Advanced Accounting test 1
Which of the following is NOT a major concern related to convergence of international accounting standards? a) the complicated nature of particular standards b) an overload of guidance on the first-time application of IFRS c) the tax-driven nature of the nation accounting regime d) IFRS language translation difficulties
B
Which of the following items is considered to be the most significant impediment to accounting convergence? A) Language differences B) Nationalism C) Lack of accounting knowledge D) High cost convergence
B
From a practical standpoint, what is the goal of accounting standards harmonization? A) creating one set of standards used throughout the world B) forcing compliance with IASB regulations C) producing accounting standards that are unique for each country D) reducing the conflict among national accounting standards
D
The purpose of a FASB _____ is to provide interpretive guidance
staff position
Accounting helps the capital allocation process attract investment capital by providing timely, _____ information
relevant
Investors are interested in financial reporting because it provides information that is _____ for making decisions
useful
What does IASB stand for?
International Accounting Standards Board
Can reject standards proposed by private sector
SEC
Can request quicker action/act as counsel to FASB
SEC
Relies on FASB to develop accounting standards
SEC
Requires companies to conform to GAAP
SEC
The body that has the power to prescribe the accounting practices and standards to be employed by companies that fall under its jurisdiction
SEC
AICPA 3 purposes
-Advance written expression of accounting principles -Determine appropriate practices -Narrow areas of difference in inconsistency and practice
Three organizations that help form GAAP
-SEC (securities and exchange commission) -AICPA (American Institute of Certified Public Accountants) -FASB (Financial Accounting Standards Board)
In some countries, financial accounting and tax accounting are so closely related that there is very little need to account for deferred income taxes. Which of the following countries has a financial accounting system that is most different from its tax laws? A) USA B) Japan C) Germany D) France
A
Regulations for trading in securities that are issued and outstanding are found in the: A) Securities Act of 1934 B) Trust Indenture Act of 1940 C) Securities Act of 1933 D) Investment Company Act of 1940
A
Mandate of SEC is to
Create accounting principles
De jure harmonization refers to the process of: a) making accounting practices consistent across countries b) resolving accounting differences through jury trials c) eliminating the need to have different accounting methods d) making accounting regulations consistent internationally
D
Differences in legal systems used in various countries have been cited as one reason for diversity in accounting practices. What are the major types of legal systems? A) Common law and code law B) Commercial law and accounting law C) Rules and regulations D) Written law and unwritten law
A
How many trustees of the IFRS Foundation will normally be senior partners of prominent international accounting firms? A) 2 B) 5 C) 0 D) 15
A
In addition to the International Accounting Standards Committee (IASC), which of the following organization was considered to be one of the most important forces in efforts to harmonize accounting standards? A) European Union (EU) B) FASB C) NATO D) UN
A
In code law countries such as Germany, France, and Japan, tax law and accounting standards tend to be: A) General B) Very different C) Detail oriented D) Unrelated
A
What is the role of the liaison members of the International Accounting Standards Board? a) to facilitate information exchange and cooperation between the FASB and the IASB b) all the above c) to eliminate the political influences on the IASB and national accounting bodies d) to enforce adherence to the fundamental principles of the IASB
A
Which of the following is exempt from the reporting provisions of the 1934 Securities Act? A) Securities issued by a state government B) Securities issued by mutual funds C) Financial derivatives used for hedging D) Preferred stock issued by corporations
A
Which of the following statements is true about accounting convergence? A) convergence means developing high-quality standards in partnership with national standard-setters B) convergence is the opposite of standardization C) convergence, unlike harmonization, takes place over a period of time D) convergence is a synonym for harmonization
A
Statement of Position (SOPs) were published by the
AICPA?
Records changes in the periods in which they occur
Accrual basis accounting
What is amortized cost of investment?
