Accounting Seminar Midterm

Under IAS 39, Financial Instruments: Recognition and Measurement, which of the following is NOT a category into which a financial asset must be classified? A. Property, plant, and equipment B. Held-to-maturity investments C. Loans and receivables D. Available-for-sale financial assets

A. property, plant, and equipment

Which of the following is an advantage of having a single set of accounting standards used worldwide? A. Reduced accounting costs for multinational corporations B. Increased power of the FASB C. Reduced number of multinational corporations on the NYSE D. Increased diversity of accounting methods used by multinational corporations

A. reduced accounting costs for multinational corporations

When a foreign subsidiary pays dividends to its U.S. parent, this process is known as: A. repatriation. B. the reverse authoritative principle. C. income-splitting. D. asset management.

A. repatriation

Carrying value 100,000 selling price 85,000 costs of disposal 3,000 expected future cash flows 75,000 present value of expected future cash flows 63,000 Using IAS 36, what is the amount of impairment loss? A. €18,000 B. €37,000 C. €15,000 D. €25,000

A. 18,000

What is the term used to describe the possibility that a foreign currency will decrease in U.S. dollar value over the life of an asset such as Accounts Receivable? A. Foreign exchange translation B. Foreign exchange risk C. Hedging D. Foreign currency options

B. Foreign exchange risk

The five most multinational U.S. companies in 2008 were Liberty Global Inc., AES Corporation, ExxonMobil, Schlumberger, and: A. General Electric. B. Kraft Foods. C. International House of Pancakes. D. Starbucks.

B. Kraft Foods

Camerata Construction borrowed €19,000,000 for 10 years at 6% specifically to modernize its operations with new equipment. The average rate of interest on Camerata's debt after considering the most recent loan was 5.5%. What rate of interest should be used for capitalizing the borrowing costs on the new equipment under IAS 23? A. 5.5% B. 6% C. 5.75% D. Some other amount

B. 6%

Carrying value 100,000 selling price 85,000 costs of disposal 3,000 expected future cash flows 75,000 present value of expected future cash flows 63,000 Using IAS 36, what is the recoverable amount? A. €85,000 B. €82,000 C. €63,000 D. €75,000

B. 82,000

IAS 38 states that an intangible asset is deemed to have an indefinite life when there is no foreseeable end to the expected cash flows the asset is likely to generate. What is the impact of an indefinite life on amortization of the intangible asset's cost under IAS 38? A. Management may choose any number of years over which to amortize the cost. B. No amortization is taken as long as the life is considered indefinite. C. The cost of the asset should be amortized over 20 years. D. The cost of the asset should be expensed in the period the intangible asset is acquired.

B. no amortization is taken as long as the life is considered indefinite

Under the IASB's exposure draft, Income Tax, how would the term "substantively enacted", as it applies to tax laws, be determined? A. When the affected jurisdiction has issued final regulations with respect to a tax law B. When any future steps in the enactment process can't change the outcome C. When one part of a bicameral legislature has passed a tax bill D. All of the above

B. when any future steps in the enactment process can't change the outcome

A "bottom-up" test and "top-down" test must be applied under IASB standards to determine: A. impairment of tangible fixed assets. B. impairment of patents. C. impairment of goodwill. D. allocation of overhead costs.

C. impairment of goodwill

Which of the following statements is true about international transfer pricing? A. It is a violation of the Foreign Corrupt Practices Act. B. It is accomplished using guidelines set up by the FASB. C. It can be used to minimize the amount of worldwide taxes. D. It cannot be regulated by countries.

C. it can be used to minimize the amount of worldwide taxes

Zenith Company, a calendar-year entity, amends its defined benefit pension plan on January 1, 2013 and must recognize the increase in past service costs of its vested and non-vested employees as of that date in the calculation of its net 2013 pension expense (or revenue). The pertinent facts as of January 1, 2013 are: Increase in PSC-vested employees $5,000 Increase in PSC-non vested employees $2,000 Remaining vesting period-non vested employees: 5 years Remaining working life-vested employees: 10 years Remaining working life-non vested employees: 20 years Calculate the past service costs included in 2013 net pension expense (or revenue) under U.S GAAP. A. $5,100 B. $5,400 C. $600 D. $7,000

C. $600

Historical Cost $12,000 Replacement Cost 9,000 Expected Selling price 10,000 Expected selling cost 500 Normal profit margin 10% of selling price Under IAS 2, what should the balance sheet report for Inventory? A. $9,000 B. $8,500 C. $9,500 D. $10,000

C. 9,500

Under IAS 12, Income Taxes, how is the relationship between a hypothetical tax expense based on statutory rates and reported tax expense based on the effective tax rate explained? A. A numerical reconciliation between tax expense based on the statutory rate in the home country and tax expense based on the effective tax rate must be presented. B. A numerical reconciliation between tax expense based on the weighted-average statutory rate across jurisdictions in which the company pays income taxes and tax expense based on the effective tax rate must be presented. C. Both (A) and (B) can be acceptable explanations. D. Neither (A) nor (B) are acceptable explanations.

C. Both (A) and (B) can be acceptable explanations

Which of the following is a reason a company might cross-list itself on a foreign stock exchange? A. It wants to hedge against currency fluctuations. B. It is less expensive than listing itself solely on a domestic exchange. C. It wants to obtain acquisition currency for acquiring a foreign company. D. It is required for accomplishing foreign direct investment.

C. it wants to obtain acquisition currency for acquiring a foreign company

OECD is an important supranational entity. What do the letters OECD stand for? A. Organization of Electrical Companies Directorate B. Oil Exporting Countries and Developers C. Organization for Economic Cooperation and Development D. Oil Exporting Corporations and Divisions

C. organization for economic cooperation and development

Carrying value 100,000 selling price 85,000 costs of disposal 3,000 expected future cash flows 75,000 present value of expected future cash flows 63,000 What is the amount of impairment loss under U.S. GAAP? A. €37,000 B. €18,000 C. €15,000 D. €25,000

D. 25,000

Under U.S. GAAP, if the carrying value of a fixed asset was $50,000, the undiscounted expected future cash flows was $55,000, the discounted expected future cash flows was $51,000, and the selling price was $53,000, what is the amount of impairment loss? A. $5,000 B. $3,000 C. $1,000 D. $0

D. $0

Zenith Company, a calendar-year entity, amends its defined benefit pension plan on January 1, 2013 and must recognize the increase in past service costs of its vested and non-vested employees as of that date in the calculation of its net 2013 pension expense (or revenue). The pertinent facts as of January 1, 2013 are: Increase in PSC-vested employees $5,000 Increase in PSC-non vested employees $2,000 Remaining vesting period-non vested employees: 5 years Remaining working life-vested employees: 10 years Remaining working life-non vested employees: 20 years Calculate the past service costs included in 2013 net pension expense (or revenue) under IAS 19. A. $5,100 B. $5,400 C. $600 D. $7,000

D. 7,000

Under IAS 39, under what circumstances will derecognition of a financial liability occur? A. When the obligation has been paid B. When the obligation has been canceled C. When the obligation has expired D. All of the above

D. all of the above

Which of the following qualitative characteristics make financial statement information useful? A. Relevance B. Understandability C. Reliability D. All of the above.

D. all of the above

Under IAS 32, which of the following is a financial asset? A. Investment in equity instruments accounted for under the equity method B. Investment in special-purpose entities C. A 30% investment in a subsidiary D. Loans to other entities

D. loans to other entities

Historical Cost $12,000 Replacement Cost 9,000 Expected Selling price 10,000 Expected selling cost 500 Normal profit margin 10% of selling price Under U.S. GAAP, what should the balance sheet report for Inventory? A. $9,000 B. $8,500 C. $9,500 D. $10,000

a. 9,000

In what way does IAS 16 (Property, Plant, and Equipment) differ from U.S. GAAP concerning fixed asset measurement subsequent to initial recognition? A. IAS 16 allows for upward revaluation of the asset based on fair value. B. IAS 16 does not allow accumulated depreciation to be shown on the balance sheet. C. IAS 16 requires that fixed assets be carried at fair value less accumulated impairment losses. D. IAS 16 allows both upward and downward revaluation of fixed assets, whereas U.S. GAAP only allows upward revaluation.

a. IAS 16 allows for upward revaluation of the asset based on fair value

Which of the following inventory valuation methods, commonly used under the U.S. GAAP, is NOT allowed under IAS 2 (Inventories)? A. LIFO B. FIFO C. Weighted average D. Retail inventory method

a. LIFO

Which of the following is a difference between IAS 37 and U.S. GAAP with respect to restructuring provisions? A. U.S. GAAP does not allow recognition of a restructuring provision until a liability has been incurred. B. There is no difference between IAS 37 and U.S. GAAP with respect to restructuring provisions. C. IAS 37 does not allow recognition of a restructuring provision until a liability has been incurred. D. A restructuring provision and related loss is more likely to occur later under IAS 37 than under U.S. GAAP.

a. US GAAP does not allow recognition of a restructuring provision until a liability has been incurred

Synergy Ltd. purchased a building in 2008 for €20,000,000 and as of December 31, 2014 had recorded accumulated depreciation on the building of €6,000,000. On December 31, 2014, the company conducted its first revaluation when the fair value was €24,000,000. Under IAS 16, the journal entry recorded on this date would include: A. a credit to Revaluation Surplus—Building for €10,000,000. B. a debit to Revaluation Surplus—Building for €14,000,000. C. a debit to Loss on Revaluation—Building for €14,000,000. D. a credit to Loss on Revaluation—Building for €10,000,000.

a. a credit to revaluation surplus-building for 10,000,000

What was the "Norwalk Agreement?" A. A pledge between the Financial Accounting Standards Board in the U.S. and the IASB to make their reporting standards compatible. B. A concession by the Financial Accounting Standards Board in the U.S. to adopt IFRS as soon as possible. C. It is a treaty between the United States and the European Union to make their accounting standards converge. D. It was an agreement signed in Norwalk, Connecticut in 2002 to make English the official language of the IASB.

a. a pledge between the financial accounting standards board in the US and the IASB to make their reporting standards compatible

According to IAS 16, a decrease in the carrying amount of a fixed asset that is identified on an asset's first revaluation should be recorded as: A. an expense on the income statement. B. a prior period adjustment to retained earnings. C. a credit to Revaluation Surplus. D. a debit to Revaluation Surplus.

