stock prices to b e discounted or costs of capital to increase. In addition, it might detract good companies from raising capital in the particular market where relevant information is not available (referred to as adverse selection in accounting theory). The efficient mark ets hypothesis is felt to exist only in a semi - strong form, meaning that only publicly available information is assimilated into stock prices. 2. Explain the need for accounting standards and identify the major entities that influence standard setting an d financial reporting. The accounting profession has tried to develop a set of standards that is generally accepted and universally practised. This is known as GAAP (generally accepted accounting principles). Without this set of standards, each enterprise would have to develop its own standards, and readers of financial statements would have to become familiar with every company’s particular accounting and reporting practices. As a result, it would be almost impossible to prepare statements that could be co mpared. In addition, accounting standards help deal with the information asymmetry problem. The Canadian Accounting Standards Board (AcSB) is the main standard - setting body in Canada for private companies, pension plans, and not - for - profit entities. Its ma ndate comes from the Canada Business Corporations Act and Regulations as well as provincial acts of incorporation. For public companies, GAAP is International Financial Reporting Standards (IFRS) as established by the International Accounting Standards Boa rd (IASB). Public companies are required to follow GAAP in order to access capital markets, which are monitored by provincial securities commissions. The U. S. Financial Accounting Standards Board (FASB) is also important as it influences IFRS standard Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 2 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d set ting. Private companies may choose to follow IFRS. Public companies that list on U.S. stock exchanges may choose to follow U.S. GAAP. 3. Explain the meaning of generally accepted accounting principles (GAAP) and the significance of professional judgement in applying GAAP. Generally accepted accounting principles are either principles that have substantial authoritative support, such as the CPA Canada Handbook , or those arrived at through the use of professional judgement and the conceptual framework. Prof essional judgement plays an important role in Accounting Standards for Private Enterprises (ASPE) and IFRS since much of GAAP is based on general principles, which need to be interpreted. 4. Discuss some of the challenges and opportunities for accounting. Some of the challenges facing accounting are the impact of technology, sustainability reporting, oversight in the capital markets, centrality of ethics, standard setting in a political enviro nment, and principles - versus rules - based standard setting . All of these require the accounting profession to continue to strive for excellence and to understand how accounting adds value in the capital marketplace. Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 3 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d M ULTIPLE CHOICE QUEST IONS Answer No. Description d 1. Accounting characteristics a 2. Nature of financial accounting c 3. Definition of financial accounting b 4. Definition of management accounting d 5. Efficient use of resources c 6. Capital allocation process d 7. Importance of accou nting information b 8. Primary exchange mechanism(s) for allocating resources b 9 . Stakeholders in efficient allocation of resources d 1 0 . Preparation of audited financial statements a 1 1 . Auditor’s responsibility c 1 2 . Causes of subprime lending crisis a 1 3 . Management’s primary responsibility with respect to financial statements c 1 4 . Primary responsibility of security and exchange commissions b 1 5 . Objectives of financial reporting b 1 6 . Appropriate objectives of general - purpose financial re porting b 1 7 . Accrual - basis accounting c 1 8 . Preparation of biased information c 19 . Existence of information asymmetry b 2 0 . Efficient markets hypothesis d 2 1 . Management bias a 22 . Moral hazard d 2 3 . Conservative accounting d 24 . Resource a llocation c 25 . Changing financial reporting environment b 26 . Reduction of information asymmetry b 2 7 . Development of GAAP c 2 8 . Financial reporting before 1900 c 2 9 . Responsibility of the AcSB a 30 . Oversight of the AcSB c 3 1 . Authority over accou nting standards in the U.S . b 32. Adoption of IFRS d 33. Activities and authority of the Ontario Securities Commission (OSC) b 34. Use of ASPE a 35. IASB’s standard - setting process d 36 . IASB’s funding principles b 37 . Issuance of IFRS a 38 . Role of p rovincial s ecurities c ommission s c 3 9 . Primary sources of GAAP under ASPE c 40 . Sources of GAAP d 41 . Exercise of professional judgement c 42 . Rules - based vs. principles - based approach c 4 3 . Comparison of Canadian GAAP and U.S. GAAP Answer No. Description d 44 . Primary sources of GAAP d 45 . Use of professional judgement Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 4 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d b 4 6 . SOX a 4 7 . Advancement of technology on financial reporting a 4 8 . IASB principles regarding funding c 4 9 . Rules - based GAAP body of knowledge b 50 . Data governance a 51 . Sustainability reporting E XERCISES Item Description E1 - 52 Effective capital allocation E1 - 53 Financial statements in practice and theory E1 - 54 Stakeholders in the financial reporting environment E1 - 55 Sources of capital and stages of company growth E1 - 56 Objective of financial reporting E1 - 5 7 Traditional users vs. others E1 - 5 8 Imperfection of the stakeholder financial reporting environment E1 - 5 9 User needs E1 - 60 Merits of accrual vs. cash - basis accounting E1 - 61 Information asymmetry E1 - 62 Maintaining competitive advantage E1 - 63 Management bias in financial statement presentation E1 - 64 Financial versus managerial accounting E1 - 6 5 Role of securities commissions and stock exchanges E1 - 6 6 Purpose of accounting standards and standard setting E1 - 6 7 ASPE vs. IFRS E1 - 6 8 IFRS Discussion Group E1 - 6 9 Sources of GAAP E1 - 70 Professional judgement E1 - 71 SOX and standard setting E1 - 7 2 Role of executives and management in a post - SOX world E1 - 7 3 Technology and financial information E1 - 74 Principles - versus rules - based approaches E1 - 75 Value creation E1 - 76 Standard setting in a political environment PROBLEMS Item Description P1 - 77 Information Asymmetry P1 - 7 8 U.S. GAAP impact on Canadian GAAP P 1 - 79 Challenges facing financial reporting P1 - 80 Shortcomings of rules - based approach P1 - 81 Sustainability reporting Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 5 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d MULTIPLE CHOICE 1. The essential characteristic(s) of accounting is (are) a) communication of financial information to interested internal parties only. b) communication of economic information to external parties. c) identification and measurement of financial information only. d) identification, measurement, and communication of financial information. Answer: d Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section R eference: Financial Statements and Financial Reporting CPA: Financial Reporting Bloomcode: Knowledge AACSB: Communication 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. Answer: a Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 3. Financial accounting can be broadly defined as the area of accounting that prepares financial statements to be used a) by parties internal to the business enterprise only. b) by investors only. c) by parties both internal and external to the business ente rprise. d) primarily by external users and the Canada Revenue Agency. Answer: c Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Financial Reporting Bloomcode: Knowledge Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 6 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d AACSB: Analytic 4. Management accounting can be broadly defined as the area of accounting that communicates financial information a) to investors only. b) to parties internal to the business enterprise only. c) to parties both intern al and external to the business enterprise. d) primarily to external users and the Canada Revenue Agency. Answer: b Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Financial Reporting CPA: Management Accounting Bloomcode: Knowledge AACSB: Analytic 5. Whether a business is successful and thrives is determined by a) free enterprise or competition. b) competition and markets only. c) markets and free e nterprise only. d) markets, competition, and free enterprise. Answer: d Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Financial Reporting CPA: Strategy & Governance Bloomcode: Knowledge AACSB: Analytic 6. Which of the following is correct? a) Reported accounting numbers do not affect the transfer of resources. b) Credit rating agencies use accounting information to assess only assets. c) Efficient capital markets promote productivity and encourage innovation. d) Efficient capital markets promote productivity but do not encourage innovation. Answer: c Difficulty: Easy Learning Objective: Understand the financial reporting environment. Sec tion Reference: Financial Statements and Financial Reporting CPA: Financial Reporting Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 7 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d CPA: Strategy & Governance Bloomcode: Knowledge AACSB: Analytic 7. Which of the following statements regarding the importance of i nformation provided by accounting to i nvestors and creditors is NOT correct? a) It allows investors and creditors to compare income and assets of companies. b) It helps investors and credit ors assess the relative risks and returns of investment opportunities. c) It helps investors and creditors channel their resources more effectively. d) It determines the share prices and lending portfolios for investors and creditors . Answer: d Difficulty: Medium Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Financial Reporting CPA: Strategy & Governance Bloomcode: Analysis AACSB: Analytic 8. In Canada, which of the following is part of the primary exchange mechanism for allocating resources ? a) shareholders b) financ ial Institutions such as banks c) government authorities such as the Canada Revenue Agency (CRA) d) management Answer: b Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Finan cial Reporting CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 9 . Stakeholders who help in the efficient allocation of resources include a) investors and creditors. b) financial analysts and regulators. c) creditors and auditors. d) management and auditors. Answer: b Difficulty: Easy Learning Objective: Understand the financial reporting environment. Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 8 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d Section Reference: Financial Statements and Financial Reporting CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 1 0 . Audited financial statements are prepared by a) auditors. b) financial analysts. c) the Canada Revenue Agency. d) management. Answer: d Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Stat ements and Financial Reporting CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 1 1 . The auditor’s primary responsibility is to a) review financial statements and discuss them with management. b) prepare financial statements. c) report to the Canada Revenue Agency. d) report to standard setters. Answer: a Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Audit & Assurance CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 1 2 . The widely publicized subprime lending crisis was NOT caused by a) capital market participants who acted in their own self - interest. b) a lack of transparency. c) the practice of securitizing assets. d) a lack of investor understanding of the investment's true risk. Answer: c Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 9 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d CPA: Finance CPA: Professional & Ethical Behaviour CPA: Strategy & Governance Bloomcode: Knowledge AACSB: Analytic 1 3 . Management’s primary responsibility with respect to financial statements is to a) prepare them, as they have the best insight and know what should be included. b) au dit them, as they are distant enough from daily operations. c) rely on them to make decisions. d) None of the above are true. Answer: a Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Stat ements and Financial Reporting CPA: Financial Reporting CPA: Strategy & Governance Bloomcode: Knowledge AACSB: Analytic 1 4 . The primary responsibility of security and exchange commissions with respect to financial statements is to a) set generally accept ed accounting principles (GAAP), which must be followed in prepar ing statements . b) review accounting choices made by companies in the financial statements to ensure decision - making logic is sound. c) monitor financial statements to ensure full and plain disclosure of material information, thus maintaining compliance with listing requirements. d) monitor and analyze the information looking for signs of an improved or weakened financial condition. Answer: c Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Financial Reporting CPA: Strategy & Governance Bloomcode: Knowledge AACSB: Analytic 1 5 . Objectives of financial reporting do NOT include a) providin g information that is useful to users in making resource allocation decisions. b) providing information about the liquidation value of an enterprise. c) providing information about an entity’s economic resources, obligations, and equity/net assets. Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 10 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d d) prov iding information about changes in an entity’s economic resources, obligations, and equity/net assets. Answer: b Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Re porting CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 1 6 . As part of the objective of general - purpose financial reporting, which of the following perspectives is considered appropriate? a) proprietary perspective b) entity perspective c) stakeholder perspective d) None of the above perspectives are considered appropriate. Answer: b Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Fina ncial Reporting Bloomcode: Knowledge AACSB: Analytic 1 7 . Which of the following is NOT true regarding accrual - basis accounting? a) A company records events that change its financial statements in the periods in which the events occur. b) Revenues and exp enses are recognized in the periods in which the company receives or pays cash. c) It has greater potential to depict meaningful trends in revenues and expenses. d) Revenues and expenses can be more easily related to the economic environment of the period in which they occurred. Answer: b Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 1 8 . The preparation by some companies of biased information is sometimes referred to as Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 11 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d a) conservative financial reporting. b) full disclosure of all material facts. c) aggressive financial reporting. d) stewardship. Answer: c Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 19 . Where information asymmetry exists, the capital market may attrac t the wrong ki nd of market participants . This is known as a) moral hazard. b) conservative accounting. c) adverse selection. d) an inefficient marketplace. Answer: c Difficulty: Easy Learning Objective: Understand the financial reporting environment. . Section Reference: Financial Statements and Financial Reporting CPA: Financial Reporting CPA: Professional & Ethical Behaviour Bloomcode: Knowledge AACSB: Analytic 2 0 . The efficient markets hypothesis proposes that a) market prices reflect information kn own only to internal stakeholders. b) market prices reflect all information about a company. c) market prices reflect information known only to external stakeholders. d) information asymmetry is required. Answer: b Difficulty: Easy Learning Objective: Un derstand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Finance CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 12 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d 2 1 . Which of the following does NOT describe a cause of management bi as? a) t he company’s need to comply with contracts, such as debt covenants b) m anagement’s desire to meet financial analysts’ expectations c) t he tendency of management to downplay negative events d) t he desire for all stakeholders to have access to all information Answer: d Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Audit & Assurance CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analyti c 2 2 . Whe n people think that no one is watching, they will often shirk their responsibilities. This is known as a) moral hazard. b) conservative accounting. c) adverse selection. d) an inefficient