Which of the following is not a reason for establishing international accounting standards?a. Some countries do not have the resources to develop accounting standards on their own.b. Comparability of financial reporting is needed between companies operating in different areas of the world.c. It would simplify the preparation of consolidated financial statements by multinational corporations.d. Demand in the United States is heavy for an alternative to U.S. generally accepted accounting principles.

Which of the following is not a reason for establishing international accounting standards?a. Some countries do not have the resources to develop accounting standards on their own.b. Comparability of financial reporting is needed between companies operating in different areas of the world.c. It would simplify the preparation of consolidated financial statements by multinational corporations.d. Demand in the United States is heavy for an alternative to U.S. generally accepted accounting principles.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA1: International Financial Reporting Standards

Section: Chapter Questions

Problem 6MCQ

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Which of the following is not a reason for establishing international accounting standards? Choose the correct.a. Some countries do not have the resources to develop accounting standards on their own.b. Comparability of financial reporting is needed between companies operating in different areas of the world.c. It would simplify the preparation of consolidated financial statements by multinational corporations.d. Demand in the United States is heavy for an alternative to U.S. generally accepted accounting principles.
1.Outline and differentiate the various definitions of international accounting? 2.Explain the environmental factors that lead to national differences in accounting? 3.What are the two main legal systems operating worldwide? How might these affect accounting? 4.Countries that rely on capital markets for finance, as opposed to banks and governments, are likely to expect greater levels of public disclosure in their accounting systems. Evaluate this argument and provide examples.
1. What impact would harmonization of national accounting standards have on international businesses? 2. Are U.S. firms at a competitive disadvantage because they cannot use accounting reserves as German firms do?
Which of the following is not a problem caused by diversity in accounting practices across countries? Multiple Choice Comparing companies in the same industry that are headquartered in different countries. Translating foreign currency balances into U.S. dollars. Converting local GAAP financial statements into U.S. GAAP for consolidation purposes. Maintaining separate accounting records in both the local and U.S. GAAP. Identifying and retaining personnel who are competent to prepare financial statements in both international and domestic accounting standards.
2.Explain the environmental factors that lead to national differences in accounting. 3.What are the two main legal systems operating worldwide? How might these affect accounting? Countries that rely on capital markets for finance, as opposed to banks and governments, are likely to expect greater levels of public disclosure in their accounting systems. Evaluate this argument and provide examples. 5.Outline and discuss three cultural aspects that can differ across countries. How do these cultural differences relate to differences in accounting systems? 6.What does accounting harmonisation mean? Differentiate harmonisation from convergence or adoption. 7.Explain the benefits of global adoption of IFRSs. 8. Outline the key challenges of US GAAP and IFRS convergence.
Which of the following is a true statement about International Financial ReportingStandards?a. They are considered to be the single strongest set of accounting standards in the world.b. They are more exact (contain more rules) than U.S. generally accepted accountingprinciples.c. They are converging gradually with U.S. standards.d. They are not being applied anywhere in the world yet, but soon they will be
Which of the following is not a potential problem caused by differences in financial reporting practices across countries?a. Consolidation of financial statements by firms with foreign operations is more difficult.b. Firms incur additional costs when attempting to obtain financing in foreign countries.c. Firms face double taxation on income earned by foreign operations.d. Comparisons of financial ratios across firms in different countries may not be meaningful.
Which of the following is not a potential problem caused by differences in financial reporting practices across countries? Choose the correct.a. Consolidation of financial statements by firms with foreign operations is more difficult.b. Firms incur additional costs when attempting to obtain financing in foreign countries.c. Firms face double taxation on income earned by foreign operations.d. Comparisons of financial ratios across firms in different countries may not be meaningful.
What are some of the differences between International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (GAAP)? What are some advantages and disadvantages of adopting IFRS in the US?
Harmonization of accounting standards through a private standard-setting process will have both advantages and disadvantages to American investors and businesses. 1. Discuss the advantages of harmonization to American investors. 2. Discuss why differences in accounting principles and disclosure requirements may place American businesses at a competitive disadvantage. 3. Discuss how the U.S. accounting profession can influence the process of harmonization.
What is the impact of some businesses using International Financial Reporting Standards (IFRS) instead of generally accepted accounting principles (GAAP)? In your opinion, should there be a worldwide convergence of accounting standards? Why or why not? Explain.
3. What are the advantages of rules-based standards? 4. Do you think that future international accounting standards will need to be more principlesbased or more rules-based? Many outside the United States claim that a problem with U.S. GAAP is that there are too many rules. They argue for principles-based accounting standards in which the broad principles of accounting are emphasized and less emphasis is placed on detailed implementation rules. Americans counter that IFRS may lack quality and rigor. Additional rules are necessary to provide adequate guidance to users.