a. an expense on the income statement

According to IFRS 8 (Segment Reporting), which is NOT one of the three criteria for defining an operating segment? A. An operating segment can't merely be a lessor. B. An operating segment is a component of a business that generates revenues. C. An operating segment is a component of a business whose operating results are regularly reviewed by the chief operating officer. D. An operating segment has separate financial information available.

a. an operating segment can't merely be a lessor

Which of the following true of assets? A. Assets should be recognized only when it is probable that future economic benefits will flow to the enterprise. B. Assets should be recognized when it is probable that an outflow of resources will be required to settle them. C. Asset is defined as decrease in equity, other than from transactions with owners. D. A resource must be owned for it to be recognized an asset of the enterprise.

a. assets should be recognized only when it is probable that future economic benefits will flow to the enterprise

Under U.S. GAAP, with respect to equity-settled share-based payments, if the fair value of the equity instrument is used, the value is determined: A. at the earlier of the date a commitment for performance is reached or the date the services are actually completed. B. at the date the services are actually completed. C. at the date a commitment for performance is reached. D. None of the above

a. at the earlier of the date a commitment for performance is reached or the date the services are actually completed

Under IAS 17, in a sale-leaseback transaction, how must the initial owner treat any gain on a finance lease? A. Defer it and amortize it into income over the life of the lease. B. Recognize it in income immediately. C. Defer it until the end of the lease term, including extensions. D. He/she can choose to either defer it or recognize it in income immediately.

a. defer it and amortize it into income over the life of the lease

The primary difference between IAS 37, and U.S. GAAP concerning the treatment of contingent liabilities pertains to: A. definition of terms. B. measurement. C. classification on the balance sheet. D. disclosure of relevant information.

a. definition of terms

Why does the IASB believe that a principles-based approach to standard setting is superior to a rules-based approach? A. Detailed guidance or rules encourage accountants to look for ways around the rules rather than trying to provide useful information. B. Principles-based standard setting is less costly to undertake than rules-based standard formulation. C. It is desirable to have all corporations in all countries using the same accounting practice. D. A conceptual framework for standard setting has demonstrated to encourage the greatest economic development.

a. detailed guidance or rules encourage accountants to look for ways around the rules rather than trying to provide useful information

What is the journal entry required to recognize a deferred tax asset of $50,000? A. Dr. Deferred Tax Asset $50,000, Cr. Income Tax Benefit $50,000 B. Dr. Deferred Tax Asset $50,000, Cr. Equity $50,000 C. Dr. Income Tax Expense $50,000, Cr. Deferred Tax Asset $50,000 D. Dr. Deferred Tax Asset $50,000, Cr. Deferred Tax Liability $50,000

a. dr. deferred tax asset $50,000, cr. income tax benefit $50,000

What is the official language of the IASB? A. English B. French C. Spanish D. German

a. english

Under U.S. GAAP, when new debt is issued for old debt: A. extinguishment costs are deferred and amortized over the term of the new debt. B. debt extinguishment costs are expensed as incurred. C. modification costs are amortized over the term of the old debt. D. old debt is not extinguished and new debt is recognized.

a. extinguishment costs are deferred and amortized over the term of the new debt

Under U.S. GAAP, fixed assets are generally reported on the balance sheet at their: A. historical cost. B. net realizable value. C. fair value. D. market value.

a. historical cost

Under U.S. GAAP, if an entity issues 4% preferred stock that gives shareholders the right to redeem the shares if the prevailing interest rates on 5-year certificates of deposit exceed 4%, how should this stock be accounted for on the books of the entity? A. Initially as equity and then reclassified as a liability when the triggering event occurs B. As a liability since the chances are more likely than not that the triggering event will occur C. As equity or a liability at the option of the entity D. As a permanent part of equity, to be debited as shares are redeemed

a. initially as equity and then reclassified as a libility wen the triggering event occurs

In what way does the IASB standard on leases (IAS 17) differ from U.S. GAAP? A. It is less specific than U.S. GAAP in terms of defining what constitutes a finance lease. B. U.S. GAAP requires more professional judgment in accounting for leases than does IAS 17. C. IAS 17 is more specific than U.S. GAAP in defining an operating lease. D. Operating leases are capitalized under IAS 17 but are not capitalized under U.S. GAAP.

a. it is less specific than US GAAP in terms of defining what constitutes finance leases

Assets are commonly shown in order of their liquidity, or in reverse order of their liquidity. What is liquidity? A. Liquidity refers to how easily the assets are converted to cash. B. Liquidity means that assets are inflation-adjusted. C. Liquidity refers to whether the asset is depreciable or not. D. Liquidity means that the assets are closely matched to specific liabilities.

a. liquidity refers to how easily the assets are converted to cash

De facto harmonization refers to the process of: A. making accounting practices consistent across countries. B. making accounting regulations consistent internationally. C. resolving accounting differences through litigation. D. creating one set of accounting standards.

a. making accounting practices consistent across countries

Which of the following items is considered to be the most significant impediment to accounting convergence? A. Nationalism B. Lack of accounting knowledge C. Language differences D. High cost of convergence

a. nationalism

What was the 2002 finding by the six largest public accounting firms regarding International Financial Reporting Standards? A. Of the countries surveyed, almost all intended to make their GAAP converge with IFRS. B. Very few of the countries studied planned to move their national accounting standards toward convergence with IFRS. C. There were almost as many convergence strategies as there were countries in the study. D. The countries that planned to make their GAAP converge with IFRS were predominantly western European nations.

a. of the countries surveyed, almost all intended to make their GAAP coverage with IFRS

Under IAS 12, current and deferred taxes are measured on the basis of: A. rates that have been enacted or substantively enacted by the balance sheet date. B. current rates and rates anticipated when temporary differences reverse. C. rates anticipated when temporary differences reverse. D. rates prevailing when the entity provided goods or services.

a. rates that have been enacted or substantively enacted by the balance sheet date

Under IAS 10 (Events after the Reporting Period), adjusting events that occur after the balance sheet date are: A. recognized through adjustment of the financial statements. B. disclosed in a footnote only. C. treated as a prior period adjustment. D. not disclosed, since they occurred after the fact.

a. recognized through adjustment of the financial statements

Why did the European Commission stop issuing directives related to accounting in 1990? A. The EU was leaving the formulation of accounting standards up to the IASC. B. The European Commission had finished the task of formulating accounting standards for the European Union. C. Accounting harmonization had been completed. D. The Commission found that its directives were unenforceable.

a. the EU was leaving the formulation of accounting standards up to the IASC

The early (1973-1988) harmonization efforts of the International Accounting Standards Committee (IASC) created standards that have been described as a "lowest-common-denominator" approach. What was the effect of these first international accounting standards? A. The IASC standards accommodated existing accounting practices in various countries. B. Comparability of financial statements across countries was achieved. C. It resulted in few companies being in compliance with IASC standards. D. All of the above

a. the IASC standards accomodated existing accounting practices in various countries

Which of the following statements is true of the International Accounting Standards Board (IASB)? A. The Board consists of 16 members. B. The Board should contain 6 part-time members. C. At least 13 members of the Board must have experience as auditors. D. All members of the Board should be from a single country.

a. the board consists of 16 members

According to IAS 37, how should contingent assets be recognized? A. They should be disclosed in the notes to the financial statements if the inflow of resources is probable. B. They should be recognized like any other asset, with a debit to "contingent assets." C. They should not be disclosed anywhere in the financial statements due to their uncertainty. D. They should only be disclosed in the notes to the financial statements if the inflows of resources are virtually certain.

a. they should be disclosed in the notes to the financial statements if the inflow of resources is probable

What is the primary focus of IAS 1? A. To establish the guidelines for financial statement presentation B. To provide guidance to first-time adopters of IFRS issued by the IASB C. To establish the framework of guidelines to be used by IASB in setting accounting standards D. None of the above

a. to establish the guidelines for financial statement presentaiton

Which of the following is NOT an objective of the International Accounting Standards Board? A. To establish worldwide uniformity of accounting practice B. To develop a single set of enforceable global accounting standards C. To promote the use and application of global accounting standards D. To encourage convergence of national accounting standards and international accounting standards

a. to establish worldwide uniformity of accounting practice

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. To eliminate the political influences on the IASB and national accounting bodies C. To enforce adherence to the fundamental principles of the IASB D. All of the above

a. to facilitate information exchange and cooperation between the FASB and the IASB

How does IAS 38 (Intangible Assets) differ from U.S. GAAP with respect to development costs? A. U.S. GAAP does not allow capitalization of development costs, whereas IAS 38 allows capitalization of these costs. B. U.S. GAAP requires capitalization of development costs, whereas IAS 38 makes capitalization of these costs optional. C. U.S. GAAP treats development costs as part of "Goodwill", whereas IAS 38 treats these costs as an intangible asset. D. U.S. GAAP requires expensing of all development costs, and IAS 38 requires capitalizing all development costs.

a. us gaap does not allow capitalizaiton of development costs, wehreas IAS 38 allows capitalizaiton of these costs

Under IAS 38, which of the following items is specifically EXCLUDED from being recognized as an internally generated intangible asset? A. Computer software costs B. Copyrights C. Customer lists D. Motion picture films

c. customer lists

SilverStone Inc. supplies emission systems worth $100,000 to Horizon Enterprises. As per the terms of sale contract, SilverStone takes back all unused emission systems. Horizon estimates that 5% of the emission systems will be returned. Under IAS 18, only four out of the five conditions for recognizing revenue from the sale of goods are met as economic benefits of 95% of sale will flow to SilverStone. How much revenue should be recognized by SilverStone Inc.? A. The recognition of the entire sale must be deferred until the fifth condition has been met. B. $75,000 of the sales price can be currently recognized as revenue and $25,000 will be treated as a deferred revenue (liability). C. The entire $100,000 sales price can be currently recognized since most of the conditions have been met. D. None of the above represents a proper treatment of this sale.

b. $75,000 of the sales price can be currently recognized as revenue and $25,000 will be treated as a deferred revenue

Of the 16 members of the International Accounting Standards Board (IASB), how many work for the board on a full-time basis? A. 8 B. 13 C. 10 D. 0

b. 13

How many trustees of the IFRS Foundation will normally be senior partners of prominent international accounting firms? A. 0 B. 2 C. 5 D. 10

b. 2

According to the Norwalk Agreement, the FASB will monitor: A. all IASB projects. B. IASB projects according to their level of interest in the topic. C. no IASB projects, since the IASB is capable of self-monitoring. D. only those projects dealing with internationally complex issues.

