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International Acct Accounting
Sample Exam
Multiple Choice
1.
How is the term stocks used on the balance sheet of a British company?
A) Capital stock in the Owners' Equity section
B) Shares of another company owned as marketable securities.
C) Fixed assets
D) Inventory
Answer: D Level: Medium LO: 1
2. A study conducted by the SEC in 1993 illustrated that U.S. GAAP was more
conservative for most of the foreign entities listed on U.S. exchanges. What does this
mean?
A) Income restated under U.S. GAAP was higher than income under GAAP of the
companies' home countries.
B) Income restated under U.S. GAAP was lower than income under GAAP of the
companies' home countries.
C) Income reported under U.S. GAAP is more accurate than income reported under
GAAP of other countries.
D) Assets were understated when restated using U.S. GAAP.
Answer: B Level: Medium LO: 2
3. Differences in legal systems used in various countries have been cited as one reason for
diversity in accounting practice. What are the major types of legal systems?
A) commercial law and accounting law
B) rules and regulations
C) written law and unwritten law
D) common law and code law
Answer: D Level: Easy LO: 3
4. The accounting standards in code law countries tend to be . . .
A) very detailed.
B) formulated by organizations such as the FASB.
C) stated broadly without much guidance on accounting procedures.
D) very conservative.
Answer: C Level: Medium LO: 3
5.
According to Sir Bryan Carsberg, former IASC Secretary-General, what is the most
significant cost of accounting diversity?
A) The time expended by accountants to create multiple sets of financial statements
conforming to different national standards.
B) The cost of the IASB to regulate compliance with many national accounting
standards.
C) The reduction in effectiveness of the international markets for capital.
D) The resources used by countries in legislating different sets of accounting standards.
Answer: C Level: Medium LO: 1, 2
6. From a practical standpoint, what is the goal of accounting standards harmonization?
A) Creating one set of standards used throughout the world.
B) Reducing the conflict among national accounting standards.
C) Producing accounting standards that are unique for each country.
D) Forcing compliance with IASB regulations.
Answer: B Level: Medium LO: is 1
7.
What the focus of the Norwalk Agreement between the IASB and the FASB?
A) To make U.S. GAAP conform with existing IASB standards
B) To ensure that IASB standards reflect existing U.S. GAAP
C) To make U.S. GAAP and IASB standards compatible
D) To highlight the differences between U.S. GAAP and the IASB standards
Answer: C Level: Medium LO: 2, 4
8. What types of issues cause differences between International Financial Reporting
Standards and U.S. GAAP?
A) Measurement
B) Alternatives available
C) Disclosure
D) All of the above may be different between IFRS and U.S. GAAP
Answer: D Level: Medium LO: 2, 4
9. Which of the following is generally true about the differences between U.S. GAAP and
IASB standards?
A) U.S. GAAP is generally more flexible than IASB standards.
B) U.S. GAAP tends to be more rule-based and the IASB standards tend to be
principles-based.
C) More professional judgment is required to apply U.S. GAAP than is required for
implementing IASB standards.
D) In all cases, U.S. GAAP is more detailed than the IASB standards.
Answer: B Level: Medium LO: 2, 4
10. Why do German companies willingly take a conservative position in calculating income?
A) To minimize tax
B) To keep employees from asking for higher wages.
C) To stabilize income from year to year for dividend purposes.
D) All of the above
Answer: D Level: Medium LO: 1
Use the following to answer questions 11-12:
The following inventory information above was taken from the records of GlobeKom Ltd.:
11. Under IAS 2, what should the Balance Sheet report for Inventory?
A) $9,000
B) $8,500
C) $9,500
D) $10,000
Answer: C Level: Medium LO: 1, 5
12. Under U.S. GAAP, what should the Balance Sheet report for Inventory?
A) $9,000
B) $8,500
C) $9,500
D) $10,000
Answer: A Level: Medium LO: 1, 5
Short Answer
1. What are the impediments to harmonization? Which of these is most important, in your
view, and why?
2. Describe Nobes 1998 model of accounting diversity. What are its primary features? How
does it differ from other models developed earlier?
3. How does financial reporting, and the accounting and reporting environment, compare
across the nations of Germany and UK? What differences are there and how do these
impact upon the quality of reporting information, as utilized by investors trying to employ
capital into these countries?