Question

1 Which of the following is an advantage of having a single set of accounting standards used worldwide?

A. Reduced accounting costs for multinational corporations

B. Increased power of the FASB

C. Reduced number of multinational corporations on the NYSE

D. Increased diversity of accounting methods used by multinational corporations

2 The accounting standards in code law countries tend to be:

A. very detailed.

B. formulated by organizations such as the FASB.

C. stated generally without much guidance on accounting procedures.

D. very conservative.

3 What is the likely result when accounting rules are left up to professional associations

rather than being legislated by governmental bodies?

A. Very general accounting rules are created, as in code law countries.

B. Very detailed rules for practice are created, as in common law countries.

C. Very general accounting rules are created, as in common law countries.

D. Very detailed rules for practice are created, as in code law countries.

4Historical cost is the primary basis for asset valuation under U.S. GAAP. 

Why is historical cost NOT as important in the accounting systems of Latin America as in the U.S.?

A. Historical costs are too difficult to calculate in the currencies used in Central and South America.

B. The countries of Latin America have experienced very high rates of inflation,

which would make historical costs meaningless to readers of financial statements.

C. There is very little foreign direct investment in the countries of Latin America,

so few assets need to be accounted for.

D. In Latin America, asset prices are very stable, making historical costs ,

so it doesn't matter which valuation basis is used.

5Which of the following statements is true about accounting convergence?

A. Convergence is a synonym for harmonization.

B. Convergence is the opposite of standardization.

C. Convergence, unlike harmonization, takes place over a period of time.

D. Convergence means developing high-quality standards in partnership with national standards.

6 Which of the following statements is believed to be true about accounting convergence

by proponents of convergence?

A. Convergence would not affect the feelings of nationalism.

B. Convergence is desirable because there is very little difference among capital markets

in different countries.

C. Convergence would help to raise the quality of accounting practices internationally.

D. None of the above statements is true.

7Why does the IASB believe that a principles-based approach to standard setting 

is superior to a rules-based approach?

A. Detailed guidance or rules encourage accountants to look for ways around the rules

rather than trying to provide useful information.

B. Principles-based standard setting is less costly to undertake than rules

-based standard formulation.

C. It is desirable to have all corporations in all countries using the same accounting practice.

D. A conceptual framework for standard setting has demonstrated to encourage

the greatest economic development.

8 If a company chooses the revaluation model permitted in IAS 16 for fixed asset measurement:

A. annual revaluations must be performed on each class of assets.

B. it must update the valuation so that the balance sheet represents fair value

on the balance sheet date.

C. appraisals must be performed by an official of the IASB.

D. the depreciated replacement cost must be used as the fair value of the fixed asset.

Answer 1

1) Advantage of having single set of accounting

A. Reduced accounting costs for multinational corporations

The reason for above answer is that when MNCs are follow single set of accounting they dont have to comply with various different accounting laws and regulation which saves the cost to MNCs to,

Single set of accounting provide standarised principle which is valid for all countries in which company is operating,

2) The accounting standards in code law countries tend to be

Very Detailed

As it has to proivde all details about which principle to be followed for different situation and for different organizations , it also provide which standard applicable for various countries,

3) What is the likely result when accounting rules are left up to professional associations rather than being legislated by governmental bodies?

D. Very detailed rules for practice are created, as in code law countries.

As when these work is alloted to professional bodies they are more aware about what consequances has arised and which rule should be made so that problem can be minimized,

such professinal body tend to give standardise practices which are very detailed as in law code countries,

4) Historical cost is the primary basis for asset valuation under U.S. GAAP.

Why is historical cost NOT as important in the accounting systems of Latin America as in the U.S.?

B. The countries of Latin America have experienced very high rates of inflation,

which would make historical costs meaningless to readers of financial statements.

Due to inflation the value of historical asset has been changed drastically which make it meaningless for readers of financial statments,

5) Which of the following statements is true about accounting convergence?

D. Convergence means developing high-quality standards in partnership with national standards.

It means making standards which are acceptable for all countries so that standardisation can be made over the world,

6 Which of the following statements is believed to be true about accounting convergence

by proponents of convergence?

C. Convergence would help to raise the quality of accounting practices internationally.

As it standardise the accounting practices which helps internationally to follow accounting practices internationally

7Why does the IASB believe that a principles-based approach to standard setting

is superior to a rules-based approach?

A. Detailed guidance or rules encourage accountants to look for ways around the rules

rather than trying to provide useful information.

8 )If a company chooses the revaluation model permitted in IAS 16 for fixed asset measurement

B. it must update the valuation so that the balance sheet represents fair value

on the balance sheet date.