1. What does “harmonization” mean in the context of international accounting?

A) The process of combining the financial statements of foreign subsidiaries into the

parent company’s financial statements .

B) Reducing the diversity of accounting standards .

C) Disclosing the accounting methods used in preparing the financial statements .

D) Assessing the exposure resulting from inadequate internal controls.

Answer : B

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

Answer : B

3. Which of the following statements is true about accounting harmonization?

A) Harmonization would increase the comparability of financial statements.

B) Harmonization would reduce the cost of financial reporting for companies whose securities are listed
on international exchanges.

C) Harmonization would increase access to less expensive capital.

D) All of the above are true.

Answer : D

4. 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.

Answer : D

5. 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.

Answer : D

6. 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.

Answer : C
[Link] 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.

ِAnswer: A

8. 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 standard board ( FASB )

B) United Nations ( UN)

C) North Atlantic Treaty Organization ( NATO )

D) European Union ( EU)

Answer : D

9. The “Fourth Directive” issued by the European Commission, which administers the European Union
(EU) , deals with which of the following?

A) Adoption of the euro as the currency used throughout the EU.

B) Consolidated Financial Statements.

C) Rules for valuation, disclosures requirements , and the format of financial statements.

D) Authority of the European Commission to pass laws.

Answer : C
10. The “Seventh Directive” issued by the European Commission is a statement to the European Union
(EU) members concering:

A) Adoption of the euro as the currency used throughout the EU.

B) Consolidated Financial Statements.

C) Rules for valuation, disclosures requirements , and the format of financial statements.

D) Authority of the European Commission to pass laws.

Answer : B

11. Why did the European Commission stop issuing directives related to accounting in 1990?

A) The EU was leaving the formulation of accounting standards up to the IASC.

B) The European Commission had finished the task of formulating accounting standards for the European
Union.

C) Accounting harmonization had been completed .

D) The Commission found that its directives were unenforceable.

Answer : A

[Link] early 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 practices 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

Answer : A

[Link] second phase of the IASC’s efforts to harmonize accounting standards was aimed at :

A) Making international accounting standards more flexible.

B) Creating greater financial statement comparability across countries.

C) Adding new alternatives for accounting practices desired by the international community.

D) Strengthening the enforcement power of the IASC.

Answer : B

[Link] of the following is NOT an objective on the International Accounting Standards Board ( IASB) ?

A) To establish worldwide uniformity of accounting practice.

B) To develop a single set of enforceable global accounting standards.

C) To promote the use and application of global accounting standards.

D) To encourage convergence of national accounting standards and international accounting standards.

Answer : A

15. Which of the following statements is true of the International Accounting Standards Board (IASB)?

A) The Board consists of 16 members.

B) The Board should contain 6 part-time members.

C) At least 13 members of the Board must have experience as auditors.

D) All members of the Board should be from a single country.

Answer: A

16. Of the 16 members of the International Accounting Standards Board (IASB) , how many work for the
board on a full-time basis?

A) 8

B) 13

C) 10

D) 0

Answer: B

[Link] Internationl Accounting Standards Board was preceded by:

A) The IOSCO

B) IFAD

C) IASC

D) The ASEAN

Answer: C

[Link] of the following is NOT true of the due process followed by the IASB in formulating International
Financial Reporting Standards?

A) A period of public comment is provided after discussion papers are made.

B) Standards are approved by a unanimous vote of the 16-member board.

C) Exposure drafts are published prior to taking a vote of the board.

D) National accounting standards and practices are studied before preparing exposure drafts.

Answer: B

[Link] basis does the International Accounting Standards Board (IASB) use in developing IFRS?

A) Detailed rules to govern accounting practice.

B) A framework for deriving gerneral principles.

C) Typical tax laws of Western nations.

D) Exceptions or unusual circumstances that require specail attention.

Answer: B

[Link] does the IASB believe that a principles-based approach to standard setting is superior to a
rules-based approach?

A) Detailed guidance or rules encourage accountants to look for ways around the rules rather than trying
to provide useful information.

B) Principles-based standard setting is less costly to undertake than rules-based standard formulation.