b. IASB projects according to their level of interest in the topic

Which of the following is generally true about the differences between U.S. GAAP and IFRS? A. U.S. GAAP is more flexible than IFRS. B. U.S. GAAP tends to be more rules-based and IFRS tend to be principles-based. C. More professional judgment is required to apply U.S. GAAP than is required for implementing IFRS. D. In all cases, U.S. GAAP is more detailed than the IFRS.

b. US GAAP tends to be more rules based and IFRS tends to be princples based

How does IAS 34 (Interim Financial Reporting) differ from U.S. GAAP? A. U.S. GAAP has no guidance for interim financial reporting. B. U.S. GAAP treats interim periods are an integral part of the full year. C. U.S. GAAP is the same as IAS 34. D. U.S. GAAP requires that an interim period be projected pro rata for the entire year.

b. US GAAP treats interim periods are an integral part of the full year

How should stock options be accounted for under IASB standard on stock options (IFRS 2)? A. Since their value is not determinable until a future date, they are not recorded, but only disclosed in the notes to the financial statements. B. A compensation expense is recorded based on the value of the options expected to vest as of the date the options are granted. C. An expense is recorded only if a market value for the options exists on the date the options are granted. D. The options are recorded as a liability for the value of the stock at the exercise date.

b. a comparison expense is recorded based on the value of the options expected to vest as of the date the options are granted

Sigma Company issued $12 million in 10 percent bonds 6 years ago currently having a carrying amount of $10.7 million. The bond agreement allows for early extinguishment by Sigma Company beginning in the current year. Sigma's investment bank has arranged for the company to issue $10 million of new 8 percent bonds at face value to a group of investors. The proceeds will be used to extinguish the 10 percent bonds. The banking, legal, and accounting costs to execute the transaction total $200,000. The journal entry to record the debt extinguishment will include: A. a debit to Bonds Payable—8% for $10,000,000. B. a credit to Gain on Extinguishment of 10% Bonds for $500,000. C. a credit to Bonds Payable—10% for $12,000,000. D. a debit to Loss on Extinguishment of 10% Bonds for of $200,000.

b. a credit to gain on extinguishment of 10% bonds for $500,000

What basis does the International Accounting Standards Board use in developing IFRS? A. Detailed rules to govern accounting practice B. A framework for deriving general principles C. Typical tax laws of western nations D. Exceptions or unusual circumstances that require special attention

b. a framework for deriving general principles

Under IAS 1, Presentation of Financial Statements, how must deferred taxes be classified on the balance sheet? A. As either a current asset or a current liability B. As always a noncurrent asset or a noncurrent liability C. As either a current or noncurrent asset or liability based on the expected timing of realization D. As a separately stated positive or negative component of equity

b. as always a noncurrent asset or a noncurrent liabilitiey

Under U.S. GAAP, interest on loans secured to acquire fixed assets must be: A. expensed in the period they are incurred. B. capitalized as part of the fixed asset cost. C. either expensed currently or capitalized as part of the fixed asset cost. D. charged against revenue in the year the asset is put into service.

b. capitalized as part of the fixed asset cost

The "Seventh Directive" issued by the European Commission is a statement to the European Union (EU) members concerning: A. adoption of the euro as the currency used throughout the EU. B. consolidated financial statements. C. rules for valuation, financial statement disclosures, and financial statement format. D. authority of the European Commission to pass laws.

b. consolidated financial statements

The term "provision" as it is used in IAS 37, is most closely related to what term in U.S. GAAP? A. Contingent liability, where the outflow of resources is "remote." B. Contingent liability, where the outflow of resources is "probable." C. Current liability, where the outflow is difficult to measure. D. Reserve for bad debt, where the amount recoverable is "uncertain."

b. contingent liability, where the outflow of resources is "probable"

The second phase (1989-1993) of the IASC's efforts to harmonize accounting standards was aimed at: A. making international accounting standards more flexible. B. creating greater financial statement comparability across countries. C. adding new alternatives for accounting practices desired by the international community. D. strengthening the enforcement power of the IASC.

b. creating greater financial statement comparability across countries

Agro-World Technologies Inc. incurred $1,000,000 to construct a pilot plant to study the feasibility of building agricultural machinery more inexpensively for emerging economies. How would this cost be classified under IAS 38 (Intangible Assets)? A. Research costs B. Development costs C. Neither research nor development D. It could be either research or development, depending on management's wishes.

b. development costs

Under a joint Exposure Draft issued by the IASB and FASB in June 2010, Revenue from Contracts with Customers, which of the following is NOT one of the steps to be applied in the recognition of revenue across a wide range of transactions and industries? A. Identify the contract with a customer. B. Do not separate the transaction price for separate performance obligations if the contract is a bundled contract where goods and services are not sold separately. C. Identify the separate performance obligations in the contract. D. Determine the transaction price.

b. do not separate the transaction price for separate performance obligations if the contrac tis a bundles contract where goods and services are not sold separately

According to IAS 1, which of the following is the overriding principle that must be followed while preparing IFRS-based financial statements? A. Going concern B. Fair presentation C. Revenue recognition D. Comparative information

b. fair presentation

Under IFRS 2, Share-based Payment, what approach is used to account for the transaction? A. Comparable transaction approach B. Fair value approach C. Market approach D. Notional value approach

b. fair value approach

The methods allowed by the IFRS for valuing property, plant, and equipment are: A. historic cost and general purchasing power. B. historic cost and fair value. C. fair value and general purchasing power. D. fair value and inflation-adjustment.

b. historical cost and fair value

Which of the following bases for fixed asset valuation was being used by Mexico until 2008? A. Historical cost B. Historical cost later restated in terms of GPP C. Historical replacement cost D. Net realizable value

b. historical cost later restated in terms of GPP

historical cost 15,000 replacement cost 11,000 expected selling price 13,500 expected selling cost 800 normal profit margin 2,500 How will income under the U.S. GAAP compare to income the company reported under IFRS after reconciliation? A. Income will not be affected by the reconciliation. B. Income under U.S. GAAP will be lower by $1,700. C. Income under U.S. GAAP will be lower by $2,500. D. Income under U.S. GAAP will be equal to income under IFRS.

b. income under US GAAP will be lower by 1,700

If a company chooses the revaluation model permitted in IAS 16 for fixed asset measurement: A. annual revaluations must be performed on each class of assets. B. it must update the valuation so that the balance sheet represents fair value on the balance sheet date. C. appraisals must be performed by an official of the IASB. D. the depreciated replacement cost must be used as the fair value of the fixed asset.

b. it must update the valuation so that the balance sheet represents fiar value on the balance sheet

How should the cost of borrowing funds to acquire or construct property, plant, and equipment be accounted for under IASB rules, as revised in 2007? A. It should be expensed in the period incurred. B. It should be added to the other costs of acquiring fixed assets to determine the amount for the balance sheet. C. Both methods are acceptable. D. Neither method is acceptable under IASB rules.

b. it should be added to the other costs of acquiring fixed assets to determine the amount for the balance sheet

Under a joint exposure draft issued by the IASB and FASB in 2010, what is one of the most significant proposals? A. IFRS and U.S. GAAP would have identical quantifiable criteria for lease classification. B. Leases would no longer be classified as finance or operating. C. Lessors would recognize income immediately at the inception of the lease. D. There would be no lease disclosure required in the notes to the financial statements.

b. leases would no longer be classified as finance or operating

De jure harmonization refers to the process of: A. making accounting practices consistent across countries. B. making accounting regulations consistent internationally. C. resolving accounting differences through jury trials. D. eliminating the need to have different accounting methods.

b. making accounting regulations consistent internationally

The IASB has permitted the translation of International Financial Reporting Standards (IFRS) into how many languages? A. None. They are only written in the official language of the IASB. B. More than 30 C. More than 100 D. Only six languages: Chinese, English, German, Japanese, Russian, and Spanish

b. more than 30

According to the Framework for Preparation and Presentation of Financial Statements of the IASB, which of the following is NOT required for asset recognition? A. Control of the resource B. Ownership of the resource C. Future economic benefits D. Reliable measurement of the cost or value of the resource

b. ownership of the resources

Which of the following is found in a Mexican income statement in the "Comprehensive Financing Result" section? A. Non-controlling interest net income B. Purchasing power gain or loss during inflationary periods C. Income taxes D. Equity in income of associates

b. purchasing power gain or loss during inflationary periods

What term is used to refer to the decision about whether to report an item in the financial statements? A. Capitalization B. Recognition C. Realization D. Conservatism

b. recognition

Under IAS 37, inflows of resources that are "virtually certain" to be received should be: A. disclosed as contingent assets in the notes to the financial statements. B. recognized as assets. C. undisclosed until management is absolutely certain that resources will be received. D. reported only in the cash flow statement.

b. recognized as assets

Under IAS 40 (Investment Property), gains or losses from revaluation are: A. recognized in revaluation surplus. B. recognized in current income. C. not permitted. D. recognized either in current income or revaluation surplus at the option of management.

b. recognized in current income

From a practical standpoint, what is the goal of accounting standards harmonization? A. Creating one set of standards used throughout the world B. Reducing the conflict among national accounting standards C. Producing accounting standards that are unique for each country D. Forcing compliance with IASB regulations

b. reducing the conflict among national accounting standards

Who was the first chairman of the International Accounting Standards Board? A. Sir Walter Raleigh B. Sir David Tweedie C. Sir Paul McCartney D. Sir Bryan Carsberg

b. sir david tweedie

Which of the following is NOT true of the due process followed by the IASB in formulating International Financial Reporting Standards? A. A period of public comment is provided after discussion papers are prepared. B. Standards are approved by a unanimous vote of the 16-member board. C. Exposure drafts are published prior to taking a vote of the board. D. National accounting standards and practices are studied before preparing exposure drafts.

b. standards are approved by a unanimous vote of the 16 member board

Which of the following statements is true about the IASB's approach to accounting standard setting? A. The IASB approach is very similar to the rules-oriented basis favored by the FASB in the United States. B. The IASB uses a principles-based approach to standards formulation. C. The IASB pronouncements have been called a "cookbook" of accounting standards. D. The Sarbanes-Oxley Act requires the IASB to move toward the approach for standard setting used by the FASB.

