Question 1 :

Desks costing C$4,700 were physically returned by customers on December 31, 2025, but Birch Current Office Interiors Ltd. did not add them to the year-end stock report because the credit memos were issued on January 3, 2026. What correction is required to ending inventory?

Increase ending inventory by C$4,700 because the goods were back on hand by year-end

Increase ending inventory only after the sales return entry is posted

Leave ending inventory unchanged because the return paperwork was completed in January

Add the desks to inventory only if they were restocked before count completion

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Question 2 :

Lumen Bay's supplier formally accepted a defective-material claim on December 29, 2025 and issued a C$18,000 credit memo to be applied against January purchases. Staff planned to record the credit only when it was used. What revision is required before release?

Make no revision until the January purchases occur

Recognize a claim receivable of C$18,000 at December 31, 2025

Recognize a claim receivable of C$9,000 at December 31, 2025

Reduce inventory by C$18,000 and record no receivable because settlement will occur through future vendor credits

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Question 3 :

Shareholder account SH-4 for Tidal Birch Renovations Ltd., a private enterprise, shows a C$44,000 2024 owner withdrawal charged to wages expense. The T4 summary, payroll remittance file, and bank memo all show no payroll deductions were withheld on the amount. What correction is required in the 2024 comparative file?

Increase 2024 wages expense and decrease shareholder equity

Leave 2024 wages unchanged and adjust January 1, 2025 retained earnings

Reclassify the amount to 2025 compensation expense and disclose the change

Decrease 2024 wages expense and reclassify the amount to shareholder withdrawal or equity

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Question 4 :

Last year, Juniper Crest Tools Ltd. recognized a future income tax asset of C$11,000 on a warranty accrual. This year, the warranty claims were paid and deducted for tax, with no tax-rate change and no valuation allowance. What future tax effect should be recorded this year?

Increase the future income tax asset by C$11,000 and decrease income tax expense by C$11,000

No future tax effect should be recorded because the cash payment already affected taxable income

Decrease the future income tax asset by C$11,000 and increase income tax expense by C$11,000

Decrease the future income tax asset by C$11,000 and decrease income tax expense by C$11,000

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Question 5 :

On the rent smoothing schedule for Harbour Flint Cycle Studio Ltd., Élodie Mercier of Maple Quarry Accountancy House sees the following.

• The operating lease runs for 4 years.
• Annual cash rent is C$18,000 in the first year.
• Annual cash rent is C$24,000 in the second year.
• Annual cash rent is C$24,000 in the third year.
• Annual cash rent is C$30,000 in the fourth year.

What balance should be recorded at December 31, 2026 from straight-line lease accounting?

Deferred rent asset of C$6,000

Accrued rent liability of C$6,000

No balance because the lease is operating

Accrued rent liability of C$24,000

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ASPE Financial Reporting

Desks costing C$4,700 were physically returned by customers on December 31, 2025, but Birch Current Office Interiors Ltd. did not add them to the year-end stock report because the credit memos were issued on January 3, 2026. What correction is required to ending inventory?

MCQ

0

5

Lumen Bay's supplier formally accepted a defective-material claim on December 29, 2025 and issued a C$18,000 credit memo to be applied against January purchases. Staff planned to record the credit only when it was used. What revision is required before release?

MCQ

0

5

MCQ

0

5

Last year, Juniper Crest Tools Ltd. recognized a future income tax asset of C$11,000 on a warranty accrual. This year, the warranty claims were paid and deducted for tax, with no tax-rate change and no valuation allowance. What future tax effect should be recorded this year?

MCQ

0

5

MCQ

0

5