Test Bank Modern Advanced Accounting 7thEdition All Chapters

1. Which of the following would NOT be a reason to obtain a greater understanding of accounting practices in other nations? A. Financial results are disclosed in different currencies. B. One needs to be aware of differing disclosure requirements from nation to nation, as this impacts the preparation of financial statements. C. Income-smoothing may have affected a foreign subsidiary's results; such smoothing practices are not permitted in North America. D. Departures from the historical cost principle may be possible in other nations. 2. Which of the following is LEAST likely to influence a country's accounting standards? A. Taxation Policies. B. Different Legal Systems. C. The currency used. D. Ties between countries. 3. If a country's accounting income does not differ significantly from its taxable income, one would reasonably expect: A. extreme conservatism on the part of accountants. B. a significant amount of deferred taxes on the balance sheet. C. that the use of LIFO would be more prevalent. D. extreme conservatism on the part of accountants as well as increased use of LIFO. 4. Income-smoothing has been applied to a German subsidiary of Company Inc, as it had an abnormally high operating income last year. Which of the following would the accountants working for the subsidiary likely have done? A. Debited an expense account and credited an equity account. B. Credited an expense account and debited an equity account. C. Credited an expense account and debited a provision account appearing under the liabilities section. D. Debited an expense account and credited a provision account appearing under the liabilities section. 5. Which decision has Canada made with respect to financial reporting for small and medium sized enterprise? A. To adopt the IFRS standards for small and medium sized enterprises. B. To retain the current standards. C. To look to US GAAP for standards. D. To develop and maintain its own standards for private enterprises. 6. What monumental decision to change the requirements for foreign registrants and their reporting in the U.S. under certain circumstances did the SEC make in 2007? A. Foreign registrants could use IFRSs in preparing their financial statements without providing a reconciliation to US GAAP. B. Foreign registrants must report under U.S. GAAP. C. Foreign registrants may report under IFRS as long as they provide a reconciliation to U.S. GAAP. D. The SEC has no jurisdiction over foreign registrants. 7. In which of the following countries has income tax law had the greatest effect on its accounting policies? A. Canada B. The United Kingdom C. Japan D. The United States 8. IMVAR INC is a U.S.-based Company with subsidiaries in both the United States and in Canada. The Company's Consolidated Financial Statements show a significantly higher net income when prepared under Canadian GAAP than under U.S. GAAP. What is the likely reason for this difference? A. Different corporate tax rates in each country. B. Timing differences which will reverse out in the future. C. Differing reporting requirements in each country. D. Currency fluctuations. 9. Which of the following bodies is responsible for the harmonization of international accounting standards? A. The European Union (EU). B. The Federal Accounting Standards Board (FASB). C. The International Accounting Standards Board (IASB). D. The Canadian Institute of Chartered Accountants (CICA). 10. Which of the following would be most affected by financial Statements being prepared under different accounting principles? A. Reduced comparability. B. Reduced reliability. C. Increased complexity. D. Inaccurate asset valuations. 11. The degree of accounting disclosure required tends to be greater in countries with well-developed capital markets. Why is this? A. Countries with well-developed capital markets also have well developed legal systems. B. The disclosure requirements were designed to prevent fraud. C. These markets tend to have more sophisticated investors who demand more information. D. Companies in these countries are required to comply with GAAP.......................................................continued