b. the IASB uses a principles based approach to standards formulation

What is Anglo-American Accounting? A. It is an association of British and American accounting regulatory agencies. B. The accounting systems used in the United States., United Kingdom, and other English-speaking countries. C. This refers to the basis used by the IASB to judge the appropriateness of international accounting standards. D. All of the above are true.

b. the accounting systems used in the united states, united kingdom, and other english speaking countries

In what way should operating leases be accounted for under IAS 17? A. The lease payments should be capitalized and shown on the balance sheet as an asset. B. The lease payments must be expensed by the lessee as they are incurred. C. IAS 17 is flexible, allowing both capitalization and expensing of operating lease costs. D. The lessee capitalizes the operating lease and the lessor expenses the lease.

b. the lease payments must be expensed by the lessee as they are incurred

It has been said that the addition of 10 new members to the European Union (EU) in 2004 is likely to significantly change the dynamics within the EU. What was the explanation given for this statement? A. The EU is getting too large to manage effectively. B. The members added in 2004 have very different political and economic traditions than the 15 members that joined before 2004. C. The members added in 2004 have more economic power than the members that joined the EU between 1957 and 1995. D. The purchasing power of the EU was weakened by the addition of additional members.

b. the members added in 2004 have very different political and economic traditions than the 15 members that joined before 2004

Which of the following statements is NOT true about Anglo-Saxon Accounting? A. There is a strong reliance on professional judgment. B. There is an agreement on the interpretation of the principle of fair presentation. C. There is a stronger emphasis on substance of reports rather than the form of reports. D. Audits report on the adherence to the principle of fair presentation.

b. there is an agreement on the interpretation of the principle of fair presentation

Under IAS 18, which of the following is NOT a condition that must be met in order for revenue from the sale of goods to be recognized? A. The significant risks and rewards of ownership of the goods have been transferred to the buyer. B. There must be a binding, written contract between the seller and the buyer. C. The amount of revenue can be measured reliably. D. Neither continued managerial involvement normally associated with ownership nor effective control of the goods is retained.

b. there must be a binding, written contract between the seller and the buyer

Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia joined the European Union in 2004. Besides membership in the EU, what do these countries have in common? A. They share a common language. B. They were members of the former Soviet bloc. C. All were under the political control of Germany until the early 1960's. D. They were former British colonies until after World War II.

b. they were members of the former soviet bloc

Which of the following is the primary purpose of preparing a statement of added value? A. To show the value added to products while at production B. To show the distribution of added value by the company among shareholders C. To calculate the net taxable income of the company D. To show the costs in addition to gross payroll that the company incurs related to its labor force

b. to show the distribution of added value by the company among shareholders

Under IFRS 2, with respect to cash-settled share-based payments, when an employee has received stock appreciation rights, how is the fair value of those rights measured? A. Using the consolidation method B. Using an option pricing model C. Using the dividend discount approach D. All of the above

b. using an option pricing model

Under IAS 39, Financial Instruments: Recognition and Measurement, which of the following terms describes the removal of a financial asset or liability from the balance sheet when certain appropriate criteria have been met? A. Decoupling B. Extinguishment C. Derecognition D. Reversal

c. derecognition

What is the likely result when accounting rules are left up to professional associations rather than being legislated by governmental bodies? A. Very general accounting rules are created, as in code law countries. B. Very detailed rules for practice are created, as in common law countries. C. Very general accounting rules are created, as in common law countries. D. Very detailed rules for practice are created, as in code law countries.

b. very detailed rules for practice are created, as in common law countries

What is true about both IFRS and U.S. GAAP with respect to service contracts? A. IFRS and U.S. GAAP both allow the use of the percentage-of-completion method. B. Neither IFRS, nor U.S. GAAP allows the use of the percentage-of-completion method. C. IFRS allows the use of the percentage-of-completion method while U.S. GAAP does not. D. U.S. GAAP allows the use of the percentage-of-completion method while IFRS does not.

c. IFRS allows the use of the percentage of completion method while US GAAP does not

In November 2007, which of the following organizations removed the requirement that foreign private issuers using IFRS reconcile their financial statements to U.S. GAAP? A. IASB B. EU C. SEC D. FASB

c. SEC

Which of the following statements is true of the treatment of actuarial gains and losses under IFRS and U.S. GAAP? A. IFRS requires the disclosure of actuarial gains and losses in the notes to financial statements. B. IFRS requires immediate recognition of actuarial gains and losses in net income. C. U.S. GAAP allows a choice between immediate recognition in other comprehensive income or in net income. D. U.S. GAAP requires the actuarial gains and losses to be recognized immediately through other comprehensive income.

c. US GAAP allows a choice between immediate recognition in other comprehensive income or in net income

Which of the following statements is believed to be true about accounting convergence by proponents of convergence? A. Convergence would not affect the feelings of nationalism. B. Convergence is desirable because there is very little difference among capital markets in different countries. C. Convergence would help to raise the quality of accounting practices internationally. D. None of the above statements is true.

c. convergence would help to raise the quality of accounting practices internationally

According to Gray's framework which is an extension of Hofstede's model of cultural pattern, which of the following is true about accounting system development? A. Accounting system development is mainly influenced by a country's constitutional framework. B. Countries following limited disclosures adhere less strictly to the notion of conservatism in the measurement of assets and liabilities. C. Accounting system development is influenced by a less conservative approach resulting in the development of short-term oriented accounting practices. D. The external factors have a direct influence on the development of institutional framework leading to the development of accounting systems.

c. accounting system development is influenced by a less conservative approach resulting in the development of short term oriented accounting practices

Which of the following is NOT a major concern related to convergence of international accounting standards? A. The complicated nature of particular standards B. The tax-driven nature of the national accounting regime C. An overload of guidance on the first-time application of IFRS D. IFRS language translation difficulties

c. an overload of guidance eon the first time application of IFRS

IAS 32 defines a financial instrument as: A. the currency of a foreign country in which the enterprise does business. B. a certified check. C. any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. D. a recognized stock exchange.

c. any contract that gives rise to a financial asset of one entity and a financial liabilitiy or equity instrument of another entitty

Blanco Chemical Company spent €15,000,000 in development efforts to create a fertilizer for which it was able to obtain a patent; however, the expected distribution costs make it infeasible to market the chemical in the foreseeable future. According to IAS 38 (Intangible Assets), how should Blanco Chemical Company record the €15,000,000? A. As a "Deferred Development Cost" on the Balance Sheet B. As "Fertilizer Revenue" on the Income Statement C. As "Development Expense" on the Income Statement D. It should only be reported in the notes to the financial statements.

c. as "devleopment expense" on the income statemetn

What kinds of temporary differences related to income taxes can arise under IFRS that don't occur under U.S. GAAP? A. Book and tax differences related to the amortization of property, plant, and equipment for book purposes and cost method for tax purposes. B. Book and tax differences related to the calculation of impairments for book purposes with adjustment for tax purposes. C. Book and tax differences related to the revaluation of property, plant, and equipment for book purposes and cost method for tax purposes. D. Book and tax differences related to the calculation of contingent liability for book purposes with no like adjustment for tax purposes.

c. book and tax differences related to the revaluation of property, plant, and equipment for book purposes and cost method for tax purposes

Which of the following statements is NOT a way in which a country might adopt IFRS? A. By requiring all companies in that country to adopt IFRS. B. By permitting foreign companies listed on domestic exchanges to adopt IFRS. C. By force of IASB to adopt of IFRS. D. By requiring domestic companies that list on foreign exchanges to adopt IFRS.

c. by force of IASB to adopt of IFRS

In the 2002 study by the world's six largest public accounting firms concerning convergence with IFRS, what was the most frequently cited concern about convergence? A. Language translation difficulties B. Lack of perceived benefit of using IFRS C. Complexity of specific IFRS D. Preference for national standards

c. complexity of specific IFRS

In terms of level of detail provided in the individual financial statements, the U.S. tends to: A. emphasize more line items on the face of the financial statements. B. rely less on footnote disclosure. C. condense the amount of line items and supplement with more footnote detail. D. use footnotes only when absolutely required by GAAP.

c. condense the amount of line items and supplement with more footnote detail

What language is used to develop the International Financial Reporting Standards (IFRS)? A. French B. German C. English D. Spanish

c. english

According to IAS 16 (Property, Plant and Equipment), what is the term used to indicate the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction? A. Replacement cost B. Net realizable value C. Fair value D. Historical cost

c. fair value

What method of fixed asset valuation would most likely be used in countries that regularly experience high rates of inflation? A. Historical cost at subsequent balance sheet dates B. Net realizable value at subsequent balance sheet dates C. Fair value D. Net present value at subsequent balance sheet dates

c. fair value

Under IAS 32, how should an equity instrument be classified? A. It must always be classified as equity by its very nature. B. The entity has the option of classifying it as a liability or equity. C. If it contains a contractual obligation that meets the definition of a financial liability, it should be classified as a liability. D. The entity should apportion the classification between liability and equity if there is a contractual obligation that meets the definition of a financial liability.

c. if it contains a contractual obligation that meets the definition of a financial liability, it should be classified as a liability

Under IFRS 2, with respect to choice-of-settlement share-based payments, if it is the entity that has the right to choose between equity settlement and cash settlement, when must the entity choose the cash settlement? A. If the supplier provides services B. If the supplier provides goods C. If the entity has a present obligation to settle in cash D. The entity always has the option to choose either method.

c. if the entity has a present obligation to settle in cash

According to the Framework for Preparation and Presentation of Financial Statements of the IASB, what is the definition of income? A. Assets minus liabilities B. Revenue minus expenses C. Increase in equity (other than from transactions with owners) D. Inflow of resources with future economic benefit

c. increase in equity (other than from transactions with owners(

Under IAS 1, Presentation of Financial Statements, which of the following is NOT a criterion in the definition of a current liability? A. It is a liability that is expected to be settled in an entity's normal operating cycle. B. It is a liability primarily held for the purpose of trading. C. It is a liability that does not have the right to defer until 18 months after the balance sheet date. D. It is a liability that is expected to be settled within 12 months of the balance sheet date.

c. it is a liability that does not have the right to defer until 18 months after the balance sheet date

