Testbank

to accompany

Contemporary Issues in
Accounting

Michaela Rankin, Patricia Stanton,

Susan McGowan, Matthew Tilling,
Kimberly Ferlauto & Carol Tilt

Prepared by
Matt Tilling

John Wiley & Sons Australia, Ltd 2012

 Chapter 12 International Accounting

Chapter 12 International Accounting

Multiple Choice Questions

1. To what does International Accounting refer?

a. Descriptions of accounting practices in different countries

b. Comparison of accounting practices between countries
c. Accounting for international transactions
*d. All of the above

Correct answer: d
Learning Objective 12.1 ~ Discuss the nature of international accounting.

2. Which of the following is NOT a level that can be used to define international
accounting?

a. Supranational
b. Company
c. Comparative
*d. None of the above, i.e. they are all levels of international accounting.

Correct answer: d
Learning Objective 12.1 ~ Discuss the nature of international accounting.

3. With harmonisation of accounting practices globally

a. International accounting differences have all but disappeared

*b. Environmental and cultural factors still lead to diversity in practice
c. Financial reporting is becoming simpler
d. All of the above

Correct answer: b
Learning Objective 12.2 ~ Outline evidence of the diversity of international accounting
practice.

4. Which of the following is likely to influence accounting systems at a national level?

a. Tax system
b. Political system
c. Capital market structures
*d. All of the above

Correct answer: d
Learning Objective 12.3 ~ Explain the environmental, cultural and religious factors that lead
to diversity of international accounting practice.

John Wiley & Sons Australia, Ltd 2012 12.1

Testbank to accompany Contemporary Issues in Accounting

5. In countries where finance is mainly provided by banks we would expect:

a. More lenient bankruptcy laws

*b. Greater emphasis on the balance sheet
c. More public disclosure
d. All of the above

Correct answer: b
Learning Objective 12.3 ~ Explain the environmental, cultural and religious factors that lead
to diversity of international accounting practice.

6. The accounting regulation is heavily influenced by the legal system in which is

operates. In Australia laws are based on which legal system?

a. Civil Law
*b. Common Law
c. Codified Roman Law
d. Case Law

Correct answer: b
Learning Objective 12.3 ~ Explain the environmental, cultural and religious factors that lead
to diversity of international accounting practice.

7. The work of Hofstede has been very important to the study of international
accounting, which of the following was NOT one of his cultural characteristics used
to describe cultures around the world?

a. Masculinity versus Femininity

*b. Organised versus laid-back
c. Individualism versus Collectivism
d. None of the above, i.e. they are all cultural characteristics

Correct answer: b
Learning Objective 12.3 ~ Explain the environmental, cultural and religious factors that lead
to diversity of international accounting practice.

8. Gray adapted Hofstedes categories for accounting, which of the following is not one
of his four accounting values?

a. Uniformity versus Flexibility

b. Secrecy versus Transparency
c. Conservatism versus Optimism
*d. Short-term versus Long-term Orientation

Correct answer: d
Learning Objective 12.3 ~ Explain the environmental, cultural and religious factors that lead
to diversity of international accounting practice.

John Wiley & Sons Australia, Ltd 2012 12.2

 Chapter 12 International Accounting

9. One of Grays accounting values is Professionalism versus Statutory Control. Which

country would you expect to be closest to the Statutory Control end of the spectrum?

a. Australia
*b. France
c. UK
d. USA

Correct answer: b
Learning Objective 12.3 ~ Explain the environmental, cultural and religious factors that lead
to diversity of international accounting practice.

10. One significant barrier to the adoption of international accounting standards in

Islamic countries has been:

*a. The prohibition on charging interest

b. Refusal to compartmentalise religious and secular life
c. The requirement to pay zakat (a religious levy)
d. All of the above

Correct answer: a
Learning Objective 12.3 ~ Explain the environmental, cultural and religious factors that lead
to diversity of international accounting practice.

