Chapter 03International Convergence

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. It may limit the effectiveness of the international capital markets

D. The resources used by countries in legislating different sets of accounting standards

Learning Objective: 03-01 Explain the meaning of convergence.
Level of Difficulty: 2 Medium

2. 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

Learning Objective: 03-01 Explain the meaning of convergence.
Level of Difficulty: 2 Medium

3. De jure harmonization refers to the process of:

A. making accounting practices consistent across countries.

B. making accounting regulations consistent internationally.

C. resolving accounting differences through jury trials.

D. eliminating the need to have different accounting methods.

Learning Objective: 03-01 Explain the meaning of convergence.
Level of Difficulty: 2 Medium

4. De facto harmonization refers to the process of:

A. making accounting practices consistent across countries.

B. making accounting regulations consistent internationally.

C. resolving accounting differences through litigation.

D. creating one set of accounting standards.

Learning Objective: 03-01 Explain the meaning of convergence.
Level of Difficulty: 2 Medium

5. Which of the following statements is true about accounting convergence?

A. Convergence is a synonym for harmonization.

B. Convergence is the opposite of standardization.

C. Convergence, unlike harmonization, takes place over a period of time.

D. Convergence means developing high-quality standards in partnership with national standard-setters.

Learning Objective: 03-01 Explain the meaning of convergence.
Level of Difficulty: 2 Medium

6. Harmonization of accounting standards:

A. is the same as convergence of accounting standards.

B. always ensures resulting of comparable financial statements internationally.

C. forces accounting differences to be resolved through litigation.

D. refers to the reduction of alternatives while retaining a high degree of flexibility in accounting practices.

Learning Objective: 03-01 Explain the meaning of convergence.
Level of Difficulty: 2 Medium

7. Which of the following statements is believed to be true about accounting convergence by proponents of convergence?

A. Convergence would not affect the feelings of nationalism.

B. Convergence is desirable because there is very little difference among capital markets in different countries.

C. Convergence would help to raise the quality of accounting practices internationally.

D. None of the above statements is true.

Learning Objective: 03-02 Identify the arguments for and against international convergence of financial reporting standards.
Level of Difficulty: 2 Medium

8. Which of the following items is considered to be the most significant impediment to accounting convergence?

A. Nationalism

B. Lack of accounting knowledge

C. Language differences

D. High cost of convergence

Learning Objective: 03-02 Identify the arguments for and against international convergence of financial reporting standards.
Level of Difficulty: 2 Medium

9. In addition to the International Accounting Standards Committee (IASC), which of the following organizations was considered to be one of the two most important forces in efforts to harmonize accounting standards?

A. U.S. Financial Accounting Standards Board (FASB)

B. United Nations (UN)

C. North Atlantic Treaty Organization (NATO)

D. European Union (EU)

Learning Objective: 03-03 Discuss major harmonization efforts under the IASC.
Level of Difficulty: 2 Medium

10. It has been said that the addition of 10 new members to the European Union (EU) in 2004 is likely to significantly change the dynamics within the EU. What was the explanation given for this statement?

A. The EU is getting too large to manage effectively.

B. The members added in 2004 have very different political and economic traditions than the 15 members that joined before 2004.

C. The members added in 2004 have more economic power than the members that joined the EU between 1957 and 1995.

D. The purchasing power of the EU was weakened by the addition of additional members.

Learning Objective: 03-03 Discuss major harmonization efforts under the IASC.
Level of Difficulty: 2 Med

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.  It may limit the effectiveness of the international capital markets

D.  The resources used by countries in legislating different sets of accounting standards