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Introduction to Financial Accounting International Edition 8e Curtis L Norton Gary A Porter
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Introduction to Financial Accounting International Edition 8e Curtis L Norton Gary A Porter
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,Appendix A: International Financial Reporting StandardsMULTIPLE CHOICE
1. All of the following statements are true about inflation except:
a. The U.S. and Germany adjust their financial statements for inflation.
b. In recent years, inflation has been more rampant in Latin America and South America than
the rest of the world.
c. The FASB developed rules for companies in the United States to use to adjust for
inflation.
d. U.S. companies no longer present financial information adjusted for the effects of
inflation.
ANS: A PTS: 1 DIF: Difficulty: Easy
REF: pp. A-2 to A-4 OBJ: LO: A-01 NAT: BUSPROG: Diversity
STA: AICPA: FN-Reporting | ACBSP: APC-09-Financial Statements
KEY: Bloom's: Application
2. Which of the following statements is true regarding common law?
a. In common law countries, there are generally more statutes written into the laws.
b. In common law countries, there is less reliance on interpretation by the courts.
c. Because more details are written into U.S. law, FASB has shorter and more general
accounting standards than most countries.
d. The common law system has its roots in the United Kingdom.
ANS: D PTS: 1 DIF: Difficulty: Easy
REF: pp. A-2 to A-4 OBJ: LO: A-01 NAT: BUSPROG: Communication
STA: AICPA: BB-Legal | ACBSP: APC-09-Financial Statements
KEY: Bloom's: Knowledge
3. Which of the following countries do not use a common law system?
a. The United States
b. Germany
c. The United Kingdom
d. Both a and c are correct.
ANS: B PTS: 1 DIF: Difficulty: Easy
REF: pp. A-2 to A-4 OBJ: LO: A-01 NAT: BUSPROG: Diversity
STA: AICPA: BB-Legal | ACBSP: APC-09-Financial Statements
KEY: Bloom's: Knowledge
4. All of the following are among the most important reasons why accounting standards differ around the
world except:
a. differences in the state of economic development
b. differences in taxation
c. differences in inflation
d. differences in code law in all countries around the world
ANS: D PTS: 1 DIF: Difficulty: Easy
REF: pp. A-2 to A-4 OBJ: LO: A-01 NAT: BUSPROG: Diversity
STA: AICPA: FN-Reporting | ACBSP: APC-02-GAAP KEY: Bloom's: Evaluation
5. All of the following are advantages available to companies if a single set of accounting standards were
used except:
a. A single set of worldwide accounting standards would have no effect on accounting fee
costs.
© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the
U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
, b. A single set of standards would make it much easier to decide whether to acquire a foreign
company.
c. A single set of worldwide accounting standards would facilitate comparisons for
investment purposes.
d. A single set of worldwide accounting standards would make it easier to access foreign
capital markets
ANS: A PTS: 1 DIF: Difficulty: Easy
REF: pp. A-4 to A-5 OBJ: LO: A-02 NAT: BUSPROG: Diversity
STA: AICPA: FN-Reporting | ACBSP: APC-02-GAAP KEY: Bloom's: Comprehension
6. Which of the following is a commonly cited disadvantage of having a new unified set of accounting
standards?
a. Acquiring foreign companies would become a more confusing proposition.
b. Corporations may find themselves more susceptible to lawsuits due to the principles-
based system.
c. Time and money would not be saved in accessing capital markets abroad.
d. The SEC would be dissolved if international accounting standards were adopted.
ANS: B PTS: 1 DIF: Difficulty: Easy
REF: pp. A-4 to A-5 OBJ: LO: A-02 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge
7. 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.?
a. FASB
b. SEC
c. IASB
d. AICPA
ANS: B PTS: 1 DIF: Difficulty: Easy
REF: pp. A-4 to A-5 OBJ: LO: A-02 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-02-GAAP KEY: Bloom's: Analysis
8. The benefits of a single set of accounting standards used around the world would include all of the
following except:
a. They would eventually save companies considerable money in accounting fees.
b. They would prevent competitors from acquiring each other.
c. They would allow easier comparisons by analysts and investors.
d. They would facilitate access to foreign capital markets.
ANS: B PTS: 1 DIF: Difficulty: Easy
REF: pp. A-4 to A-5 OBJ: LO: A-02 NAT: BUSPROG: Diversity
STA: AICPA: FN-Reporting | ACBSP: APC-02-GAAP KEY: Bloom's: Comprehension
© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the
U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
, 9. The group with primary responsibility for development of a single set of accounting standards around
the world is the
a. FASB
b. SEC
c. IFRS
d. IASB
ANS: D PTS: 1 DIF: Difficulty: Easy
REF: pp. A-6 to A-7 OBJ: LO: A-03 NAT: BUSPROG: Diversity
STA: AICPA: FN-Reporting | ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge
10. During what year did the IASB and FASB reaffirm their commitment to achieving convergence of
accounting standards in the U.S.?
a. 2007
b. 2009
c. 2002
d. 2008
ANS: B PTS: 1 DIF: Difficulty: Easy
REF: pp. A-6 to A-7 OBJ: LO: A-03 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge
11. The International Accounting Standards Committee was established in 1973 to develop
worldwide standards. Which group replaced it in 2001?
a. FASB
b. IFRS
c. IASB
d. IIA
ANS: C PTS: 1 DIF: Difficulty: Easy
REF: pp. A-6 to A-7 OBJ: LO: A-03 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge
12. What is the name of the formalized commitment of the IASB and the FASB to converge U.S. and
international accounting standards?
a. The Sarbanes-Oxley Act
b. The Norwalk Agreement
c. The IFRS Foundation
d. The Conceptual Framework
ANS: B PTS: 1 DIF: Difficulty: Easy
REF: pp. A-6 to A-7 OBJ: LO: A-03 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-02-GAAP KEY: Bloom's: Knowledge
13. 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?
a. Low end of the range.
b. High end of the range.
c. Midpoint of the range.
d. IFRS presents no specific guidance as to this point.
ANS: C PTS: 1 DIF: Difficulty: Moderate
REF: pp. A-7 to A-10 OBJ: LO: A-04 NAT: BUSPROG: Communication
STA: AICPA: FN-Reporting | ACBSP: APC-16-Current Liabilities
KEY: Bloom's: Knowledge
14. Which of the following inventory costing methods is prohibited under IFRS?
© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the
U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
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