11. Which of the following is NOT considered a challenge for international business
operations when faced with accounting diversity?

a. It is costly to restate financial statements

b. It reduces access to international investments
*c. National accounting regimes are inferior to international accounting
d. None of the above, i.e. they are all a challenge

Correct answer: c
Learning Objective 12.4 ~ Discuss international adoption of IFRSs, explain the difference
between harmonisation and convergence and identify the benefits and limitations of IFRSs
adoption.

12. The international Accounting Standards Boards objective for International

Accounting Standards would be best described as

*a. Adoption
b. Harmonisation
c. Convergence
d. Adaption

Correct answer: a
Learning Objective 12.4 ~ Discuss international adoption of IFRSs, explain the difference
between harmonisation and convergence and identify the benefits and limitations of IFRSs
adoption.

John Wiley & Sons Australia, Ltd 2012 12.3

Testbank to accompany Contemporary Issues in Accounting

13. Which of the following is NOT an advantage to IFRS adoption?

a. It is a cost effective way to have a comprehensive set of standards

b. It makes financial statements more comparable
*c. It makes accounting standard development more flexible
d. None of the above, i.e. they are all advantages

Correct answer: c
Learning Objective 12.4 ~ Discuss international adoption of IFRSs, explain the difference
between harmonisation and convergence and identify the benefits and limitations of IFRSs
adoption.

14. Which of the following elements or standards has been raised as a significant problem
with the adoption of IFRS in certain countries?

a. Consolidation requirements
b. Fair value accounting
c. Profit focus
*d. All of the above

Correct answer: d
Learning Objective 12.4 ~ Discuss international adoption of IFRSs, explain the difference
between harmonisation and convergence and identify the benefits and limitations of IFRSs
adoption.

15. In Australia IFRSs are required to be used by:

*a. All reporting entities

b. All listed entities
c. Consolidated entities only
d. Multinational Entities

Correct answer: a
Learning Objective 12.4 ~ Discuss international adoption of IFRSs, explain the difference
between harmonisation and convergence and identify the benefits and limitations of IFRSs
adoption.

16. Chinas acceptance of international accounting standards would be best described as:

a. Adoption
b. Harmonisation
*c. Convergence
d. Indifference

Correct answer: c
Learning Objective 12.4 ~ Discuss international adoption of IFRSs, explain the difference
between harmonisation and convergence and identify the benefits and limitations of IFRSs
adoption.

John Wiley & Sons Australia, Ltd 2012 12.4

 Chapter 12 International Accounting

17. The SEC allows non-US companies listed on a US stock exchange to report using:

a. Their home countrys standards

b. International Accounting Standards, with a reconciliation to US-GAAP
*c. International Accounting Standards
d. None of the above, they must use US-GAAP only

Correct answer: c
Learning Objective 12.6 ~ Evaluate the impact of international accounting and tax issues on
multinational enterprises.

18. As of 2012 which US IFRS convergence projects are a priority?

*a. Leases
b. Accounting for Income Taxes
c. Emissions trading schemes
d. All of the above

Correct answer: a
Learning Objective 12.6 ~ Evaluate the impact of international accounting and tax issues on
multinational enterprises.

19. Multinational entities

a. Are largely unaffected by the culture of individual countries

b. Operate independently of any national legal framework
c. Use IFRS exclusively
*d. None of the above

Correct answer: d
Learning Objective 12.6 ~ Evaluate the impact of international accounting and tax issues on
multinational enterprises.

20. Transfer pricing has been identified as a major problem for multi-national entities.
This refers to:

a. Setting up parent entities in tax havens

*b. The pricing of goods and services exchanged within a corporate group
c. Paying local workers less than expatriate employees
d. Manufacturing cheaply in the third world to sell at high profit in the first
world

Correct answer: b
Learning Objective 12.6 ~ Evaluate the impact of international accounting and tax issues on
multinational enterprises.

John Wiley & Sons Australia, Ltd 2012 12.5