Chapter 03 – International

Convergence of Financial
Reporting
Multiple Choice Questions
1.
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
2.
De jure harmonization refers to:
a) the process of making accounting practice consistent across
countries.
b) the process of making accounting regulations consistent
internationally.
c) forcing accounting differences to be resolved through jury trials.
d) eliminating the need to have different accounting methods.
3.
Which of the following statements is believed to be true about
accounting convergence by proponents of convergence?
a) Convergence would decrease feelings of nationalism.
b) Convergence is desirable because there is little difference among
capital markets in different countries.
c) Convergence would help to raise the quality of accounting practice
internationally.
d) None of the above statements is true.
4.
Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia,
and Slovenia joined the European Union in 2004. Besides membership
in the EU, what do these countries have in common?
a) They share a common language.
b) They were previously under the political and economic influence of
the Soviet Union.
c) All were under the political control of Germany until the early
1960's.
d) They were former British colonies until after World War II.
5.
The early (1973-1988) harmonization efforts of the International Accounting
Standards Committee (IASC) created standards that have been described as
a “lowest common denominator” approach. What was the effect of these
first international accounting standards?
a) The IASC standards accommodated existing accounting practice in
various countries.
b) Comparability of financial statements across countries was achieved.
c) It resulted in few companies being in compliance with IASC standards.
d) All of the above
6.
Who was the first chairman of the International Accounting Standards
Board?
a) Sir Walter Raleigh
b) Sir David Tweedie
c) Sir Paul McCartney
d) Sir Bryan Carsberg
7.
According to the IASB, what is needed for international accounting
standards to work effectively?
a) Commitment from auditors to resist client pressures
b) Professional judgment in the public interest on the part of
management
c) Financial statement preparers must produce reports that faithfully
represent all transactions
d) All of the above are conditions for effective standards.
8.
What was the 2002 finding by the six largest public accounting firms
regarding International Financial Reporting Standards?
a) Of the countries surveyed, almost all planned to make their GAAP
converge with IFRS.
b) Very few of the countries studied planned to move their national
accounting standards toward convergence with IFRS.
c) There were almost as many convergence strategies as there were
countries in the study.
d) The countries that planned to make their GAAP converge with IFRS
were predominantly western European nations.
9.
Which of the following is not a major concern related to convergence of
international accounting standards?
a) The complicated nature of particular standards
b) The tax-driven nature of the national accounting regime
c) An overload of guidance on the first-time application of IFRS
d) IFRS language translation difficulties
10.
In which of the following countries is the use of IFRS not allowed for
domestic companies listed on its stock exchanges?
a) United Kingdom
b) Yugoslavia
c) Australia
d) United States