marketplace. Answer: a Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 2 3 .Conservative accounting refers to a) a manager’s tendency to shirk their stewardship responsibilities. b) a manager’s engagement in greater risk taking. c) a decision to downplay the negative and focus on the positive. d) a decision to downplay the positive and focus on the negative. Answ er: d Difficulty: E asy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Financial Reporting CPA: Strategy & Governance Bloomcode: Knowledge Feedback: a ) , b ) , and c ) de scribe aggressive accounting. AACSB: Analytic Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 13 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d 24 . Which of the following stakeholders do NOT typically rely on the financial statements to make resource allocation decisions? a) investors b ) creditors c ) analysts d ) standard setters Answer: d Difficulty: E asy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting CPA: Financial Reporting CPA: Strategy & Governance Bloomcode: Knowledge AACSB: Analytic 25 . Which of the following is/are major factors in the rapidly changing financial reporting environment in Canada? a) increased demand for accountants and the impact of technology b) globalization and the unethical actions of accountants c) the growing number of instituti onal investors who want more information regarding environmental and social issues d) increased use of the Internet Answer: c Difficulty: Easy Learning Objective: Understand the financial reporting environment. Section Reference: Financial Statements and Financial Reporting Learning Objective: Discuss some of the challenges and opportunities for accounting. Section Reference: Challenges and Opportunities for the Accounting Profession CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 2 6 . The problem of information asymmetry can be reduced by a) aggressive accounting. b) accounting standards. c) adverse selection. d) only focusing on positive events. Answer: b Difficulty: Easy Learning Objective: Explain the need for accounting standards and identify the major entities that Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 14 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d influence standard setting and financial reporting. Section Reference: Standard Setting CPA: Financial Reporting CPA: Strategy & Governance Bloomcode: Knowledge AACSB: Analytic 2 7 . Which of the following sources of generally accepted accounting principles (GAAP) are NOT developed by the Canadian Accounting Standards Board ( AcSB )? a) Accounting Standards for Private Enterprises (ASPE) b) International Financial Reporting Standards (IFRS) c) GAAP for pension plans d) G AAP for not - for - profit entities Answer: b Difficulty: Easy Learning Objective: Explain the need for accounting standards and identify the major entities that influence standard setting and financial reporting. Section Reference: Standard Setting CPA: Fin ancial Reporting Bloomcode: Knowledge AACSB: Analytic 2 8 . Before 1900, which of the following accurately describes financial reports? a) They emphasized the need for standardized and increased corporate disclosures. b) They were for widespread use and dis tribution. c) They emphasized solvency and liquidity. d) None of the above accurately describe financial reports pre - 1900. Answer: c Difficulty: E asy Learning Objective: Explain the need for accounting standards and identify the major entities that influence standard setting and financial reporting. Section Reference: Standard Setting CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 2 9 . As of 2011, the responsibilities of the Accounting Standards Board ( AcSB ) in Canada relate to setting standards for a) publicly accountable entities only. b) both publicly accountable entities and private enterprises. c) private enterprises, not - for - profit entities, and pension plans. d) not - for - profit entities and pension plans only. Test Bank for Intermediate Accounting, Thirteenth Canadian Edition 1 - 15 Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is prohibite d Answer: c D ifficulty: Easy Learning Objective: Explain the need for accounting standards and identify the major entities that influence standard setting and financial reporting. Section Reference: Standard Setting CPA: Audit & Assurance CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 30 . In Canada, the body that has the responsibility of overseeing the Accounting Standards Board (AcSB) is the a) Accounting Standards Oversight Council (AcSOC). b) International Accounting Standards Board (IASB). c) Chartered Professional Accountants of Canada (CPA Canada) . d) Financial Accounting Standards Board (FASB). Answer: a Difficulty: Easy Learning Objective: Explain the need for accounting standards and identify the major entities that influence standard se tting and financial reporting. Section Reference: Standard Setting CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 3 1 . In the United States, the body that has the final authority over accounting standards is the a) Financial Accounting Standards Board (FASB). b) International Accounting Standards Board (IASB). c) Securities and Exchange Commission (SEC). d) Accounting Standards Oversight Council (AcSOC). Answer: c Difficulty: Easy Learning Objective: Explain the need for accounting sta ndards and identify the major entities that influence standard setting and financial reporting. Section Reference: Standard Setting CPA: Financial Reporting Bloomcode: Knowledge AACSB: Analytic 32. The adoption of International Financial Reporting Standa rds in Canada is an example of a) the impact of technology on user's needs. b) the impact of globalization on capital markets.