According to Sir Bryan Carsberg, former IASsecretary-general, what is the most significant cost of accounting diversity? A. The time expended by accountants to create multiple sets of financial statements conforming to different national standards B. The cost of the IASB to regulate compliance with many national accounting standards C. It may limit the effectiveness of the international capital markets D. The resources used by countries in legislating different sets of accounting standards

c. it may limit the effectiveness of the international capital markets

Rive Rouge Confections Company incurred €5,000,000 to determine if chocolate could be made to resist melting by adding certain inert minerals to the mixture. According to IAS 38, how should Rive Rouge record this cost? A. It should be capitalized as a deferred development cost. B. It should be treated as a cost of products it currently markets. C. It should be expensed currently. D. It should be amortized over 20 years.

c. it should be expensed currently

Alpha Inc. has receivables from unrelated parties with a face value of $5,000. It transfers these receivables to bank for $4,500, without recourse. It will continue to collect the receivables, depositing them in a non-interest-bearing bank account with the cash flows remitted to the bank at the end of each month. It is not allowed to sell or pledge the receivables to anyone else and is under no obligation to repurchase the receivables from bank. Which of the following is the appropriate treatment for these Accounts receivables? A. It should show these receivables in its Balance Sheet. B. It should amortize these receivables. C. It should derecognize these receivables. D. It should derecognize these receivables if it retains the interest earned on these.

c. it should derecognize these receivables

Which of the following statements is true of IAS 19? A. It establishes guidance for measuring onerous contract. B. It requires all past service costs to be recognized in net income in a subsequent period in which the benefit plan is changed. C. Its revised version became effective in the year 2013. D. It covers all employee benefits including share-based compensation.

c. its revised version became effective in the year 2013

Under IAS 38, which of the following items might qualify for capitalization as internally generated intangible assets? A. Brands B. Publishing titles C. Market share D. Customer lists

c. market share

In an Ernst & Young 2005 survey of 130 companies' Forms 20-F filed with the SEC, what issue required adjustments by the greatest number of companies? A. Goodwill B. Leases C. Pensions D. Wages

c. pensions

Under U.S. GAAP, a deferred tax asset must be realized when: A. realization is probable. B. realization is possible. C. realization is more likely than not. D. realization is greater than 75% likely.

c. realization is more likely than not

Chien Bleu Ltd. purchased a building in 2009 for €10,000,000 and as of December 31, 2015 had recorded accumulated depreciation on the building of €3,000,000. On December 31, 2015, the company conducted its first revaluation when the fair value was €12,000,000. According to IAS 16, what account should be credited for €5,000,000? A. Loss on Revaluation—Building B. Gain From Revaluation of Building C. Revaluation Surplus—Building D. Revaluation Revenue—Building

c. revaluation surplus - building

The "Fourth Directive" issued by the European Commission, which administers the European Union (EU), deals with which of the following? A. Adoption of the euro as the currency used throughout the EU B. Consolidated financial statements C. Rules for valuation, disclosures requirements, and the format of financial statements D. Authority of the European Commission to pass laws

c. rules for valuation, disclosures requirements, and the format of financial statements

The IASB is organized under an independent entity called: A. the SEC. B. the AFL. C. the IFRSF. D. INTERPOL.

c. the IFRSF

Under what circumstance, both U.S. GAAP and IAS 2 will provide similar result with respect to inventory valuation? A. When historical cost is greater than the net realizable value B. When replacement cost is lower than historical cost C. When replacement cost is greater than the net realizable value D. When normal profit margin is less than 15%

c. when replacement cost is greater than the net realizable value

Under IAS 2, what adjustment needs to be made after an inventory write-down if the selling price subsequently increases? A. No adjustment is necessary. Once inventory is written down, it cannot be increased under IASB standards. B. It should be sold at the replacement cost. C. The inventory write-down should be reversed to bring it in line with the new net realizable value. D. Recovery of inventory loss should be debited to reflect the increase in inventory value.

c. the inventory write down should be reversed to bring it in line with the new net realizable value

According to IAS 37, with respect to onerous contracts, a provision should be recognized for "unavoidable costs of the contract", which is: A. the intrinsic value of the contract. B. the lower of cost or market value of the contract. C. the lower of cost of fulfillment or the penalty from non-fulfillment of the contract. D. None of the above

c. the lower of cost of fulfillment or the penalty from non-fulfillment of the contract

Which of the following statements is NOT true about Anglo-Saxon Accounting? A. There is a strong reliance on professional judgment. B. Financial reporting focuses on the firm with an investor orientation. C. There is a strong emphasis on measurement of taxable income. D. Principle of fair presentation is predominant in financial reporting.

c. there is a strong emphasis on measurement of taxable income

Why is it difficult to compare IAS 18, Revenue, to U.S. GAAP? A. The IASB definition of revenue is very complicated, whereas the definition of revenue under U.S. GAAP is straightforward. B. Revenue is not defined under U.S. GAAP. C. There is no single standard in U.S. GAAP that deals solely with revenue. D. Under U.S. GAAP, revenue is defined in terms of cash, whereas IAS 18 defines revenue in terms of a variety of resources.

c. there is no single standard in US GAAP that deals solely with revenue

Under IAS 37, how are contingent liabilities treated in the financial statements? A. IAS 37 does not address contingent liabilities. B. They are recorded as current liabilities if the amount is reasonably measured. C. They are disclosed in the notes to the financial statements when there is more than a remote possibility of an outflow of resources. D. They are not disclosed.

c. they are disclosed in the notes to the financial statements when there is more than a remote possibility of an outflow of resources

What do IASB standards say about related party transactions? A. They are illegal in most countries and must be avoided. B. Related party transactions should be eliminated from the financial statements. C. They must be disclosed in the notes to the financial statements. D. None of the above

c. they must be disclosed in the notes to the financial statements

What is the intent of IFRS 1? A. To establish the guidelines for financial statement presentation B. To provide the working definitions of accounting elements C. To provide guidance on first-time application of IFRS D. To provide the framework for setting international accounting standards

c. to provide guidance on first time application of IFRS

Under IAS 19, Employee Benefits, which of the following benefits are covered? A. Compensated absences and bonuses B. Post-employment benefits C. Deferred compensation and disability benefits D. All of the above

d. all of the above

Under IAS 32, which of the following is a financial liability? A. A payable B. A bank loan C. An intercompany loan payable D. All of the above

d. all of the above

Which of the following is true about the IASB standards on statement of cash flows? A. Cash flow statements are not required under the IASB standards. B. Operating cash flows must be determined using the "direct method only." C. Operating cash flows may be combined with financing cash flows. D. IAS 7 requires essentially the same information in the statement of cash flows as U.S. GAAP.

d. IAS 7 requires essentially the same informaiton in the statement of cash flows as US GAAP

How does U.S. GAAP differ from IFRS with respect to cash-settled share-based payments? A. U.S. GAAP always treats such payments as a liability. B. U.S. GAAP offers the option to treat such payments as either a liability or equity. C. IFRS and U.S. GAAP follow the same approach with respect to such payments. D. U.S. GAAP, under certain circumstances, may treat such payments as equity.

d. US GAAP, under certain circumstances, may treat such payments as equity

How does the treatment of borrowing costs under U.S. GAAP differ from IFRS? A. U.S. GAAP has no guidance for accounting treatment related to borrowing costs. B. U.S. GAAP specifically includes foreign exchange gains and losses on foreign currency borrowings. C. The definition of borrowing costs under U.S. GAAP is broader in scope than the definition of interest cost under IAS 23. D. U.S. GAAP does not allow netting of interest income against interest cost.

d. US GAAp does not allow netting of interest income against interest cost

To create an appropriate mix of members of the IASB, since 2012 the board includes: A. eight auditors. B. eight academic representatives. C. four members of the FASB. D. a diverse geographical balance of members.

d. a diverse geographical balance of members

The term "Class B Accounting" as it is used by the researcher Christopher Nobes refers to: A. less preferred accounting systems. B. less efficient accounting systems. C. accounting systems that primarily serve external shareholders. D. accounting systems that were developed primarily for creditors and taxing authorities.

d. accounting systems that were developed primarily for creditors and taxing authorities

IAS 18, Revenue, covers which types of revenues? A. Sale of goods B. Rendering of services C. Interest, royalties, and dividends D. All of the above

d. all of the above

Under IAS 12, Income Taxes, which of the following issues are covered? A. Temporary differences B. Operating loss carry forwards C. Tax credit carry forwards D. All of the above

d. all of the above

Which of the following represents a difference in the classification of current liabilities between IFRS and U.S. GAAP? A. Refinanced short-term debt B. Amounts payable on demand due to violation of debt covenants C. Bank overdrafts D. All of the above

d. all of the above

According to the IASB, what is needed for IFRS to work effectively? A. Commitment from auditors to resist client pressures. B. Professional judgment in the public interest on the part of companies and auditors. C. Financial statement preparers must produce reports that faithfully represent all transactions. D. All of the above are conditions for effective standards.

d. all of the above are conditions for effective standards

How does the definition of asset impairment differ between IAS 36 and U.S. GAAP? A. U.S. GAAP does not consider selling price in determining impairment, but IAS 36 does. B. U.S. GAAP considers cash flows in assessing value of continued use, but does not discount them, whereas IAS 36 requires discounting in assessing asset impairment. C. Asset impairment is more likely to occur under IAS 36 than under U.S. GAAP. D. All of the above are differences between IAS 36 and U.S. GAAP.

d. all of the above are differences between IAS 36 and US GAAP

Which of the following is NOT a share-based payment transaction under IFRS 2? A. Equity-settled share-based payment B. Cash-settled share-based payment C. Choice-of-settlement share-based payment D. All of the above are share-based payment transactions under IFRS 2.

d. all of the above are shared based payment transactions under IFRS 2

IASB standards address related party transactions. According to these standards, which of the following is considered a "related party?" A. Parent companies B. Subsidiary companies C. Key members of management D. All of the above could be related parties.

d. all of the above could be related parties

International accounting diversity can be found in terms of: A. the terminology used in the financial statements. B. the amount of information disclosed in the financial statements. C. the order of items in the financial statements. D. All of the above evidence of accounting diversity.

d. all of the above evidence of accounting diversity

Under IAS 18, when it is probable that the economic benefits of interest, royalties, and dividends will flow to the enterprise and can be measured reliably, how should revenue be recognized? A. Interest income shall be recognized based on an effective yield basis. B. Royalties are recognized on an accrual basis with reference to the terms of the agreement. C. Dividends are recognized when the shareholders' right to receive payment is established. D. All of the above govern revenue recognition under these circumstances.

