Worldwide Accounting Diversity
Chapter 02
Worldwide Accounting Diversity
Multiple Choice Questions
1. |
What is the equivalent of the common stock account on a U.S. balance sheet on the balance sheet of a British company?
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Learning Objective: 02-01 Provide evidence of the diversity that exists in accounting internationally. |
2. |
What does "harmonization" mean in the context of international accounting?
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Learning Objective: 02-02 Explain the problems caused by accounting diversity. |
3. |
It is generally believed that the 1997 financial crisis in East Asia was partly due to accounting factors in that part of the world. Which of the following accounting values was lacking in that part of the world and thereby contributed to the crisis?
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Learning Objective: 02-02 Explain the problems caused by accounting diversity. |
4. |
Which of the following is NOT a problem caused by accounting diversity?
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Learning Objective: 02-02 Explain the problems caused by accounting diversity. |
5. |
Differences in legal systems used in various countries have been cited as one reason for diversity in accounting practices. What are the major types of legal systems?
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Learning Objective: 02-03 Describe the major environmental factors that influence national accounting systems and lead to accounting diversity. |
6. |
The accounting standards in code law countries tend to be:
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Learning Objective: 02-03 Describe the major environmental factors that influence national accounting systems and lead to accounting diversity. |
7. |
What is likely to be the source of accounting standards in common law countries?
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Learning Objective: 02-03 Describe the major environmental factors that influence national accounting systems and lead to accounting diversity. |
8. |
What is the likely result when accounting rules are left up to professional associations rather than being legislated by governmental bodies?
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Learning Objective: 02-03 Describe the major environmental factors that influence national accounting systems and lead to accounting diversity. |
9. |
Relative to accounting standards in countries such as Germany, whose accounting laws are only 47 pages long, accounting practice in the U.S. is often described as being subject to:
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Learning Objective: 02-03 Describe the major environmental factors that influence national accounting systems and lead to accounting diversity. |
10. |
In code law countries such as Germany, France, and Japan, tax law and accounting standards tend to be:
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Learning Objective: 02-03 Describe the major environmental factors that influence national accounting systems and lead to accounting diversity. |
11. |
If most of a country's business financing comes from families, banks, and the government, what should we expect in terms of information disclosure to the public?
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Learning Objective: 02-03 Describe the major environmental factors that influence national accounting systems and lead to accounting diversity. |
12. |
In countries such as the U.S., there is great demand for public disclosure of accounting information. What is the reason for this?
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Learning Objective: 02-03 Describe the major environmental factors that influence national accounting systems and lead to accounting diversity. |
13. |
Historical cost is the primary basis for asset valuation under U.S. GAAP. Why is historical cost NOT as important in the accounting systems of Latin America as in the U.S.?
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Learning Objective: 02-03 Describe the major environmental factors that influence national accounting systems and lead to accounting diversity. |
14. |
In the United States, conformity between presentation of the financial statements and the tax statements is required only for:
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Learning Objective: 02-03 Describe the major environmental factors that influence national accounting systems and lead to accounting diversity. |
15. |
In some countries, financial accounting and tax accounting are so closely related that there is very little need to account for deferred income taxes. Which of the following countries has a financial accounting system that is most different from its tax laws?
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Learning Objective: 02-03 Describe the major environmental factors that influence national accounting systems and lead to accounting diversity. |
16. |
In the Nobes classification of accounting systems, micro-based accounting systems are oriented toward:
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Learning Objective: 02-04 Describe a judgmental classification of countries by financial reporting system. |
17. |
According to the research of Christopher Nobes, the most relevant factor in determining the purpose of financial reporting is:
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Learning Objective: 02-04 Describe a judgmental classification of countries by financial reporting system. |
18. |
According to the research of Christopher Nobes, what is the primary determinant of the accounting systems in developing countries?
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Learning Objective: 02-04 Describe a judgmental classification of countries by financial reporting system. |
19. |
The "Fair Presentation/Full Disclosure Model" is a classification scheme used by:
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Learning Objective: 02-04 Describe a judgmental classification of countries by financial reporting system. |
20. |
The extent to which hierarchy and unequal authority distribution in institutions and organizations are accepted within a culture is referred to as:
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
21. |
A cultural preference for a loosely knit social fabric rather than a tightly knit social fabric is referred to as:
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
22. |
A cultural emphasis on values of performance and achievement rather than values of relationships, caring, and nurturing is referred to as:
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
23. |
What term is used to refer to a cultural aversion to ambiguous situations?
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
24. |
A cultural preference for accounting systems that rely on compliance with legal requirements is called:
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
25. |
Countries such as the U.S. tend to value self-regulation of accounting. What term is used to define this subculture?
