Question 1

IOSCO is

Accepted Answer

IOSCO stands for International Organization of Securities Commissions. It is an international organization that brings together securities market regulators from around the world to promote high standards of regulation and to cooperate in the oversight of international securities markets. It is not a part of the UN, a relic of the European customs union, or a group of accountants.

Question 2

According to the 7th Directive of the EU,

Accepted Answer

The 7th Directive of the EU requires worldwide consolidation, meaning that companies must consolidate both domestic and foreign subsidiaries.

Question 3

The International Accounting Standards Committee:

Accepted Answer

The statement "has a compliance problem" is true as the IASC is currently facing challenges with ensuring implementation and adherence to its standards by member countries. The other options are incorrect as the IASC does not have a standard for everything, is not primarily supported by the EU financing and does not exist to help corporations get higher stock prices.

Question 4

The IASC stated objectives are to
I. formulate and publish in the public interest accounting standards
II. work for the improvement and harmonization of regulations
III. try to raise stock prices

Accepted Answer

The IASC's stated objectives are to formulate and publish accounting standards in the public interest (I) and work on the improvement and harmonization of accounting regulations (II). There is no mention of trying to raise stock prices (III).

Question 5

Investors have problems with MNE financial statements because

Accepted Answer

Worldwide consolidations, which are necessary for understanding MNE financial statements, are not always practiced in all countries, leading to inconsistencies and difficulties in analysis for investors. The other options are not directly relevant to the problem of understanding MNE financial statements.

Question 6

According to the 4th Directive of the EU,

Accepted Answer

The 4th Directive of the EU requires companies to use a vertical format for the balance sheet, which includes current liabilities with current assets. This is to provide a clearer picture of a company's financial position. The directive does not require reporting of cost of goods sold or a separate line item for personnel expenses due to union influence.

Question 7

Trade unions do not want accounting information for interfirm comparisons, but for

Accepted Answer

Trade unions use accounting information primarily for policy formulation to negotiate better wages and working conditions for their members.

Question 8

All of the following are trade unions except

Accepted Answer

ETUC (European Trade Union Confederation), ICFTU (International Confederation of Free Trade Unions), and WCL (World Confederation of Labour) are all trade unions or labor unions, while IASC (International Accounting Standards Committee) is not a trade union but rather an organization that sets accounting standards.

Question 9

Which of the following is an example of a group involved in harmonization of accounting that represents the accounting profession?

Accepted Answer

The IASC (International Accounting Standards Committee) is an example of a group involved in harmonization of accounting that represents the accounting profession. The IASC was responsible for developing a single set of high-quality global accounting standards, which became known as International Financial Reporting Standards (IFRS).

Question 10

The International Accounting Standards Committee requires the following segment information:

Accepted Answer

The IASC requires segment information to include sales and profits by line of business. While geographic information may be provided, it is not mandatory and profits must be disclosed along with sales.

Question 11

According to the 4th Directive of the EU, the operational basis for the income statement means that

Accepted Answer

Cost of goods sold is a line item in the income statement.

Question 12

Following the issuance of several directives in the EU, including the 4th, 7th and 8th, it appears that

Accepted Answer

The directives mentioned indicate that mutual recognition of each other's accounting standards and practices is becoming the norm in the EU. This suggests a move towards increased flexibility rather than a set of standards that all countries would follow. There is no indication that new accounting regulations are imminent or that stock exchanges are losing their influence.

Question 13

A main information concern of trade unions is

Accepted Answer

Trade unions are primarily concerned with the interests of their members, which include wages, working conditions, and job security. Transfer pricing, inflation data, production quotas, and stock prices are not primary concerns of trade unions.

Question 14

According to the IASC's project on "Comparability of Financial Statements,"

Accepted Answer

The IASC's project aimed to reduce the number of alternative accounting treatments allowed under International Accounting Standards to enhance the comparability of financial statements across different countries.

Question 15

Trade unions want accounting information

Accepted Answer

Trade unions want accounting information for contract bargaining purposes to negotiate better salaries, working conditions, and benefits for their members. They use financial data to evaluate the company's profitability and financial health and can use this information to push for better deals for their members. Cost-volume profit analyses are more relevant to management decisions, and outsourcing does not require trade unions to access accounting information. While MNEs paying proper taxes is important, this is more relevant to tax authorities and regulators than trade unions.

Question 16

Analysis of MNE aggregate results requires knowledge of the component parts of the following except

Accepted Answer

Certification of the COFRI is not a relevant component in analyzing MNE aggregate results. The other options (profitability, degree of risk, potential for growth) are all important factors to consider in analyzing MNE aggregate results.

Question 17

Investors are concerned about

Accepted Answer

Investors are concerned about having up-to-date measurements of earnings, ensuring comparability of multinational enterprise (MNE) financial reports, and the informational content of such reports. All three factors contribute to investors' ability to make informed decisions about the allocation of their investment capital.

Quiz 7: International Accounting Standards and Global Convergence