d. all of the above govern revenue recognition under these circumstances

What types of differences can cause issues between International Financial Reporting Standards and U.S. GAAP? A. Measurement B. Alternatives available C. Disclosure D. All of the above may be different between IFRS and U.S. GAAP.

d. all of the above may be different between IFRS and US GAAP

Which of the following items should be included in the cost of property, plant, and equipment under IAS 16? A. All costs directly attributable to getting the asset to the proper location B. Import duties and taxes C. Estimated costs of removing the asset D. All of these should be considered part of the cost of the asset.

d. all of these should be considered part of the cost of the asset

How does U.S. GAAP require the prior service cost related to retirees to be recognized? A. Amortize over the average remaining working lives of active employees B. Recognize immediately C. Don't recognize at all D. Amortize over remaining expected life of the retirees

d. amortize over remaining expected life of the retirees

Under both IFRS and U.S. GAAP, in an equity-settled share-based payment transaction, how are such payments to non-employees measured? A. At the cost of the goods or services received. B. Both standards are silent as to the treatment of payments to non-employees. C. Always the fair value of the equity instrument. D. At the fair value of goods or services received, if a reliable determination is available—otherwise, the fair value of the equity instrument.

d. at the fiar value of goods or services received, if a reliable determiniation is availabe-otherwise, the fiar value of the equity instrument

Which of the following statements is true about accounting convergence? A. Convergence is a synonym for harmonization. B. Convergence is the opposite of standardization. C. Convergence, unlike harmonization, takes place over a period of time. D. Convergence means developing high-quality standards in partnership with national standard-setters.

d. convergence means developing high quality standards in partnership with national standard setters

In addition to the International Accounting Standards Committee (IASC), which of the following organizations was considered to be one of the two most important forces in efforts to harmonize accounting standards? A. U.S. Financial Accounting Standards Board (FASB) B. United Nations (UN) C. North Atlantic Treaty Organization (NATO) D. European Union (EU)

d. european union (EU)

Under IAS 16 (Property, Plant, and Equipment), subsequent revaluation decreases are: A. never recognized. B. credited to a revaluation surplus account. C. recognized as an expense on the income statement. D. first recognized as a reduction in any related revaluation surplus.

d. first recognized as a reduction in any related revaluation surplus

With respect to post-employment medical benefits, U.S. GAAP: A. does not recognize the concept of post-employment medical benefits. B. has considerably less guidance than IAS 19. C. follows the guidance of IAS 19. D. has considerably more guidance than IAS 19.

d. has considerably more guidance than IAS 19

The IASB's Framework for Preparation and Presentation of Financial Statements (1989) implies that the most important group of users is: A. government. B. general public. C. creditors. D. investors.

d. investors

What is a "contingent asset?" A. There is no such thing, in IASB standards, as a "contingent asset." B. This is an asset that has been put up as collateral against a loan. C. This is a possible inflow of resources arising from a future activity. D. It is a probable asset, arising from past events, whose existence is yet to be confirmed definitively by a future event.

d. it is a probable asset, arising from past events, whose exitence is yet to be confirmed definitively by a future event

Which of the following statements is true of IFRS 1? A. It does not permit the recognition of intangible assets in balance sheets. B. After its issuance in July 2001, it has not been amended as yet. C. It deals primarily with fair value measurement of assets. D. It provides exemptions to complying with IFRS in specific areas.

d. it provides exemptions to complying with IFRS in specific areas

Through 50 years of high quality service, Domo Diagnostics Laboratory has created goodwill with its clients that management estimates is worth at least $20,000,000. Under IAS 38, how should this be recognized? A. An intangible asset "Goodwill" should be debited for $20,000,000. B. The $20,000,000 should be expensed over a period of 20 years. C. The $20,000,000 should be expensed over a period of 50 years. D. It should not be recognized in Domo's accounting records at all.

d. it should not be recognized in domo's accounting records at all

Under IFRS 2, with respect to choice-of-settlement share-based payments, if the supplier chooses the cash settlement, the entity is deemed to have issued a compound financial instrument consisting of debt and equity. When cash is received, how does the supplier applies it? A. Only against the equity portion B. Apportioned between debt and equity based on relative fair market value of each component C. Only against current year liabilities D. Only against the debt portion

d. only against the debt prtion

What should be the basis for choosing depreciation methods for fixed assets under IAS 16 (Property, Plant, and Equipment)? A. Tax minimization B. Profit maximization C. Useful life of the fixed asset D. Pattern of economic benefits to be derived from the asset

d. pattern of economic benefits to be derived from the asset

Under IAS 18, which of the following is an example of retention of significant risks and rewards by the seller? A. The buyer has no right to rescind the purchase. B. The seller is under no obligation for satisfactory performance not covered by normal warranties. C. Goods are sold subject to installation, but installation is not a significant part of the contract and has not yet been completed. D. Receipt of revenue by the seller is contingent on the buyer generating revenue through its sale of the goods.

d. receipt of revenue by the seller is contingent on the buyer generating revenue through its sale of the goods

Harmonization of accounting standards: A. is the same as convergence of accounting standards. B. always ensures resulting of comparable financial statements internationally. C. forces accounting differences to be resolved through litigation. D. refers to the reduction of alternatives while retaining a high degree of flexibility in accounting practices.

d. refers to the reduction of alternatives while retaining a high degree of flexibility in accounting practices

Which of the following is a difference among the U.S. and other Anglo-Saxon countries in terms of accounting standards? A. The U.S. does not adhere to the "true and fair view" approach. B. The U.S. is more private-sector oriented. C. The U.S. always follows a conceptual framework when developing accounting standards. D. The U.S. standards are becoming more rigid than the U.K. standards.

d. the US standards are becoming more rigid than the UK standards

Which of the following statements is true about the comparability of financial statement of the United States and the United Kingdom? A. The result of Latin American colonialism is the large number of countries with the United Kingdom's influence on their accounting practices. B. The financial statements of companies in the United States and the United Kingdom are comparable as they are prepared after adjusting inflation, which is a critical factor affecting accounting practice. C. The basic principle followed by both countries in preparing financial statements is government economics and government tax and legal framework. D. The accounting practices of both the countries are oriented toward the decision needs of a large number of investors and creditors.

d. the accounting practices of both the countries are oriented toward the decision needs of a large number of investors and creditors

If a derivative is not designated as a hedge: A. the change in market value must be recognized in net income when it changes. B. the change in market value is not recognized in net income. C. the change in fair value is not recognized in net income. D. the change in fair value must be recognized in net income when it changes.

d. the change in fair value must be recognized in net income when it changes

Which of the following groups is responsible for translating International Financial Reporting Standards into languages other than the official language of the IASB? A. The International Accounting Standards Board B. The International Accounting Standards Committee Foundation C. The United Nations D. The national accountancy bodies of individual countries

d. the national accountancy bodies of invidividual countries

In preparation for admission to the European Union, Hungary, Poland, and the Czech Republic passed new accounting laws based on EU Directives. How were these new laws different from their previous accounting laws? A. The new laws are easier to enforce than the previous laws. B. The new accounting regulations are written in English, whereas the earlier accounting standards were written in Russian. C. The new laws are less flexible than their earlier accounting laws. D. The new laws are market-oriented whereas their earlier accounting laws were Soviet-style.

d. the new laws are market oriented whereas their earlier accounting laws were soviet style

In the United States, conformity between presentation of the financial statements and the tax statements is required only for: A. goodwill. B. depreciation. C. gains or losses on securities. D. the use of the LIFO inventory cost flow assumption.

d. the use of the LIFO inventory cost flow assumption

As defined by IAS 38, how are intangible assets unlike other assets? A. They must have arisen from past events. B. Their value cannot be reasonably measured. C. They must be controlled by enterprises. D. They are nonmonetary and lack physical substance.

d. they are nonmonetary and lack physical substance

What is one major difference between IFRS and U.S. GAAP relative to correction of errors? A. U.S. GAAP is silent as to how to treat errors that have been discovered. B. IFRS is silent as to how to treat errors that have been discovered. C. Under U.S. GAAP, a prospective approach is taken. D. Under IFRS, if it's impractical to restate financial statements, then no restatement is necessary.

d. under IFRS, if its impractical to restate financial statements, then no restatement is necessary

In which of the following countries is the use of IFRS NOT allowed for domestic companies listed on its stock exchanges? A. United Kingdom B. Yugoslavia C. Australia D. United States

d. united states

What share of the world's gross domestic product (GDP) is generated by the 100 largest multinational companies? A. 4% B. 12% C. 50% D. 75%

A. 4%

What percentage of world trade is represented by manufactured products? A. 64.6% B. 22.5% C. 8.5% D. 75.5%

A. 64.6%

How should we recognize the difference in the value of a receivable in a foreign currency at the time it was recorded and the time the cash was received? A. As an adjustment to stockholders' equity B. As an adjustment to purchases C. As an extraordinary capital expenditure D. As a prior period adjustment

A. As an adjustment to stockholder's equity

In international accounting, a "hedge" is: A. a business transaction made to reduce the exposure of foreign exchange risk. B. the legal barriers in various divisions of a multinational company. C. the loss in US dollar resulting from a decline in the value of the US dollar relative to foreign currencies. D. a form of foreign direct investment.

A. a business transaction made to reduce the exposure of foreign exchange risk

Foreign exchange risk arises when: A. business transactions are denominated in foreign currencies. B. sales are made to customers in a domestic country. C. goods or services purchased from suppliers in a foreign country are denominated in domestic currency. D. auditing reports are prepared in a foreign currency.

A. business transactions are denominated in foreign currencies

For a U.S. multinational corporation, consolidating the financial statements of foreign subsidiaries requires two steps. First, the foreign subsidiary's statements must be restated according to the U.S. GAAP. The next step is to: A. convert the account balances into U.S. dollars. B. determine the exchange rate gain or loss. C. calculate the translation adjustment. D. restate the income using international accounting standards.

A. convert the account balances into US dollars

What does "multinationality" mean? A. Geographical distribution of sales, assets, and employees of the company B. The diversity of languages spoken at a company's headquarters C. The number of stock exchanges where a company's shares are listed D. None of the above

A. geographical distribution of sales, assets, and employees of the company

Which of the following is true about foreign direct investment? A. It is a means of reducing transportation costs in export sales. B. Since the 1980s, foreign direct investment has been relatively stable worldwide. C. Only very large corporations are undertaking foreign direct investment. D. It refers only to the amount of money U.S. corporations put into non-U.S. businesses.

