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Chapter 04 - International Financial Reporting Standards: Part I Chapter 04 International Financial Reporting Standards: Part I Multiple Choice Questions 1. In an Ernst and Young 2005 survey of 130 companies Forms 20-F filed with the SEC, what issue required the greatest adjustment? A) goodwill B) leases C) pensions D) business combinations Answer: C Level: Medium LO: 1 2. 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: 1 3. 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: 1 4. Which of the following inventory valuation methods commonly used in the U.S. is NOT allowed under IAS 2 (Inventories)? A) LIFO B) FIFO C) weighted average D) retail inventory method Answer: A Level: Medium LO: 2, 3 4-1 Chapter04 - International Financial Reporting Standards: Part I Use the following to answer questions 5-6: The following inventory information above was taken from the records of GlobeKom Ltd.: 5. 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: 2 6. 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: 2, 3 Use the following to answer questions 7-9: The following inventory information was taken from the records of Kleinfeld Inc.: 4-2 Chapter 04 - International Financial Reporting Standards: Part I 7. Under IAS 2, what should the Balance Sheet report for Inventory? A) $7,000 B) $8,500 C) $7,600 D) $9,000 Answer: B Level: Medium LO: 2 8. Assume that subsequent to your adjustment the expected selling price increases to $13,000. (All the rest of the facts are the same.) What adjustment to inventory should be made under IAS 2 after this event? A) Inventory should be increased (debited) by $3,500. B) Inventory should be increased (debited) by $4,000. C) No adjustment should be made to inventory once it is written down. D) Inventory should be increased (debited) by $1,000. Answer: A Level: Medium LO: 2 9. Under U.S. GAAP, what should the Balance Sheet report for Inventory? A) $9,000 B) $8,500 C) $7,600 D) $10,000 Answer: C Level: Hard LO: 2, 3 10. The following inventory information was taken form the records of a foreign corporation whose stock is listed on an exchange in the U.S. ... View Full Document

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