C) It is desirable to have all corporations in all countries using the same accounting practice.

D) A conceptual framework for standard setting has demonstrated to encourage the greatest economic
development.

Answer: A

21. According to IASB, what is needed for IFRS to work effectively?

A) Commitment from auditors to resist client pressures.

B) Professional judgment in the public interest on the part of companies and auditors.

C) Financial statements preparers must produce reports that faithfully represent all transactions.

D) All of the above are conditions for effective standards.

Answer: D

22. The IASB's Framework for Preparation and Presentation of Financial Statements

(1989) establishes:

A) the required practices that should be followed by accountants in preparing

financial statements.

B) the structure, content, and format of financial statements.

C) sanctions for failure to comply with the IASB standards.

D) the concepts to be used in formulating international accounting standards.

Answer : D

23. The IASB's Framework for Preparation and Presentation of Financial Statements implies that the most
important group of users is:

A) government.

B) general public.

C) creditors.

D) investors.

Answer: D

24. Which of the following qualitative characterstics make financial statements information useful?
A) Relevance.

B) Understandability.

C) Reliability.

D) All of the above.

Answer: D

[Link] is the intent of IFRS (1)?

A) To establish the guidelines for financial statements presentation

B) To provide the working definitions of accounting elements.

C) To provide guidance on first-time application of IFRS.

D) To provide the framework for setting international accounting standards.

Answer: C

[Link] is the Primary focus of IAS (1) ?

A) To establish the guidelines for financial statements presentation

B) To provide guidance for first-time adopters of IFRS issued by IASB.

C) To establish the framework of guidelines to be used by IASB in setting accounting standards.

D) None of the above.

Answer: A

28. What language is used to develop IFRS ?

A) Spanish

B) French

C) German

D) English

Answer: D

[Link] is the official language of IASB?

A) French

B)German

C)English

D) Spanish

Answer: C

30. What was the “Norwalk Agreement?”

A) A pledge between the Financial Accounting Standards Board in the U.S. and the

IASB to make their reporting standards compatible .

B) A concession by the Financial Accounting Standards Board in the U.S. to adopt

IFRS as soon as possible .

C) It is a treaty between the United States and the European Union to make their

accounting standards converge .

D) It was an agreement signed in Norwalk, Connecticut in 2002 to make English the

official language of the IASB.

Answer: A

[Link] of the following statements is NOT a way in which a country might adopt IFRS?

By requiring all companies in that country to adopt IFRS.

By permitting Foreign countries listed on domestic exchanges to adopt IFRS.

By force of IASB to adopt IFRS.

By requiring domestic companies that list on foreign exchanges to adopt IFRS.

Answer : C

32. Which of the following is NOT a major concern related to convergence of international accounting
standards?

The complicated nature of particular standards.

The tax-driven nature of the national accounting regime.

An overload of guidance on the first-time application of IFRS .

IFRS language translation difficulties.

Answer: C

33. According to the Norwalk Agreement, the FASB will monitor:

A) All IASB projects.

B) Only those projects where they have a level of interest in the topic.

C) No IASB projects, since the IASB is capable of self-monitoring.

D) Only those projects dealing with internationally complex issues

Answer: B

34. What is the role of the liaison members of the International Accounting Standards

Board?

A) To facilitate information exchange and cooperation between the FASB and the

IASB.

B) To eliminate the political influences on the IASB and national accounting bodies .

C) To enforce adherence to the fundamental principles of the IASB .

D) All of the above.

Answer: A

35. Which of the following statements is NOT true about Anglo-Saxon Accounting?

A) There is a strong reliance on professional judgment.

B) Financial reporting focuses on the firm with an investor orientation.

C) There is a strong emphasis on measurement of taxable income.

D) Principle of fair presentation is predominant in financial reporting.

Answer : C

35. Which of the following statements is NOT true about Anglo-Saxon Accounting?

A) There is a strong reliance on professional judgment.

B) There is an agreement on the interpretation of the principle of fair presentation.

C) There is a strong emphasis on substance of reports rather than the form on reports.

D) Audits reports on the adherence to the principle of fair presentation.

Answer: B