Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 11, Problem 2P
To determine
Identify the appropriate answer for the given statement from the given choices.
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Which of the following is not a problem caused by diversity in accounting practices across countries?
Multiple Choice
Comparing companies in the same industry that are headquartered in different countries.
Translating foreign currency balances into U.S. dollars.
Converting local GAAP financial statements into U.S. GAAP for consolidation purposes.
Maintaining separate accounting records in both the local and U.S. GAAP.
Identifying and retaining personnel who are competent to prepare financial statements in both international and domestic accounting
standards.
Question:
Diverse accounting practices resulting from cultural, political, and regulatory differences across different countries result in:
a. A lack of comparability among financial statements which are consolidated.
b. Greater consistency in the application of accounting principles when preparing consolidated statements.
c. A decreased need for accountants with expertise in foreign accounting principles and consolidations.
d. Fewer accounting records.
2.Explain the environmental factors that lead to national differences in accounting.
3.What are the two main legal systems operating worldwide? How might these affect accounting?
Countries that rely on capital markets for finance, as opposed to banks and governments, are likely to expect greater levels of public disclosure in their accounting systems. Evaluate this argument and provide examples.
5.Outline and discuss three cultural aspects that can differ across countries. How do these cultural differences relate to differences in accounting systems?
6.What does accounting harmonisation mean? Differentiate harmonisation from convergence or adoption.
7.Explain the benefits of global adoption of IFRSs.
8. Outline the key challenges of US GAAP and IFRS convergence.
Chapter 11 Solutions
Advanced Accounting
Ch. 11 - Historically, what factors contributed to the...Ch. 11 - Nestl S.A. is a very large company headquartered...Ch. 11 - Prob. 3QCh. 11 - Prob. 4QCh. 11 - Prob. 10QCh. 11 - Prob. 11QCh. 11 - Prob. 12QCh. 11 - What are the two extreme approaches that a company...Ch. 11 - Prob. 14QCh. 11 - Prob. 15Q
Ch. 11 - Prob. 16QCh. 11 - Prob. 17QCh. 11 - Prob. 18QCh. 11 - Prob. 19QCh. 11 - Prob. 20QCh. 11 - Even if all companies in the world were to use...Ch. 11 - Prob. 1PCh. 11 - Prob. 2PCh. 11 - Which of the following is not a reason for...Ch. 11 - Prob. 4PCh. 11 - Prob. 5PCh. 11 - Prob. 6PCh. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Prob. 10PCh. 11 - Prob. 11PCh. 11 - Prob. 12PCh. 11 - Which of the following statements is true for a...Ch. 11 - Prob. 14PCh. 11 - Prob. 15PCh. 11 - Prob. 16PCh. 11 - Prob. 17P
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- Which of the following is part of risk assessment? A foreign subsidiary does not adapt to changes in company procedures. The client lacks written procedures for initiating sales transactions. Lack of proper approval of payroll checks. The client does not reconcile its bank accounts on a regulararrow_forwardE Which one of the following statements is correct? A B E Comparing results across geographic locations is easier since all countries now use a common set of accounting standards. Peer group analysis is easier when seasonal firms have different fiscal years. Adjustments have to be made when comparing the income statements of firms that use different methods of accounting for inventory. Peer group analysis is simplified when firms use varying methods of depreciation. Peer group analysis is easier when a firm is a conglomerate versus when it has only a single line of business.arrow_forwardIdentify a limitation to using ratio analysis when examining companies reporting under different accounting systems such as IFRS versus U.S. GAAP.arrow_forward
- Which is a incorrect statement below? A. Change in revaluation surplus is an OCI that will be reclassified to retained earnings.B. An entity may present its comprehensive income using a single statement approach.C. Gain or loss from translating financial statements of a foreign operation is an OCI that will be reclassified subsequently to retained earnings.D. Sales commissions are part of selling expenses.arrow_forwardEconomic consequences of accounting standard-setting means: a. standard-setters must give first priority to ensuring that companies do not suffer any adverse effect as a result of a new standard. b. standard-setters must ensure that no new costs are incurred when a new standard is issued. c. the objective of financial reporting should be politically motivated to ensure acceptance by the general public. d. accounting standards can have detrimental impacts on the wealth levels of the providers of financial information.arrow_forwardHow do international accounting standards and cultural differences impact financial reporting practices in different regions of the world?arrow_forward
- 81) Inadequacies of the existing system of financial ratios signify a need for a different approach to monitoring business performance. Of the following statements, which is NOT a shortcoming of financial ratios? a) financial measures are lagging indicators of business performance. b) financial ratios have a short-term orientation and emphasize the cash flow rather than the processes that contribute to cash flow. c) Financial ratios focus equally on the stockholders as on the customers, suppliers and employees. d) A and B e) A and B and Carrow_forwardEconomic consequences of accounting standard-setting means:a. standard-setters must give fi rst priority to ensuring that companies do not suffer any adverseeffect as a result of a new standard.b. standard-setters must ensure that no new costs are incurred when a new standard is issued.c. the objective of financial reporting should be politically motivated to ensure acceptance by thegeneral public.d. accounting standards can have detrimental impacts on the wealth levels of the providers of financialinformation.arrow_forwardWhich of the following is true regarding GAAP and IFRS? None of the answers are correct. GAAP and IFRS require specific information be presented in the financial statements for U.S. and international companies. GAAP and IFRS require specific terminology be used in the financial statements. GAAP and IFRS determine the financial reporting requirements for specialized companies in a limited number of industries. GAAP and IFRS are not similar in their reporting requirements.arrow_forward
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