Chapter 3

Ace your homework & exams now with Quizwiz!

The Framework acknowledges that several different measurement bases may be used to measure assets. These bases include all of the following, except ______.

future value

The aim of the Regulation 1606/2002 of the European Union was to ______.

improve the quality of corporate financial reporting and to promote the development of a single capital market in Europe

The 2008 financial crisis had an impact on the convergence process of U.S. GAAP and IFRS. One of the debates on such fundamental issues was how to report information about financial _____.

instruments

How often does the review of the IASC Foundation's constitution take place?

Every 5 years

The International Accounting Standard (IAS) that provides guidelines for the preparation and presentation of financial statements is ____.

IAS 1

Which IFRS provides guidelines for First-time adoption of IFRS?

IFRS 1

The major concerns in achieving IFRS convergence include ______.

IFRS language translation difficulties

Why would someone argue that comparability of financial statements worldwide would be necessary for the globalization of capital markets?

Because financial statement comparability would make it easier for investors to evaluate potential investments in foreign securities

During the 1970s and 1980s, why were the UN and the OECD concerned that the IASC lacked legitimacy?

Because the IASC was created by the private sector with its self-interests

When did the Trustees vote to revise the constitution for changes resulting from the first phase of the review, including formation of the Monitoring Board?

January 2009

What does "IAS-lite" mean?

The use of IAS with exceptions

The objectives of the IFRS Advisory Council include ______.

advising the IASB on its priorities and informing the IASB of the views of the Council members on its major standard-setting projects

The International Organization of Securities and Commissions (IOSCO) provides assistance to ensure the integrity of the markets by ______.

an application of the standards and by effective enforcement

One of the ways in which a country might adopt IFRS is to require or permit stock exchange-listed companies to use IFRS in preparing____ financial statements, and nonlisted companies use national GAAP.

consolidated

Several different measurement bases may be used to measure assets, including historical cost, _____ cost, realizable value, and present value. Listen to the complete question

current

IAS 1 requires companies to classify assets and liabilities as ______.

current and noncurrent on the balance sheet

The 2008 financial crisis affected the convergence process of U.S. GAAP and IFRS by initiating debates on how to report information about financial instruments, and the appropriateness of _____ _____.

fair values

Principles-based standards focus on establishing____ principles

general

The International Federation of Accountants (IFAC) is now a global organization of ______.

over a hundred countries all over the world

an application of the standards and by effective enforcement

over a hundred countries all over the world 123 countries all over the world, not just European countries

The objective of the Framework for the Preparation and Presentation of Financial Statements deals with all of the followings, except the ______.

quantity of the items included in the financial statements

The greatest obstacle to international convergence of financial reporting standards is ______.

the magnitude of the differences that exist between countries

When was the International Accounting Standards Board (IASB) created?

2001

How many trustees does the IFRS Foundation consist of?

22

Which international organization has NOT contributed to the harmonization efforts at the global level?

All of the three international organizations (IOSCO, IFAC, IFAD) have contributed.

With regard to the composition of the trustees, what does the constitution require?

An appropriate balance of professional backgrounds

According to IAS 1 requirements, which balance sheet items are classified as current and noncurrent?

Assets and liabilities

How many appointed members does the IFRS Interpretations Committee have?

14

How many years did the initial phase of the IASC's harmonization efforts cover?

15

How many members does the International Accounting Standards Board consist of?

16

The specific functions of the Monitoring Board do not include ______.

raising funds

Support for a principles-based approach has come from both current and former U.S. _____.

regulators

As a result of the announcement of the AICPA made in 2008 to allow private companies to adopt IFRS ahead of public companies, U.S. based private companies that were subsidiaries of foreign companies using IFRS ______.

were allowed to adopt IFRS in their audited financial statements

When did the Trustees vote to revise the constitution for changes resulting from the second phase of the review, including the name change from IASC Foundation to IFRS Foundation?

January 2010

When did the European Union issue a directive requiring all listed companies of member states to prepare consolidated financial statement?

July 2002

On which basis are the International Accounting Standards Board members selected?

Professional competence and practical experience

Support for a principles-based approach has come from both current and former U.S.

Regulators

When did the Norwalk Agreement take place?

September 2002

Which of the following statements is correct?

The European Union (EU) directives reduced the differences in financial statements but did not lead to complete comparability across member nations.

What is the independent foundation that the IASB is organized under called?