A. it is a means of reducing transportation costs in export sales

Which of the following is NOT a problem caused by accounting diversity? A. Lack of qualified international auditors B. Preparation of consolidated financial statements C. Access to foreign capital markets D. Comparability of financial statements

A. lack of qualified international auditors

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. United States of America B. Japan C. Germany D. France

A. united states of america

In countries such as the U.S., there is great demand for public disclosure of accounting information. What is the reason for this? A. Corporate management isn't trustworthy. B. Businesses rely heavily on financing through issuance of stock to the public. C. The American populace is better able to read financial statements than people in other countries. D. U.S. government officials are generally members of corporate boards of directors and can get all the information they require.

B. businesses rely heavily on financing through issuance of stock to the public

In 2011, the country with the largest amount of exports was: A. the United States of America. B. China. C. Japan. D. Germany.

B. china

When setting transfer prices among international subsidiaries, the corporation must: A. make sure that the total tax is minimized. B. ensure that the transfer prices are acceptable to the taxing authorities in the countries involved. C. do whatever it takes to make taxes paid in the United States as low as possible. D. follow the transfer pricing policy used for domestic transfers.

B. ensure that the transfer prices are acceptable to the taxing authorities in the countries involved

A translation adjustment may be necessary when: A. notes to financial statements are converted from one language to another. B. foreign currency financial statements are converted to another currency. C. purchasing goods from a domestic company. D. hedging foreign currency.

B. foreign currency financial statements are converted to another currency

The ownership and control of foreign assets, such as a manufacturing plant, is called: A. a hedge. B. foreign direct investment. C. an option. D. derivatives.

B. foreign direct investment

What is a "greenfield" investment? A. Farm land held for speculation B. Foreign direct investment whereby a new facility is constructed abroad C. Purchasing an existing facility as a foreign direct investment D. A foreign investment that has been approved by the Environmental Protection Agency

B. foreign direct investment whereby a new facility is constructed abroad

Purchasing an option to buy foreign currency at a predetermined exchange rate in order to reduce exchange risk is called: A. transfer pricing. B. hedging. C. translating. D. cross-listing.

B. hedging

What is KPMG? A. It is a Dutch manufacturing company with plants in over 50 countries worldwide. B. It is an international public accounting firm. C. It is the largest of the multinational corporations listed on the NYSE. D. It is a governmental agency whose aim is promoting international business.

B. it is an international public accounting firm

Historical cost is the primary basis for asset valuation under U.S. GAAP. Why is historical cost NOT as important in the accounting systems of Latin America as in the U.S.? A. Historical costs are too difficult to calculate in the currencies used in Central and South America. B. The countries of Latin America have experienced very high rates of inflation, which would make historical costs meaningless to readers of financial statements. C. There is very little foreign direct investment in the countries of Latin America, so few assets need to be accounted for. D. In Latin America, asset prices are very stable, making historical costs equal to replacement costs, so it doesn't matter which valuation basis is used.

B. the countries of latin america have experienced very high rates of inflation, which would make historical costs meaningless to readers of financial statements

Which of the following is a reason for the tremendous increase in the flow of foreign direct investment from 1990 to 2011? A. The relaxation of transfer pricing regulations B. The liberalization of investment laws in many countries C. The similarities in tax rates and tax laws across the globe D. The universal application of U.S. GAAP accounting standards

B. the liberalization of investment laws in many countries

Many countries have recently liberalized their investment laws. What is the primary reason for these actions? A. To make it more difficult for multinational companies to compete with domestic corporations B. To encourage foreign direct investment C. To enable funds to flow out of their country more easily D. To make taxing foreign companies easier

B. to encourage foreign direct investment

What is a key objective of a company's performance evaluation system? A. To determine how much to pay executives in bonuses and other compensation B. To ensure that the domestic and foreign operations are achieving their objectives C. To control foreign subsidiaries D. To assess the effect of foreign exchange rates on published financial statements

B. to ensure that the domestic and foreign operations are achieving their objectives

The following data relates to Alpha Inc. and Sigma Solutions: Which of the following statements is true of Alpha and Sigma? A. Sigma Solutions is more multinational as its ratio of foreign sales to total sales is more than Alpha Inc. B. Alpha Inc. is more multinational as its ratio of foreign employment to total employment is more than Sigma Solutions. C. Sigma Solutions has a higher multinationality index than that of Alpha Inc. D. Alpha Inc. has a higher multinationality index than that of Sigma Solutions.

C. Sigma solutions has a higher multinationality index than that of Alpha inc

Assume that ABCO is a U.S. multinational corporation. Its foreign subsidiaries must report income in their respective countries according to GAAP in those countries. How must ABCO report its consolidated financial statements? A. ABCO must choose any one country's accounting standards and combine the subsidiary reports into the parent company's statements using that one country's GAAP. B. Since the company is operating in several different countries, the International Accounting Standards must be used for the consolidated financial statements. C. Since ABCO is a U.S. corporation, U.S. generally accepted accounting principles, or GAAP, must be used for the consolidated financial statements. D. On the consolidated financial statements, each subsidiary's financial results must be shown in the currency of the country where the subsidiary is located.

C. Since ABCO is a U.S. corporation, U.S. generally accepted accounting principles, or GAAP, must be used for the consolidated financial statements.

What is the primary role of internal auditing in a multinational corporation? A. To assist the external auditors in completing the financial statement audit in a timely fashion B. To make sure that employees comply with local customs and traditions C. To ensure that corporate policies and procedures are being followed and to assess operating efficiency D. To prepare the consolidated financial statement of the corporation in compliance with international accounting standards

C. To ensure that corporate policies and procedures are being followed and to assess operating efficiency

Which of the following is an example of a "greenfield" investment? A. Nike contracts with a footwear company in China to make athletic shoes. B. A Chinese oil company buys a U.S. oil company. C. Toyota, a Japanese automaker, builds an assembly plant in Ohio. D. Daimler, a German automaker, merges with Chrysler, a U.S. automaker.

C. Toyota, a Japanese automaker, builds an assembly plant in Ohio

What countries are collectively known as "the triad"? A. France, Spain, and Italy B. Germany, Russia, and China C. United States, Japan, and members of the European Union D. United States, Canada, and Mexico

C. United States, Japan, and members of the European Union

The factor used to convert from one country's currency to another country's currency is called the: A. interest rate. B. cost of capital. C. exchange rate. D. strike price.

C. exchange rate

Which of the following ratios is used in the calculation of the multinationality index (MNI)? A. Foreign working capital to total working capital B. Foreign cash to total cash C. Foreign employment to total employment D. Foreign loans to total loans

C. foreign employment to total employment

The accounting standards in code law countries tend to be: A. very detailed. B. formulated by organizations such as the FASB. C. stated generally without much guidance on accounting procedures. D. very conservative.

C. stated generally without much guidance on accounting procedures

Foreign companies that are listed on the New York Stock Exchange (NYSE) and following their domestic GAAP must report their income in terms of: A. the International Accounting Standards. B. the GAAP of their home country. C. the GAAP of the United States. D. All of the above

C. the GAAP of the united states

In 2011, the most popular location for inbound foreign direct investment (FDI) among OECD countries was: A. France. B. China. C. the United States. D. Australia.

C. the United States

What is "transfer pricing?" A. The cost to convert from one country's GAAP to another country's GAAP B. The value of sales made in a foreign country C. The prices established to record an intercompany sale D. The taxes paid on sales in a foreign country

C. the prices established to record an intercompany sale

Why would a company want its stock cross-listed on the stock exchanges of several countries? A. To make financial reporting less burdensome for its accounting firm B. In order to use International Financial Reporting Standards C. To gain access to more financial resources than are available in its home country D. All of the above

C. to gain access to more financial resources than are available in its home country

Which of the following is the primary role of an internal auditor? A. To ensure the adoption of IFRS by all foreign companies B. To prepare the financial statements of the company C. To uncover errors, inefficiencies, and fraud D. The prepare the financial budgets for the company

C. to uncover errors, inefficiencies, and fraud

In the context of multinational corporations, the United States, Japan, and members of the European Union are collectively known as the: A. G8. B. Commonwealth. C. triad. D. OECD.

C. triad

Determination of net present value involves: A. forecasting future profits and cash flows. B. discounting future cash flows back to their present value. C. analysis on an after-tax basis. D. All of the above

D. All of the above

In which of the following levels can international accounting be defined? A. Supranational organizations B. Company C. Country D. All of the above

D. All of the above

What is the advantage of foreign direct investment? A. Helps in retaining advantage over competition B. Reduces transportation costs C. Creates a company tailored to a foreign market's unique characteristics D. All of the above

D. All of the above

Which of the following functional areas is included in the study of international accounting? A. Financial accounting B. Accounting information systems C. Taxation D. All of the above

D. All of the above

Which of the following groups is a supranational organization? A. United Nations B. Organization for Economic Cooperation and Development C. International Federation of Accountants D. All of the above

D. All of the above

Which of the following is a reason for foreign direct investment? A. To reduce costs of doing business B. To protect domestic markets C. To protect foreign markets D. All of the above

D. All of the above

Why is auditing a multinational corporation potentially more difficult than auditing an entity that has only domestic operations? A. Language differences B. Cultural differences C. Multiple sets of accounting standards D. All of the above

D. All of the above

What group is primarily responsible for the creation of International Financial Reporting Standards (IFRS)? A. Financial Accounting Standards Board (FASB) B. International Forum on Accountancy Development (IFAD) C. International Federation of Accountants (IFA) D. International Accounting Standards Board (IASB)

D. International accounting standards board (IASB)

What is the primary provision of the Foreign Corrupt Practices Act? A. To specify which corrupt practices are acceptable under U.S. law B. To specify how to account for bribes paid by U.S. corporations to obtain business from foreign governments C. To inform internal auditors how to detect fraud in multinational corporations D. To prohibit U.S. companies from paying bribes to foreign government officials to obtain business

D. To prohibit US companies from paying bribes to foreign government officials to obtain business

Which of the following statements is true about U.S. taxation of foreign subsidiaries? A. The U.S. income taxes income generated by subsidiaries incorporated in foreign countries. B. U.S. multinationals do not pay tax on their worldwide income if incorporated in the U.S. C. Transfer pricing will eliminate taxes by the U.S. government on multinational corporations. D. U.S. tax on foreign operations does not have to be paid until the income is brought back to the U.S.

