Question 1

Hofstede's concept of collectivism implies that;&#10;A)People are loyal to their relatives and social group&#10;B)Worker cooperatives are common&#10;C)Family is more important than society&#10;D)People like to acquire (collect)material wealth

Accepted Answer

Hofstede's concept of collectivism suggests that people prioritize their social group (family, community, organization) over individual needs or desires. Loyalty to the group is considered important, and decisions are often made based on what is best for the group rather than the individual. Therefore, choice A is the best answer as it highlights the importance of loyalty to one's social group, which is a key aspect of collectivism.

Question 2

Which of the following is NOT classified as a Common Law country'&#10;A)England&#10;B)Wales&#10;C)Scotland&#10;D)Ireland

Accepted Answer

Scotland does not follow the Common Law system; instead, it has a unique legal system that combines elements of both civil and common law.

Question 3

The recording of deferred tax on the balance sheet is well established in which one of the following countries?&#10;A)Denmark&#10;B)Sweden&#10;C)Norway&#10;D)Germany

Accepted Answer

The recording of deferred tax on the balance sheet is well established in Denmark.

Question 4

A decrease in information asymmetry between shareholders and companies increases the cost of capital.

Accepted Answer

A decrease in information asymmetry means that shareholders have better access to information about the company, which reduces their perceived risk and the cost of capital.

Question 5

The use of another company as a performance yardstick is jeopardized by;&#10;A)language differences&#10;B)accounting flexibility&#10;C)currency differences&#10;D)different accounting periods

Accepted Answer

Accounting flexibility can lead to differences in how companies report their financial performance, making it difficult to use another company as a reliable performance yardstick. Language differences, currency differences, and different accounting periods can also create challenges, but accounting flexibility is the most significant factor in this case.

Question 6

In countries that are classified as Code Law countries the degree of enforcement of investor protection is much stricter.

Accepted Answer

Code Law countries have a legal system that is centered around a comprehensive set of laws, codes, and regulations, which includes strict enforcement of investor protection laws.

Question 7

In countries classified as Code Law countries 'the substance' dominates 'the legal form'.

Accepted Answer

In Code Law countries, the legal form (the written codes and laws) is more important than the substance (the interpretation or spirit behind the law).

Question 8

The difference in providers of finance is one of the key causes of international differences in financial reporting.

Accepted Answer

Different providers of finance have different information needs and thus, require different types of financial information. This results in differences in financial reporting practices across countries. For example, countries with a dominant bank-based financial system tend to focus more on detailed cash flow information, while those with a market-based system tend to prioritize earnings performance.

Question 9

In most countries with an active equity market the legal system is the common law system.

Accepted Answer

The common law system is predominant in countries with active equity markets such as the United States, the United Kingdom, Australia, and Canada. This legal system relies on judicial precedents and case law to guide decisions, as opposed to a civil law system which relies on statutes and codes.

Question 10

Which of the following is an 'accounting value' as defined by Gray (1988)&#10;A)Professionalism versus Adhocracy&#10;B)Rigidity versus Flexibility&#10;C)Pessimism versus Optimism&#10;D)Secrecy versus Transparency

Accepted Answer

According to Gray (1988), secrecy versus transparency is considered an accounting value because it reflects the degree of openness and disclosure in financial reporting practices.

Deck 2: International Accounting Differences