, 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
, 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?
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