The IFRS Foundation

Which of the following is NOT a challenge related to the international convergence of financial reporting standards?

The Norwalk Agreement

The European Union issued two directives aimed at harmonizing accounting. Which directive requires companies to prepare consolidated financial statements and outlines procedures for their preparation?

The Seventh Directive

In 2005, what did the IASC Foundation's Trustees change the criterion for IASB membership from "technical expertise" into?

"Professional competence and practical experience"

What are the two ways of accounting harmonization?

(1) Harmonization of accounting regulations or standards and (2) harmonization of accounting practices

The International Accounting Standards Committee (IASC) was established in the year of ______.

1973

When did the International Organization of Securities Commissions (IOSCO) become a member of the IASC's Consultative Group?

1987

IASC's second phase covered which time period?

1989-1993

In response to the use of "IAS-lite," when was IAS 1 revised?

1997

Since when did the Form 20-F filed by foreign issuers using IFRS with the SEC no longer include a reconciliation to U.S. GAAP?

2007

When did the FASB issue the SFAS No. 159, the Fair Value Option for Financial Assets and Financial Liabilities?

2007

When did the IASB publish a revised IAS 1?

2007

When did the SEC decide to remove the requirement that foreign private issuers using IFRS reconcile their financial statements to U.S. GAAP?

2007

When did the AICPA announce that private companies were allowed to adopt IFRS ahead of publicly traded companies?

2008

How many generic International Accounting Standards (IAS) did the IASC issue in the initial phase?

26

How long is the term of the members of the IFRS Interpretations Committee?

3 years

How many members of the International Accounting Standards Board are from Europe?

4

How many members of the International Accounting Standards Board are from North America?

4

How many International Accounting Standards (IAS) have been issued by the International Accounting Standards Committee (IASC)?

41

Which approach does the IASB use to develop accounting standards?

A principles-based approach

In 1993-1994, standard-setters from the United Kingdom, the United States, Canada, and Australia began meeting quarterly to discuss issues related to international standard-setting. The group became to be known as the G4+1. What did the 1 refer to?

A representative, usually the secretary-general of the IASC, who attended as an observer

What was the ultimate goal of convergence of the FASB and IFRS?

A single set of high-quality, international accounting standards used worldwide for both domestic and cross-border financial reporting

The IASC was established by an agreement of the leading professional accounting bodies in the following 10 countries: ______.

Australia, Canada, France, Germany, Ireland, Japan, Mexico, the Netherlands, the United Kingdom, and the United States

Initially, which country or countries among the 14 countries represented on IOSCO's Technical Committee did not allow foreign companies to use IAS without reconciliation to local GAAP for listing purposes?

Canada and the United States

Which component is not included in the structure of the International Accounting Standards Board (IASB)?

FASB

True or false: International Accounting Standard (IAS) 11, Construction Contracts, as originally written in 1979, allowed companies to use ONLY the percentage-of-completion method in accounting for long-term construction contracts.

False: IAS 11 originally written in 1979, allowed companies to choose between the percentage-of-completion method and the completed contract method in accounting for long-term construction contracts

True or false: Other factors, such as similarities in the quality of audits, enforcement mechanisms, culture, legal requirements, and socioeconomic and political systems, may lead to noncomparable accounting numbers.

False: It is the differences, not the similarities, that may lead to noncomparable accounting numbers

The international organization that aims to ensure a better regulation of the market on both the domestic and international levels, and provides assistance to ensure the integrity of the markets is the ______.

IOSCO

Which of the following does NOT show U.S. support for a principles-based approach?

In Germany in February 2002, the SEC chairman expressed preference for a principles-based set of accounting standards.

Which organization(s) was (were) not in the working group to create the International Forum on Accountancy Development (IFAD)?

None of the answers are correct: Both the UNCTAD and OECD were in the working group

At a meeting in Norwalk, Connecticut, the FASB and the IASB pledged to use their best efforts to make their existing financial reporting standards fully compatible as soon as is practicable, and to coordinate their work program to ensure that once achieved, compatibility will be maintained. What was this agreement called?

Norwalk

When did the International Accounting Standards Board (IASB) take over from the International Accounting Standards Committee (IASC)?

On April 1, 2001

How long did the process of restructuring the IASC into IASB take?

Over 5 years

What is the likely future of the IASB/FASB convergence?

The convergence is likely to remain an elusive dream.

