Question 1

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

Accepted Answer

One of the commonly cited disadvantages of having a new unified set of accounting standards is that corporations may find themselves more susceptible to lawsuits due to the principles-based system, where judgments may vary from one jurisdiction to another. This could result in costly legal battles for companies. Option A may not necessarily be the case, as a unified set of accounting standards could actually make it easier to acquire foreign companies by reducing the complexity of different accounting systems. Option C is incorrect, as a unified set of accounting standards could actually reduce the time and cost required to access capital markets abroad. Option D is not a relevant disadvantage of having a new unified set of accounting standards.

Question 2

When analyzing foreign statements,all of the following are accurate positions of non-current liabilities listings except:

Accepted Answer

A

Question 3

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

Accepted Answer

In the U.S., Contingent Liabilities are recognized as a separate category on financial statements. However, in other parts of the world, such as Europe, they may be referred to as "Provisions for Other Risks." Share Capital (A) refers to the amount of capital raised through the sale of stock, Capital Reserves (B) refers to profits retained by a company, and Deferred Income (D) refers to income received in advance that has not yet been earned.

Question 4

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

Accepted Answer

According to IFRS, if a range of values exists for a possible outcome, a provision should be recorded at the midpoint of the range if the outcome is probable. This is also known as the best estimate of the liability. Recording the low end or high end of the range would not represent the most accurate estimate of the liability. IFRS provides specific guidance on the recognition and measurement of provisions in IAS 37.

Question 5

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? U.S.GAAP IFRS

Accepted Answer

Under U.S. GAAP, there is typically more emphasis on detailed guidance and specific rules, whereas IFRS tends to have more principle-based standards with less specific guidance. However, when it comes to disclosure requirements, IFRS tends to require more extensive and detailed disclosures than U.S. GAAP. Therefore, the correct answer is B – U.S. GAAP has more detail but requires less disclosure, whereas IFRS has less detail but requires more disclosure.

Question 6

All of the following statements are true about inflation except:

Accepted Answer

The answer of All of the following statements are true...

Question 7

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

Accepted Answer

A single set of accounting standards would not prevent competitors from acquiring each other, as this is determined by antitrust laws and regulations.

Question 8

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 U.S.is:

Accepted Answer

In many countries, Additional Paid-In Capital is known as Capital Reserves. Share Capital refers to the amount of money invested by shareholders, Provisions for Other Risks is a liability account set aside for potential losses, and Deferred Income is revenue that has been received but not yet earned.

Question 9

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

Accepted Answer

A single set of worldwide accounting standards would have an impact on accounting fee costs as it would decrease the need for companies to prepare multiple sets of financial statements to comply with different accounting standards. Therefore, the correct answer is A as it is not an advantage that would be available to companies if a single set of accounting standards were used.

Question 10

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

Accepted Answer

Share Capital is the term commonly used in other parts of the world to refer to what is known as Capital Stock in the U.S. Capital Reserves refer to profits that are reserved for future use, Provisions for other Risks are funds set aside to cover potential losses, and Deferred Income is revenue that is recognized at a later date.

Question 11

During what year did the IASB and FASB reaffirm their commitment to achieving convergence of accounting standards in the U.S.?

Accepted Answer

The answer of During what year did the IASB and...

Question 12

Which of the following countries do not use a common law system?

Accepted Answer

Germany does not use a common law system; instead, it uses a civil law system based on Roman law. The United States and the United Kingdom use common law systems.

Question 13

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

Accepted Answer

While differences in the state of economic development, taxation, and inflation can all impact accounting standards, code law is not a universal factor that differs across all countries. Common law systems, for example, rely on judicial decisions and precedents rather than statutory law.

Question 14

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 was replaced by the International Accounting Standards Board (IASB) in 2001, which continues to develop and promote International Financial Reporting Standards (IFRS) for worldwide use. Option A, FASB, refers to the Financial Accounting Standards Board, which is the primary standard-setting body for accounting and financial reporting in the United States. Option D, IIA, refers to the Institute of Internal Auditors, which is a professional association for internal auditors.

Question 15

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 16

Which organization would have the ultimate responsibility of deciding if the advantages outweigh the disadvantages in the adoption of IFRS accounting standards in the U.S.?

Accepted Answer

The SEC (Securities and Exchange Commission) would have the ultimate responsibility of deciding if the advantages outweigh the disadvantages in the adoption of IFRS (International Financial Reporting Standards) accounting standards in the U.S., as it is an independent agency of the federal government responsible for regulating the securities industry, including financial reporting requirements for public companies. While the FASB (Financial Accounting Standards Board), IASB (International Accounting Standards Board), and AICPA (American Institute of Certified Public Accountants) are all involved in the development and implementation of accounting standards, the SEC has final authority on whether to adopt new standards for public companies under its jurisdiction.

Question 17

Which of the following statements is true regarding common law?

Accepted Answer

Common law system has its roots in the United Kingdom. The United States, Australia, Canada, and other countries follow the common law system, which relies heavily on judicial decisions and precedents. It does not necessarily mean that there are fewer statutes or less reliance on interpretation by courts in common law countries. Additionally, the statement about FASB's accounting standards is inaccurate as it does not relate to common law.

Question 18

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

Accepted Answer

IFRS prohibits the use of LIFO (last in, first out) inventory costing method.

Question 19

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 International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) to converge U.S. and international accounting standards. The Sarbanes-Oxley Act is a U.S. law related to corporate governance and financial reporting, the IFRS Foundation is the organization responsible for the development and promotion of International Financial Reporting Standards, and the Conceptual Framework is a document that outlines the fundamental concepts and principles underlying financial reporting.

Question 20

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

Accepted Answer

The balance sheet under international accounting standards is called the "Statement of Financial Position." Option A is incorrect as it only refers to certain portions of a balance sheet. Option C is not a commonly used term for a balance sheet. Option D is not a recognized term for a balance sheet.

Quiz 14: International Financial Reporting Standards