Deck 4: International Accounting

Question 1

According to Gray (1988),the higher a country ranks in terms of uncertainty avoidance and power distance,and the lower it ranks in terms of individualism and masculinity,the more likely it is to rank highly in terms of:

A) Optimism
B) Professionalism
C) Uniformity
D) Secrecy

Answer 1

D

Question 2

According to Violet (1983),accounting cannot be considered to be culture-free.Which of the following does not explain what Violet means by this?

A) Accounting is a social institution and, as such, has integrated certain cultural customs and elements within it.
B) Accounting is an independent component of culture.
C) Accounting is a product of culture, and contributes to the evolution of the culture which employs it.
D) Since accounting is culturally determined, other cultural customs, beliefs and institutions influence it.

Answer 2

B

Question 3

Which of the following is an influence on the nature of accounting practice in different countries?

A) Accidents in history, such as stock-market crashes
B) The strength of the accounting profession
C) Religion
D) All of the given options are correct.

Answer 3

D

Question 4

What is the cause of differences between the reporting results by the same company,in two different countries,for the same set of transactions and period?

A) Different underlying economic systems
B) Different accounting and reporting standards
C) Different accounting policy choice
D) All of the given options are correct.

Question 5

Which of the following of Gray's accounting sub-culture values describes a preference for substance over legal form regulation?

A) Professionalism versus statutory control
B) Uniformity versus flexibility
C) Conservatism versus optimism
D) Secrecy versus transparency

Question 6

The type of business ownership and financing system,and the taxation system,influence the nature of accounting practice in different countries.Which of the following describes the institutional influence more conducive to the increasing scale of globalised business and development of international accounting standards?

A) Outsider systems, where finance is mainly provided by external shareholders, and where the tax system is separate from the accounting system
B) Insider systems, where finance is mainly provided by family owners, banks and government, and the tax system dominates the accounting system
C) Outsider systems, where finance is mainly provided by family owners, banks and government, and the tax system is separate from the accounting system
D) Insider systems, where finance is mainly provided by external shareholders, and where the tax system dominates the accounting system

Question 7

Which of the following is true of Hofstede's (1980)theory?

A) The theory was developed as part of the cross-cultural psychology literature, and therefore was not directly concerned with accounting.
B) It detected four structural elements of culture which strongly affect known behaviour in work situations in organisations and institutions.
C) It derived from data collected from a multinational corporation located in more than 50 countries.
D) All of the given options are correct.

Question 8

Hofstede (1980)defined culture as:

A) An expression of norms, values and customs which reflect typical behavioural aspects
B) A system of individual values, customs and beliefs
C) The collective programming of the mind, which distinguishes the members of one human group from another
D) A system of societal or collectively-held values

Question 9

According to Gray (1988),the higher a country ranks in terms of uncertainty avoidance and power distance,and the lower it ranks in individualism,the more likely it is to rank highly in terms of:

A) Conservatism
B) Professionalism
C) Uniformity
D) Flexibility

Question 10

What is the major difference between Islamic religion and Western accounting practices which would make convergence of accounting standards difficult to achieve in Islamic countries?

A) The Islamic concept that stewardship is to God not the individual.
B) Islam prevents debt financing and the payment of interest.
C) Fundamental business ethics flow automatically from religious practices rather than from the codes of professional associations.
D) The Islamic religion influences how people do business and make decisions.

Question 11

Which of the following does not constitute one of Gray's accounting values in the accounting sub-culture,which he identified after closely considering Hofstede's societal values?

A) Secrecy versus transparency
B) Uniformity versus flexibility
C) Conservatism versus optimism
D) Individualism versus collectivism

Question 12

Which of the following cultural characteristics is not consistent with communities that prefer information disclosures to be kept to a minimum?

A) Collective, rather than an individualistic approach
B) High preference for uncertainty avoidance
C) Low power distance
D) All of the given options are correct.

Question 13

Which of the following is not a characteristic of the Continental European model of financial accounting and its regulation?

A) It has been strongly influenced by government and the banking sector.
B) It relies on qualitative requirements, such as 'true and fair', rather than accounting rules.
C) There is a strong association between accounting methods and the tax rules in place.
D) Information tends to be of the nature that protects creditors rather than investors.

Question 14

According to Gray (1988),the higher a country ranks in terms of individualism and the lower it ranks in terms of uncertainty avoidance and power distance,the more likely it is to rank highly in terms of:

A) Optimism
B) Professionalism
C) Uniformity
D) Transparency

Question 15

According to Nobes (1998),many of the factors that have been suggested as reasons for differences in accounting methods in different countries are inter-related.He divided these into two broad categories.What is one of these broad categories?

A) Cultural factors
B) Religious influences
C) The political system in place
D) The tax system in place

Question 16

Which of the following of Hofstede's societal value dimensions is associated with societies that maintain a more relaxed atmosphere,in which practice counts more than principles and deviance is more easily tolerated?

A) Weak uncertainty avoidance
B) Collectivism
C) Small power distance
D) Femininity

Question 17

Which researcher argued that the value systems of accountants are derived from,and related to,societal values,and that these social values are also held by accountants at a sub-culture level,and therefore will impact on the development of national accounting systems over time?

A) Hofstede (1980)
B) Gray (1988)
C) Mueller (1968)
D) Perera (1989)

Question 18

Which of the following of Hofstede's societal value dimensions addresses the dimension of how a society handles inequities among people when they occur?