The European Union issued two directives aimed at harmonizing accounting. Which directive deals with valuation rules, disclosure requirements, and the format of the financial statements?

The fourth directive

Which is NOT a responsibility of the IFRS Interpretations Committee?

To approve and oversee Trustees

What is the primary objective of IFRS-based financial statements?

To provide information useful for decision making

True or false: The IFRS Advisory Council provides a forum for participation by organizations and individuals with an interest in international financial reporting, having diverse geographical and functional backgrounds.

True Reason: The IFRS Advisory Council does provide such a forum.

True or false: Initially, the United States did not allow foreign companies to use IAS without reconciliation to local GAAP for listing purposes.

True: The United States did not allow companies to use IAS without reconciliation to local GAAP for listing purposes.

Choose an international organization that has been involved in harmonization efforts worldwide.

United Nations

Complete the following statement: "Harmonization of accounting regulations or standards is also known as formal or____ _____ harmonization, and harmonization of accounting practices is also known as material or _________ _________ harmonization.

de jure, de facto

The primary objective of IFRS-based financial statements is to provide information useful for____ _____

decision making

The principal responsibilities of the IASB include ______.

developing and issuing International Financial Reporting Standards and Exposure Drafts and approving Interpretations

One of the ways that a country might adopt IFRS is by requiring or permitting IFRS to be used by all of the following, except ______.

domestic companies listing on domestic stock exchanges and using national GAAP

Two significant activities took place from 1989 to 1993, which can be described as the IASC's second phase. The first was the 1989 publication of the Framework for the Preparation of Financial Statements. The second activity was the Comparability of Financial Statements Project, the purpose of which was "to ______(accept/eliminate) most of the choices of accounting treatment currently permitted under International Accounting Standards."

eliminate

Different concepts of capital maintenance described by the Framework include ______.

financial capital maintenance versus physical capital maintenance

Complete the following statement: "Cross-listing of securities for companies would allow companies to gain access to ______ expensive capital in other countries."

less

The objective of the Framework for the Preparation and Presentation of Financial Statements deals with the definition, recognition, and____ of the financial statements elements.

measurement

Different concepts of capital maintenance lead to different bases for____ assets

measuring

The FASB's mission is to improve U.S. financial accounting standards for the benefit of present and _____ investors, lenders, donors, and other creditors.

potential

The Monitoring Board comprises of the relevant leaders of ______.

the European Commission, the Japanese Financial Services Agency, the U.S. Securities and Exchange Commission, the Emerging Markets Committee of IOSCO, and the Technical Committee of IOSCO

The European Union issued two directives aimed at harmonizing accounting. These two directives are ______.

the Fourth Directive and the Seventh Directive

The major concerns in achieving IFRS convergence include all of the following, except ______.

the absence of the IFRS Interpretations Committee

One of the obstacles to convergence of financial reporting standards is ______.

the enormous cost to eliminate differences that exist between countries

The factors that may lead to noncomparable accounting numbers despite similar accounting standards are differences in ______.

the quality of audits, enforcement mechanisms, culture, legal requirements, and socioeconomic and political systems

One limitation of the European Union (EU) directives was that ______.

they did not lead to complete comparability across member nations

The mission of the International Forum on Accountancy Development (IFAD) was ______.

to improve market security and transparency and financial stability on a global basis

The mission of the International Federation of Accountants (IFAC) is ______.

to serve the public interest and to strengthen the accountancy profession and contribute to the development of economies worldwide

If there is no conceptual framework, accounting standards may be inconsistent and, according to Gresham's law, bad accounting practices will____ over good practices.

triumph

The four characteristics that make financial statement information useful are ______.

understandability, relevance, reliability, and comparability

Select the best answer to complete the following statement: "With no conceptual framework, accounting standards are developed ______."

unsystematically


Related study sets

PCAT - General Chemistry Problems [XI-XII]

View Set

Small Business Management Exam Review 1

View Set

Writing and graphing Equations in Two Variables

View Set

Past Perfect and Past Perfect Continuous

View Set

Cultural Anthropology (1), Cultural Anthropology Midterm (1), Chapter 2 - Cultural Anthropology (1), ALL Quizes Anthropology (1) large

View Set

Finance Exam 2 Connect questions

View Set

Ch 4 Respiratory disorders/pediatric success nclex ?s/ex2

View Set

chapter 12 Sexual Variants, Abuse, and Dysfunctions

View Set

Module 07- sensation and the senses

View Set