Multiple Choice Question
1. Which of the following could explain why accounting is more conservative in some countries than in others?
a. Accounting is oriented toward stockholders as a major source of financing.
b. Published financial statements are the basis for taxation.
c. A common law legal system is used.
d. Full disclosure in financial statements is emphasized.

2. Which of the following is not a problem caused by differences in financial reporting practices across countries?
a. Consolidation of financial statements by firms with foreign operations is more difficult.
b. Firms incur additional costs when attempting to obtain financing in foreign countries.
c. Firms face double taxation on income earned by foreign operations.
d. Comparisons of financial ratios across firms in different countries may not be meaningful.

3. Which of the following is not a reason for establishing international accounting standards?
a. Some countries do not have the resources to develop accounting standards on their own.
b. Comparability is needed between companies operating in different areas of the world.
c. It would simplify the preparation of consolidated financial statements by multinational corporations.
d. Demand in the United States is heavy for an alternative to U.S. generally accepted accounting
principles.

4. According to the IASB, IFRS are composed of
a. International financial reporting standards issued by the IASB only.
b. International accounting standards issued by the IASC only.
c. International financial reporting standards issued by the IASB and international accounting standards issued by the IASC.
d. International financial reporting standards issued by the IASB and statements of financial accounting standards issued by the FASB.

5. After 2012, which of the following countries will be using IFRS?
a. Canada.
b. Mexico.
c. Brazil.
d. All of the above.

6. What is the so-called Norwalk Agreement?
a. An agreement between the FASB and SEC to allow foreign companies to use IFRSs in their filing of financial statements with the SEC.
b. An agreement between the U.S. FASB and the U.K. Accounting Standards Board to converge their respective accounting standards as soon as practicable.
c. An agreement between the SEC chairman and the EU Internal Market commissioner to allow EU companies to list securities in the United States without providing a U.S. GAAP reconciliation.
d. An agreement between the FASB and the IASB to make their existing standards compatible as soon as practicable and to work together to ensure compatibility in the future.

7. Which of the following is not one of the FASB’s initiatives to converge with IASB standards?
a. The FASB eliminates differences between FASB and IASB standards by adopting IASB requirements, or vice versa, in a short-term convergence project.
b. The FASB considers the possibility of convergence with IASB standards when deciding which topics to add to its work agenda.
c. A member of the FASB serves as a liaison with the IASB by working out of the IASB’s offices in London.
d. A joint project develops a common conceptual framework that both the FASB and IASB could use as a basis for future standards.