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
26. |
What does "transparency" mean in accounting?
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
27. |
What term is used to describe accounting standards that encourage risk-taking in financial reporting?
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
28. |
In Gray's framework for accounting system development, which of the following countries tends to have a relatively high degree of transparency in their companies' financial statements?
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
29. |
In Gray's framework for accounting system development, which of the following countries tends to show a relatively high preference for conservative accounting standards?
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
30. |
In Gray's framework for accounting system development, optimism is a value of accounting standards that would most likely be found in _____.
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
31. |
In Gray's framework for accounting system development, the cultural dimensions of individualism, power distance, uncertainty avoidance, and masculinity directly affect:
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
32. |
Individualism, power distance, uncertainty avoidance, and masculinity are examples of:
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
33. |
The concepts of professionalism, uniformity, conservatism, and secrecy are classified in Gray's framework for accounting system development as:
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
34. |
According to Gray's framework for accounting system development, which of the following is directly affected by ecological influences, such as geography, demography, and technology?
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
35. |
According to Gray's framework for accounting system development, the counterpart to the accounting value of "secrecy" is:
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
36. |
In their 1993 paper, Doupnik and Salter found that countries tended to cluster in terms of the similarities or differences of their accounting systems. These researchers attribute the large cluster around United Kingdom to:
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
37. |
The 1993 study by Doupnik and Salter found that a cluster of Latin American countries indicated that the similarity of their accounting systems was related to:
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
38. |
In some countries, financial institutions operate under Shariah, which also gives guidance about accounting practice in these institutions. Shariah is the:
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
39. |
The term "Class A Accounting" as it is used by the researcher Christopher Nobes refers to:
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Learning Objective: 02-06 Describe a simplified model of the reasons for international differences in financial reporting. |
40. |
The term "Class B Accounting" as it is used by the researcher Christopher Nobes refers to:
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Learning Objective: 02-06 Describe a simplified model of the reasons for international differences in financial reporting. |
41. |
Which financial statement is provided by virtually all corporations worldwide?
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Learning Objective: 02-07 Categorize accounting differences internationally and provide examples of each type of difference. |
42. |
Which of the following financial statements is NOT universally included in annual reports?
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Learning Objective: 02-07 Categorize accounting differences internationally and provide examples of each type of difference. |
43. |
International accounting diversity can be found in terms of:
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Learning Objective: 02-07 Categorize accounting differences internationally and provide examples of each type of difference. |
44. |
What term is used to refer to the decision about whether to report an item in the financial statements?
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Learning Objective: 02-07 Categorize accounting differences internationally and provide examples of each type of difference. |
45. |
What method of fixed asset valuation would most likely be used in countries that regularly experience high rates of inflation?
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Learning Objective: 02-07 Categorize accounting differences internationally and provide examples of each type of difference. |
46. |
Under U.S. GAAP, fixed assets are generally reported on the balance sheet at their:
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Learning Objective: 02-07 Categorize accounting differences internationally and provide examples of each type of difference. |
47. |
Which of the following bases for fixed asset valuation was being used by Mexico until 2008?
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Learning Objective: 02-07 Categorize accounting differences internationally and provide examples of each type of difference. |
48. |
The methods allowed by the IFRS for valuing property, plant, and equipment are:
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Learning Objective: 02-07 Categorize accounting differences internationally and provide examples of each type of difference. |
49. |
In terms of level of detail provided in the individual financial statements, the U.S. tends to:
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Learning Objective: 02-07 Categorize accounting differences internationally and provide examples of each type of difference. |
50. |
Which of the following is found in a Mexican income statement in the "Comprehensive Financing Result" section?
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Learning Objective: 02-07 Categorize accounting differences internationally and provide examples of each type of difference. |
51. |
Assets are commonly shown in order of their liquidity, or in reverse order of their liquidity. What is liquidity?
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Learning Objective: 02-07 Categorize accounting differences internationally and provide examples of each type of difference. |
52. |
Which of the following statements is true about the comparability of financial statement of the United States and the United Kingdom?
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Learning Objective: 02-04 Describe a judgmental classification of countries by financial reporting system. |
53. |
According to Gray's framework which is an extension of Hofstede's model of cultural pattern, which of the following is true about accounting system development?
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Learning Objective: 02-03 Describe the major environmental factors that influence national accounting systems and lead to accounting diversity. |
54. |
Which of the following is the primary purpose of preparing a statement of added value?
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Learning Objective: 02-07 Categorize accounting differences internationally and provide examples of each type of difference. |
55. |
Gray argues that national cultural values affect accounting values. If Country X ranks low on uncertainty avoidance, which of the following statements would be true?
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Learning Objective: 02-05 Discuss the influence that culture is thought to have on financial reporting. |
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