D. U.S. tax on foreign operations does not have to be paid until the income is brought back to the U.S.

What is the equivalent of the common stock account on a U.S. balance sheet on the balance sheet of a British company? A. Capital redemption reserve B. Share premium account C. Own shares held D. Called-up share capital

D. called up share capital

The practice of having the stock listed and traded on several foreign stock exchanges is known as: A. SEC registration. B. initial public offering. C. consolidation. D. cross-listing.

D. cross listing

The number of companies involved in international trade has grown significantly in recent years. What percent of U.S. exporters are relatively small companies (i.e. less than 500 employees)? A. Less than 5% B. 10% C. 25% D. More than 90%

D. more than 90%

As per U.S. corporate tax laws, which of the following statements is true of a company that is incorporated in the U.S. and has a branch in a foreign country? A. The credit for the amount of taxes already paid is given to arrange for double taxation. B. The credit for the amount of taxes already paid is given to charge for the taxes not paid in the home country. C. The credit for the amount of taxes already paid is given to refund the taxes already paid in the home country. D. The credit for the amount of taxes already paid is given to give relief for the taxes paid in foreign country.

D. the credit for the amount of taxes already paid is given to give relief for the taxes paid in foreign country

Belmonte Corporation, with a division located in Germany, must translate its financial statements from euros to U.S. dollars. What is the major accounting issue involved in translation? A. Most accountants are not conversant in foreign currency exchange. B. U.S. GAAP may differ from German GAAP. C. The U.S. dollar has been steadily falling relative to the euro. D. The resulting balance sheet may not balance.

D. the resulting balance sheet may not balance

The operations of Silver Lights Inc. incorporated in U.S. are spread out in Ireland, Finland, and Chile. Which of the following statements is true about the operations of Silver Lights Inc.? A. The financial statements of Silver Lights must be prepared in local currencies of the branch countries for consolidation purposes. B. The external auditor of Silver Lights must be proficient in U.S. auditing and financial reporting standards to audit the operations of branch offices. C. Silver Lights Inc. must give credit for the corporate tax paid as per U.S. tax laws to provide relief from double taxation. D. The transfer of parts between U.S. operations and other branches should be at the highest acceptable price most profitable to Silver Lights Inc. keeping in view the rate of tax and tax authorities in respective nations.

D. the transfer of parts between US operations and other branches should be at the highest acceptable price most profitable to silver lights inc keeping in view the rate of tax and tax authorities in respective nations

It is generally believed that the 1997 financial crisis in East Asia was partly due to accounting factors in that part of the world. Which of the following accounting values was lacking in that part of the world and thereby contributed to the crisis? A. Professionalism B. Statutory control C. Uniformity D. Transparency

D. transparency

In some countries, financial institutions operate under Shariah, which also gives guidance about accounting practice in these institutions. Shariah is the: A. financial accounting standards board in Saudi Arabia. B. law governing human conduct that is derived from the Koran. C. codification of banking regulations in the European Union. D. political system used in South American countries.

b. law governing human conduct that is derived from the Koran

A cultural emphasis on values of performance and achievement rather than values of relationships, caring, and nurturing is referred to as: A. uncertainty avoidance. B. masculinity. C. individualism. D. power distance.

b. masculinity

What is likely to be the source of accounting standards in common law countries? A. Tax law B. Non-government entities such as the FASB C. Federal and local legislatures D. The International Accounting Standards Board

b. non government entities such as the FASB

Which of the following financial statements is NOT universally included in annual reports? A. Balance sheet B. Statement of cash flows C. Income statement D. All of the above statements are included in annual reports worldwide.

b. statement of cash flows

According to the research of Christopher Nobes, what is the primary determinant of the accounting systems in developing countries? A. The nature of their financing system B. The accounting system of countries that dominate their culture C. The size of their capital market D. The strength of their tax code

b. the accounting system of countries that dominate their culture

What does "harmonization" mean in the context of international accounting? A. The process of combining the financial statements of foreign subsidiaries into the parent company's financial statements B. The process of reducing accounting differences across countries C. Disclosing the accounting methods used in preparing the financial statements D. Assessing the exposure resulting from inadequate internal controls

b. the process of reducing accounting differences across countries

According to Gray's framework for accounting system development, the counterpart to the accounting value of "secrecy" is: A. professionalism. B. transparency. C. optimism. D. flexibility.

b. transparency

The term "Class A Accounting" as it is used by the researcher Christopher Nobes refers to: A. conservative accounting systems. B. the most efficient accounting systems. C. accounting systems that primarily serve external shareholders. D. accounting systems developed primarily for creditors and taxing authorities.

c. accounting systems that primarily serve external shareholders

Which financial statement is provided by virtually all corporations worldwide? A. Statement of Cash Flows B. Statement of Changes in Financial Position C. Balance Sheet D. Statement of Changes in Non-current Assets

c. balance sheet

Individualism, power distance, uncertainty avoidance, and masculinity are examples of: A. accounting values. B. ecological factors. C. cultural dimensions. D. external forces.

c. cultural dimensions

In code law countries such as Germany, France, and Japan, tax law and accounting standards tend to be: A. unrelated. B. very different. C. general. D. detail oriented.

c. general

A cultural preference for a loosely knit social fabric rather than a tightly knit social fabric is referred to as: A. uncertainty avoidance. B. masculinity. C. individualism. D. power distance.

c. individualism

A cultural preference for accounting systems that rely on compliance with legal requirements is called: A. professionalism. B. uniformity. C. statutory control. D. optimism.

c. statutory control

In their 1993 paper, Doupnik and Salter found that countries tended to cluster in terms of the similarities or differences of their accounting systems. These researchers attribute the large cluster around United Kingdom to: A. the superiority of the Anglo accounting model. B. the predominant influence of Great Britain in the world economy. C. the colonial influence of Great Britain on accounting development. D. the fact that more of the world's people speak English than any other language.

c. the colonial influence of Great Britain on accounting development

The "Fair Presentation/Full Disclosure Model" is a classification scheme used by: A. Germany. B. Japan. C. the United States and the United Kingdom. D. Brazil.

c. the united states and the united kingdom

In Gray's framework for accounting system development, which of the following countries tends to have a relatively high degree of transparency in their companies' financial statements? A. Germany B. Switzerland C. United Kingdom D. Saudi Arabia

c. united kingdom

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. Commercial law and accounting law B. Rules and regulations C. Written law and unwritten law D. Common law and code law

d. common law and code law

According to Gray's framework for accounting system development, which of the following is directly affected by ecological influences, such as geography, demography, and technology? A. Accounting values B. Accounting systems C. Institutional consequences D. Cultural dimensions

d. cultural dimensions

In Gray's framework for accounting system development, which of the following countries tends to show a relatively high preference for conservative accounting standards? A. Norway B. United Kingdom C. United States of America D. Japan

d. japan

What does "transparency" mean in accounting? A. An emphasis on confidentiality B. Restricted disclosure of accounting information C. Flexibility in the application of accounting standards D. Openness of accounting information

d. openness of acounting information

The extent to which hierarchy and unequal authority distribution in institutions and organizations are accepted within a culture is referred to as: A. uncertainty avoidance. B. masculinity. C. individualism. D. power distance.

d. power distance

Countries such as the U.S. tend to value self-regulation of accounting. What term is used to define this subculture? A. Uniformity B. Flexibility C. Conservatism D. Professionalism

d. professionalism

What term is used to describe the process of reducing foreign exchange risk? A. International accounting B. Exposure C. Hedging D. Globalization

C. Hedging

Which of these European countries does NOT use the Euro as its domestic currency? A. France B. United Kingdom C. Ireland D. The Netherlands

B. United Kingdom

ABCO Corporation has its two wholly owned subsidiaries, Delta and Parry, in Country A and Country B, respectively. Parry purchases a part for its production from Delta. Country B has a higher tax rate than Country A. To minimize the corporation's overall income tax, how should ABCO set its transfer prices between its subsidiaries? A. Delta should sell parts to Parry at low prices. B. Delta should sell parts to Parry at high prices. C. It doesn't matter what transfer price is used because the subsidiaries are part of the same company. D. Transfer pricing does not affect the total tax paid by the corporation.

B. Delta should sell parts to parry at high prices

What is the entry point for most companies into the world of international business? A. Transfer pricing B. Exporting C. Foreign direct investment D. Cross-listing on international stock exchanges

B. Exporting

What currency is used in the United Kingdom? A. Crown B. Euro C. British pound D. UK dollar

C. British pound

Which of the following terms is used to describe the combining of the financial statements of all subsidiaries, both foreign and domestic, into the financial statements of the parent? A. Convergence B. Hedging C. Consolidation D. Incorporation

C. Consolidation

In the Nobes classification of accounting systems, micro-based accounting systems are oriented toward: A. government economics. B. business practices. C. tax laws. D. code law.

b. business practices

In Gray's framework for accounting system development, the cultural dimensions of individualism, power distance, uncertainty avoidance, and masculinity directly affect: A. accounting systems. B. accounting values. C. external influences. D. ecological influences.

b. accounting values

In Gray's framework for accounting system development, optimism is a value of accounting standards that would most likely be found in _____. A. Japan B. Australia C. Mexico D. Brazil

b. australia

The concepts of professionalism, uniformity, conservatism, and secrecy are classified in Gray's framework for accounting system development as: A. accounting values. B. accounting systems. C. institutional consequences. D. cultural dimensions.

a. accounting values

What term is used to describe accounting standards that encourage risk-taking in financial reporting? A. Optimism B. Conservatism C. Professionalism D. Transparency

a. optimism

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. Relatively little disclosure because the public isn't a major factor B. A great deal of disclosure because it will be the only way for interested parties to learn about the company C. Complete openness of accounting records D. No disclosure at all

a. relatively little disclosure because the public isn't a major factor

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 overload. B. standards minimization. C. the optimal amount of accounting regulation. D. ideal accounting standards.

a. standards overload

According to the research of Christopher Nobes, the most relevant factor in determining the purpose of financial reporting is: A. the financing system of the country. B. religious differences across countries. C. the population of the country. D. the strength of the country's accounting profession.

a. the financing system of the country

What term is used to refer to a cultural aversion to ambiguous situations? A. Uncertainty avoidance B. Masculinity C. Power distance D. Individualism

a. uncertainty avoidance