Question 1

Japan has a greater number of differences than the U.S.between the amount of income reported to stockholders and that reported to the taxing authorities.

Accepted Answer

The answer of Japan has a greater number of differences...

Question 2

No single explanation can be given for the divergence of accounting standards.

Accepted Answer

The divergence of accounting standards is influenced by various factors such as legal and cultural differences, economic developments, and the varying needs of different stakeholders.

Question 3

The state of economic development can affect accounting standards.

Accepted Answer

The level of economic development can affect the accounting standards followed in a country. In less developed economies, accounting standards may be less stringent or less effectively enforced, while more developed economies may have more sophisticated and complex accounting standards. Additionally, cultural and legal factors in a country can also impact its accounting standards.

Question 4

U.S.GAAP requires companies to present a balance sheet with classifications for current and long-term liabilities,while IFRS does not.

Accepted Answer

The answer of U.S.GAAP requires companies to present a balance...

Question 5

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

Accepted Answer

Neither IFRS nor U.S.GAAP requires a standard set of terms on the balance sheet. While there are generally accepted accounting principles that guide the preparation of financial statements, the specific terminology used on the balance sheet may vary across different countries and even across different companies within the same country. It is important for financial statement users to understand the specific terms used on a particular balance sheet in order to properly analyze and interpret the information presented.

Question 6

A single set of accounting standards could help a U.S.company save time and money in the acquisition of a German company.

Accepted Answer

If both companies use the same accounting standards, there would be less need for extensive financial analysis and translation, making the acquisition process more efficient and cost-effective.

Question 7

Both U.S.GAAP and IFRS classify gains and losses that are both unusual in nature and infrequent in occurrence as extraordinary and present them in a separate section of the income statement.

Accepted Answer

Under both U.S.GAAP and IFRS, gains and losses that are both unusual in nature and infrequent in occurrence are not classified as extraordinary items and are reported in the "Other Income (Expense)" section of the income statement. The concept of extraordinary items was eliminated under both frameworks in 2015.

Question 8

Companies in Mexico must begin using IFRS by 2012.

Accepted Answer

The Mexican government mandated the adoption of IFRS for all listed companies and those with significant public accountability by 2012.

Question 9

Which of the following presents the proper ordering of assets,liabilties and equities on the statement of financial position used by some countries that is different from the U.S.?

Accepted Answer

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

Question 10

The U.S.accounting standards are more principle-based than IFRS.

Accepted Answer

The statement is false. The U.S. accounting standards are considered more rule-based than IFRS, which is more principle-based.

Question 11

Essentially,the entire statement of financial position is inverted compared to what is commonly seen in the United States.

Accepted Answer

In the United States, the statement of financial position (also known as the balance sheet) is typically presented with assets listed first, followed by liabilities and equity. However, in some other countries (such as the United Kingdom), the statement of financial position may be presented with liabilities listed first, followed by assets and equity. This is known as an inverted balance sheet.

Question 12

Under IFRS,if inventory is written down to a new lower market value,this cannot be reversed in later periods.

Accepted Answer

Under IFRS, if inventory is written down to a new lower market value, it can be reversed in later periods if the market value increases again, provided it is not higher than the original cost of inventory.

Question 13

Ultimately,it will be the responsibility of the FASB in the U.S.to decide if the advantages of IFRS's outweigh the disadvantages.

Accepted Answer

The answer of Ultimately,it will be the responsibility of the...

Question 14

There is a standard format in various countries for the statement of financial position.

Accepted Answer

The answer of There is a standard format in various...

Question 15

In countries,like Japan and much of Europe,fewer differences between the amount of income reported to stockholders and that reported to the taxing authorities exist than in the U.S.

Accepted Answer

This statement is true. In countries like Japan and much of Europe, there are fewer differences between the amount of income reported to stockholders and that reported to the taxing authorities than in the U.S. This is due to stricter regulations and more stringent accounting standards in those countries.

Question 16

Regarding the valuation of operating assets,IFRS allows companies to use fair value.

Accepted Answer

Under IFRS, companies are allowed to value their operating assets using either historical cost or fair value, depending on their accounting policies. Fair value is often used to reflect changes in market values or when an asset has a significant change in value over time.

Question 17

While U.S.GAAP requires a complete set of financial statements,including a balance sheet,statement of stockholders' equity,income statement,and statement of cash flows,IFRS does not.

Accepted Answer

Both U.S.GAAP and IFRS require a complete set of financial statements, which includes a balance sheet, statement of comprehensive income (which replaces the income statement and statement of stockholders' equity), statement of changes in equity, and statement of cash flows.

Question 18

According to the text,in economies like those that made up the former Soviet Union,accounting standards are relatively less complex due to the fact that they are just beginning to be developed.

Accepted Answer

The text states that in economies like those of the former Soviet Union, accounting standards are less complex because they are just beginning to be developed.

Question 19

Both U.S.GAAP and IFRS apply the lower-of-cost-or market rule in a similar manner to inventory.

Accepted Answer

Under U.S. GAAP, the lower-of-cost-or-market rule is applied to inventory, where "market" can mean replacement cost, net realizable value, or net realizable value less a normal profit margin. However, IFRS uses the lower of cost and net realizable value, without the option to use replacement cost as a measure.

Question 20

IFRS is now mandatory in all member states of the economic and political organization known as the European Union.

Accepted Answer

IFRS (International Financial Reporting Standards) is mandatory for the consolidated financial statements of companies whose securities are listed on a regulated market in the European Union (EU). Therefore, since all member states of the EU have regulated markets, IFRS is now mandatory in all of them.

Quiz 14: International Financial Reporting Standards