A) Large versus small power distance
B) Individualism versus collectivism
C) Strong versus weak uncertainty avoidance
D) Masculinity versus femininity

Question 19

Which of the following does not equate with Gray's hypothesised linkages between accounting values and accounting practice?

A) The higher the degree of optimism, as opposed to conservatism, the stronger the ties with traditional measurement practice.
B) The higher the degree of uniformity, the lower the extent of professional judgment and the stronger the level of enforcement in applying rules and procedures.
C) The higher the degree of secrecy preferred, the lower the amount of disclosure.
D) The higher the degree of professionalism, the greater the degree of self-regulation and the lower the need for government intervention.

Question 20

Which of the following is not a characteristic of the Anglo-American model of financial accounting and its regulation?

A) It has been strongly influenced by professional accounting bodies rather than government
B) It emphasises the importance of capital markets as the main source of equity and debt
C) Regulation tends to be totally rule-based rather than requiring professional judgement
D) It emphasises consideration of substance over legal form

Question 21

According to Zarzeski (1996):

A) Entities located in countries classified as relatively more Individualistic and Masculine and relatively lower in terms of Uncertainty Avoidance provide greater levels of disclosure.
B) Entities with a relatively higher international profile tend to be more secretive than other entities.
C) Entities from continental European countries, such as France and Germany, which have historically tended to rely more heavily on debt financing than, say, Anglo-American companies, have higher levels of disclosure than Anglo-American companies.
D) Local enterprises are less likely to disclose information commensurate with the secrecy of their culture than are international enterprises.

Question 22

Which of the following is not considered to be an obstacle in the standardisation of international accounting?

A) International cultural and institutional differences
B) The economic implications of adopting a 'new' set of accounting standards
C) IASs and IFRSs are strongly Anglo-American influenced
D) None of the given options are correct.

Question 23

Australia is classified as a masculine society.This means that:

A) Emotions are not shown much in Australia; people are fairly relaxed and not averse to taking risks.
B) Australians are proud of their successes and achievements in life, and the country offers a basis for hiring and promotion decisions in the workplace
C) Both managers and employees expect to be consulted, and information is shared frequently.
D) In the business world, employees are expected to be self-reliant and to display initiative.

Question 24

The reason accounting rules are different in various countries is because of underlying differences in:

A) Culture
B) Legal systems
C) Financing systems
D) All of the given options are correct.

Question 25

The decision that Australia would adopt international accounting standards issued by the IASB was made by:

A) The Australian Accounting Standards Board
B) The Federal Government Treasurer
C) The Financial Reporting Council
D) The International Accounting Standards Board

Question 26

From 2005,Australia has adopted the IASB standards for:

A) All the reporting entities
B) Multinational enterprises only
C) All the entities listed on the stock markets
D) All entities that prepare consolidated financial statements

Question 27

Which of the following is not necessarily a benefit of harmonisation and convergence?

A) Increased relevance, functionality and appropriateness for all countries
B) Improved understanding and interpretation of financial reports by users in different countries
C) Increased comparability and consistency
D) Lower preparation costs for companies that have to produce different financial reports in different countries

Question 28

From a practical standpoint,what is the goal of accounting standards harmonisation or convergence?

A) Creating one set of standards used throughout the world
B) Reducing the conflict among national accounting standards
C) Producing accounting standards that are unique for each country
D) Forcing compliance with IASB regulations

Question 29

Which of the following is an obstacle that is not unique to international harmonisation of accounting standards?

A) Standards may be opposed due to their negative economic consequences on individuals or groups
B) Standards may lack relevance to the recipients that they are imposed upon
C) Differences of opinion as to who should have the authority and responsibility of setting accounting standards
D) All of the given options are correct.

Question 30

Which of the following is not an objective of the IASB?

A) To develop, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that require high quality, transparent and comparable information in financial statements and other financial reporting to help participants in the world's capital markets and other users to make economic decisions.
B) To promote the use and rigorous application of the IASB standards.
C) To take account of, as appropriate, the special needs of small and medium-sized entities and emerging economies.
D) To provide financial support to countries adopting the IASB standards.

Question 31

The process of adopting international accounting standards in Australia did not include:

A) An initial period of harmonisation where AASB standards were made to be compatible with the IAS's, but with some divergence allowed where appropriate
B) A Corporate Law and Economic Reform Program (CLERP) Report, in 1997, outlining the rationale and benefits for Australia of adopting international accounting standards
C) A decision by the FRC in 2002 that Australia would adopt accounting standards issued by the IASNB, and no divergence was to be acceptable
D) Opposition from the Australian Stock Exchange

Question 32

Which of the following is not true for the International Accounting Standards and the International Financial Reporting Standards?

A) They are based on the legalistic approach.
B) They provide choices in the recognition and measurement of various accounting transactions.
C) They incorporate 'uncertainty expressions', such as 'probable', 'significant influence', 'control' and 'substantial'.
D) They are based on the concept of presenting a 'true and fair view' of a company's financial reports, where professional accountants are given the right to use their judgment to accomplish this goal.

Question 33

Assume that a society is comfortable with ambiguity and the people are adaptable and entrepreneurial.Truth may be relative,though in the immediate social circles there is concern for Truth with a capital T,and rules (but not necessarily laws)abound.Nonetheless,adherence to laws and rules may be flexible to suit the situation and pragmatism is a fact of life.This description shows that this society has a:

A) Weak Uncertainty Avoidance society
B) Strong Uncertainty Avoidance society
C) Large Power Distance society
D) Small Power Distance Society