Question 1

When analyzing foreign statements,all of the following are accurate positions of noncurrent liabilities listings except

Accepted Answer

The answer of When analyzing foreign statements,all of the following...

Question 2

All of the following statements are true regarding international legal systems except

Accepted Answer

In code law countries, there is less reliance on court interpretations than in common law countries. Code law systems are based on comprehensive legal codes, and the role of court decisions is generally to interpret these codes rather than to create law, as is more common in common law systems.

Question 3

What is the name of the formalized commitment of the IASB and the FASB to converge U.S.and international accounting standards?

Accepted Answer

The Norwalk Agreement is the formalized commitment of the IASB and the FASB to converge U.S. and international accounting standards. The Sarbanes-Oxley Act pertains to corporate governance and financial reporting requirements for U.S. public companies. The IFRS Foundation is responsible for the oversight and development of the International Financial Reporting Standards. The Conceptual Framework provides a foundation for developing accounting standards.

Question 4

Which of the following presents the proper ordering of assets,liabilities,and equities on the statement of financial position used by some countries that is different from the United States?

Accepted Answer

The answer of Which of the following presents the proper...

Question 5

Significant differences exist in terms on financial statements around the world.For example,another name for what we know as Contingent Liabilities in the United States is

Accepted Answer

Provisions for Other Risks is another term used in some countries to describe what is commonly known as Contingent Liabilities in the United States. Share Capital and Capital Reserves are not related to contingent liabilities, while Deferred Income refers to revenue received in advance for goods or services that have not been provided yet.

Question 6

The International Accounting Standards Committee was established in 1973 to develop worldwide standards.Which group replaced it in 2001?

Accepted Answer

The International Accounting Standards Committee (IASC) was replaced by the International Accounting Standards Board (IASB) in 2001, which continues to develop and publish International Financial Reporting Standards (IFRS). FASB is a US-based accounting standards organization and IIA is a professional association for internal auditors, neither of which replaced the IASC.

Question 7

On the reporting of liabilities where a range of values exists as a possible outcome,IFRS require which of the following points to be recorded as a provision,if the outcome is probable?

Accepted Answer

According to IFRS, the midpoint of the range should be recorded as a provision if the outcome is probable. This is because the midpoint reflects the best estimate of the potential liability, which is the amount that is most likely to occur. Choosing the low or high end of the range may result in an overestimation or underestimation of the liability, respectively. IFRS provides specific guidance for recording provisions based on the range of possible outcomes to ensure that financial statements accurately reflect the potential liability.

Question 8

All of the following are advantages available to companies if a single set of accounting standards were used except

Accepted Answer

The statement in option A is incorrect as switching to a single set of accounting standards can have an impact on accounting fee costs. The other options are advantages that companies can avail if a single set of accounting standards is used.

Question 9

Which of the following is a commonly cited disadvantage of having a new unified set of accounting standards?

Accepted Answer

A disadvantage of a principles-based system is that it allows for more interpretation, potentially leading to lawsuits if different parties interpret the standards differently.

Question 10

Which of the following is a true statement about the terms used on the balance sheet?

Accepted Answer

Neither IFRS nor U.S.GAAP require a standard set of terms on the balance sheet. However, there are some common terms used across different countries and accounting standards.

Question 11

During what year did the IASB and FASB reaffirm their commitment to achieving convergence of accounting standards in the United States?

Accepted Answer

In 2009, the IASB and FASB reaffirmed their commitment to achieving convergence of accounting standards in the United States.

Question 12

Significant differences exist in terms on financial statements around the world.For example,another name for what we know as Capital Stock in the United States is

Accepted Answer

Share Capital is the common term used in other countries, such as the United Kingdom, to refer to what is known as Capital Stock in the United States. Other options such as Capital Reserves, Provisions for Other Risks, and Deferred Income refer to different items on financial statements and are not equivalent to Capital Stock/Share Capital.

Question 13

Significant differences exist in terms on financial statements around the world.For example,another name for what we know as Additional Paid-In Capital in the United States is

Accepted Answer

In many countries outside of the United States, Additional Paid-In Capital is known as Capital Reserves.

Question 14

Which of the following inventory costing methods is prohibited under IFRS?

Accepted Answer

Under IFRS, LIFO (Last-in, First-out) method is prohibited for inventory costing. This is because LIFO assumes that the last items purchased are the first ones sold, which does not reflect the true flow of inventory in most cases. Instead, IFRS requires the use of either FIFO (First-in, First-out) or weighted average method for inventory costing. Perpetual inventory system, on the other hand, is a method of tracking inventory levels in real-time and is not a method of inventory costing itself.

Question 15

When comparing U.S.GAAP and IFRS,regarding the level of details in the standards and the level of disclosure required,which of the following is correct? 
\(\begin{array}{ll}\text { U.S. GAAP }&\text { IFRS }\\hline

Accepted Answer

U.S. GAAP is known for being more detailed in its accounting and reporting standards, whereas IFRS focuses on principles, leading to potentially less detail in the standards themselves but often requires more disclosure to ensure the financial statements provide a true and fair view.

Question 16

The benefits of a single set of accounting standards used around the world would include all of the following except

Accepted Answer

Adopting a single set of accounting standards around the world would not prevent competitors from acquiring each other. The other options are true benefits of using a single set of accounting standards.

Question 17

What is the name for the balance sheet under international accounting standards?

Accepted Answer

The balance sheet is referred to as the "statement of financial position" under International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS).

Question 18

All of the following are among the most important reasons why accounting standards differ around the world except

Accepted Answer

While differences in economic development, taxation, and inflation can all impact accounting standards, not all countries have code law (which is a civil law system that relies on written laws and codes rather than case law) as their legal system. Therefore, it cannot be considered as one of the important reasons why accounting standards differ around the world.

Question 19

The group with primary responsibility for development of a single set of accounting standards around the world is the

Accepted Answer

The International Accounting Standards Board (IASB) is the organization primarily responsible for the development of a single set of high-quality, understandable, enforceable, and globally accepted International Financial Reporting Standards (IFRS).

Question 20

Which organization would have the ultimate responsibility of deciding if the advantages outweigh the disadvantages in the adoption of IFRS accounting standards in the United States?

Accepted Answer

The Securities and Exchange Commission (SEC) is responsible for regulating and overseeing the financial reporting of public companies in the United States. Therefore, the adoption of IFRS accounting standards would fall under its purview. The SEC would ultimately have the responsibility of deciding whether the advantages of adopting IFRS outweigh the disadvantages. While other organizations, such as the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), may provide input and guidance on this decision, it ultimately falls to the SEC to make the final determination. The American Institute of Certified Public Accountants (AICPA) is a professional organization for accountants that does not have regulatory authority.

Quiz 14: International Financial Reporting Standards