Acquisition cost adjusted for amortization of discount/premium, if appropriate
Which debt security? Bonds will mature in 5 years are purchased. The company would like to hold them until they mature, but money has been tight recently and need to be sold
Available for Sale
Debt securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses that are included as other comprehensive income and as a separate component of stockholders' equity are a) never sell debt securities b) available for sale debt securities c) trading debt securities d) held to maturity debt securities
B
Harmonization of Accounting Standards: a) is the same as convergence of accounting standards b) refers to the reduction of alternatives while retaining a high degree of flexibility in accounting practices c) forces accounting differences to be resolved through litigation d) always ensures resulting of comparable financial statements internationally
B
If most of a country's business financing comes from families, banks, and the government, what should we expect in terms of information disclosure to the public? A) No disclosure at all B) Relatively little disclosure because the public isn't a major factor C) A great deal of disclosure because it will be the only way for interested parties to learn about the company D) Complete openness of accounting records
B
Relative to accounting standards in countries such as Germany, whose accounting laws are only 47 pages long, accounting practice in the U.S. is often described as being subject to: A) standards minimization B) standards overload C) the optimal amount of accounting regulation D) ideal accounting standards
B
The Chief Accountant of the SEC does all of the following except: A) Advises the SEC on accounting principles, auditing standards, and financial disclosures B) Serves as one of the five commissioners of the SEC C) Is the liaison between the SEC and the accounting profession D) Conducts investigations of questionable accounting practices
B
The IASB is organized under an independent entity called: A) the AFL B) the IFRSF C) INTERPOL D) the SEC
B
The basic SEC form used for the registration of new security issues is: A) Form S-K B) Form S-1 C) Form S-4 D) Form 8-K
B
What was the "Norwalk Agreement?" a) It is a treaty between the US & EU to make their accounting standards converge b) a pledge between the FASB in the US and the IASB to make their reporting standards compatible c) it was an agreement signed in Norwalk, CT in 2002 to make English the official language of the IASB d) a concession by the FASB in the US to adopt IFRS as soon as possible
B
Which one of the following statements best describes the principal mission of the SEC? A) To promulgate accounting and auditing standards B) To promote efficient capital allocation by ensuring that securities markets function fairly and honestly C) To ensure the profitability and safety of investments offered to the public D) To maintain a database useful in securities research
B
Which statement is false concerning Regulation S-X? A) Regulation S-X prescribes the accounting principles to be used in SEC filings B) Regulation S-X prescribes standards for qualifications of auditors of periodic financial statements C) Regulation S-X prescribes reporting requirements for interim financial statements D) Regulation S-X does not cover reporting requirements for disclosures other than financial information in periodic filings
B
De facto harmonization refers to the process of: a) making accounting regulations consistent internationally b) creating one set of accounting standards c) making accounting practices consistent across countries d) resolving accounting differences through litigation
C
Debt securities that are accounted for at amortized cost, not fair value, are a) available for sale debt securities b) never sell debt securities c) held to maturity debt securities d) trading debt securities
C
The SEC division most frequently encountered by accountants is the: A) Division of Trading and Markets B) Division of Enforcement C) Division of Corporation Finance D) Division of Investment Management
C
Watt Company purchased $300,000 of bonds for $315,000. If Watt intends to hold the securities to maturity, the entry to record the investment includes a) a debit to Debt investments b) a credit to premium on debt investments for $15,000 c) a credit to debt investments for $315,000 d) none of these choices are correct
C
Which statement is most accurate regarding the accounting standards required for financial statements of non-U.S. companies that file with the SEC? A) The financial statements must be prepares used IFRS B) The financial statements must be prepared using either U.S. GAAP or IFRS C) The financial statements may be prepared using standards other than U.S. GAAP or IFRS, with reconciliations of income and equity to U.S. GAAP D) The financial statements must be prepared using U.S. GAAP
C
Which organization was responsible for issuing Accounting Research Bulletins? use the acronym
CAP
GAAP specifies that, regarding the amortization of a premium or discount on a debt security, the amortization of a premium or discount on a debt security, the a) effective-interest method of allocation must be used b) bear value method must be used and therefore no allocation is necessary c) straight -line method of allocation must be used d) effective-interest method of allocation should be used but other methods can be applied if there is no material difference in the results obtained
D
The division of Corporation Finance primarily: A) Sets standards for audits and auditors B) Monitors trading activity to identify instances of fraud C) Administers insider trading sanctions D) Administers the disclosure requirements of the securities laws
D
To create an appropriate mix of members of the IASB, since 2012 the board includes: A) four members of the FASB B) eight academic representatives C) eight auditors D) a diverse geographical balance of members
D
Which of the following is not correct in regard to trading securities? a) Unrealized holding gains and losses are reported as part of net income b) any discount or premium is amortized c) they are held with the intention of selling them in a short period of time d) all of these choices are correct
D
Which of the following statements is true of the IASB A) The Board should contain 6 part-time members B) At least 13 members of the board must have experience as auditors C) All members of the board should be from a single country D) The board consists of 16 members
D
The purpose of the _____ Task Force is to provide a consensus on how to account for new and unusual financial transactions
Emerging Issues
The _____ is due to the difference between what the public thinks accountants should do and what accountants think they can do
Expectations Gap
The Financial Accounting Foundation oversees the operations of the _____
FASB
True or False: GAAP is a product of careful logic or empirical findings and is not influenced by political action
False
True or False: The SEC appointed the Committee on Accounting Procedure
False
Which debt security? A bond matures in 10 years was purchased. The company has committed the money for an expansion project planned 10 years from now
Held to maturity
The purpose of the _____ is to promote uniform accounting standards among countries of the world
IASB
Which debt security? Bonds were purchased in December of this year. The bonds are expected to be sold in January of next year
Trading security because within a month
Tru of False: The American Institute of Certified Public Accountants has published accounting standards
True
True or False: The expectations gaps is due to the difference between what the public thinks accountants should do and what accountants think they can do
True
General-purpose financial statements are the product of _____ accounting
financial
The passage of a new FASB Accounting standards update requires the support of _____ of _____ board members
four,
The passage of a new FASB Accounting Standards Update requires the support of _____ of the _____ board members
four, seven