Question

1. Which of the following shows what would be acceptable to list at the top of an income statement, and why?

1. For the Year Ended 20XX; it is measured over a span of time
2. As of January 31, 20XX; it is measured at a point in time
3. As of January 31, 20XX; it is measured over a span of time
4. For the Year Ended 20XX; it is measured at a point in time

2. The SEC's Release 1 (FRR-1) officially recognizes accounting standards issued by

1. the IASB because the SEC's philosophy is that the public sector retains the initiative for establishing and improving accounting standards.
2. the FASB because the SEC's philosophy is that the public sector retains the initiative for establishing and improving accounting standards.
3. the IASB because the SEC's philosophy is that the private sector retains the initiative for establishing and improving accounting standards.
4. the FASB because the SEC's philosophy is that the private sector retains the initiative for establishing and improving accounting standards.

3. In which of the following situations would it be inappropriate for an auditor to issue an unqualified opinion with explanatory paragraph?

1. When the auditor questions the business' ability to continue
2. When there has been a change in who performs the audit
3. When the audit was conducted by an internal auditor
4. When some information immaterial to appropriate standards requires special emphasis

4. A subsidiary of a US company based in China keeps its books in the Chinese renminbi and does the majority of its business in the Chinese renminbi (RMB). The home currency is the US dollar (USD). According to IAS 21: The Effects of Changes in FX Rates , during the step where one translates foreign currency financial statements into the functional currency, non-monetary items that are reported at historical cost in RMB

1. are translated into USD using the closing exchange rate.
2. are translated into USD using the exchange rate on the transaction date.
3. are translated into USD using the exchange rate as of the date of the fair value measurement.
4. do not need to be translated in this step as they are already in the functional currency.

Answer 1

1. As of January 31, 20XX; it is measured over a span of time is the top listed as per the accounting norms
2. The Financial Accounting Standards Board (FASB) is a private, non-profit organization standard-setting body[1] whose primary purpose is to establish and improve Generally Accepted Accounting Principles (GAAP) within the United States in the public's interest. The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the US. The FASB replaced the American Institute of Certified Public Accountants' (AICPA) Accounting Principles Board (APB) on July 1, 1973.
3. it would be inappropriate for an auditor to issue an unqualified opinion with explanatory paragraph When the audit was conducted by an internal auditor because an audit can not rely on the audit of internal auditor it should be assess by himself.
4. IAS 21 The Effects of Changes in Foreign Exchange Rates outlines how to account for foreign currency transactions and operations in financial statements, and also how to translate financial statements into a presentation currency. An entity is required to determine a functional currency (for each of its operations if necessary) based on the primary economic environment in which it operates and generally records foreign currency transactions using the spot conversion rate to that functional currency on the date of the transaction. The company do not need to be translated in this step as they are already in the functional currency.