1) The ultimate responsibility for the formulation of financial reporting rules in the US rests with:
a. Congress
b. Financial accounting standards board
c. IRS
d. Securities & exchange commission
2) In countries where the bulk of investment capital is attracted from a broad base of investors, there is a demand for financial statements to report:
a. Income on a cash basis
b. Income on a tax basis
c. Retained earnings
d. The underlying economics
3) The US requires foreign companies that wish to have securities traded on US exchanges to reconcile their reporting methods to US:
a. Congressional law
b. Generally accepted accounting principles
c. Generally accepted auditing standards
d. Tax law
4) When compared to US GAAP, international accounting standards allow:
a. About the same latitude
b. Less latitude
c. much more latitude
d. No tolerance from US GAAP
5) According to the SECs statement on International Accounting Standards the SEC requires 3 key elements for acceptance of the IASCs proposed core standards. Which one of the following is a required element?
a. Standards must be routinely interpreted & applied
b. Standards must be in accordance with US gov. accounting (Yellow Book) standards
c. Standards must comply with US GAAP
d. Standards must include a core set of accounting pronouncements that constitute a comprehensive, generally accepted basis of accounting
6) A decline in the purchasing power of a country's currency is:
a. Abnormal
b. Deflation
c. Inflation
d. Mandatory inflation
7) When a company uses the current cost accounting approach for dealing with inflation, all non-monetary assets are reflected on the balance sheet at:
a. Current costs at the balance sheet date
b. Future value
c. Net realizable value as of the beginning of the year
d. Price-level adjusted historical cost
8) General price level accounting is intended to make historical currency amounts expended in different periods:
a. Comparable
b. Consistent
c. Constant
d. Equal
9) Which one of the following accounts is a non-monetary item?
a. Accounts receivable
b. Bonds payable
c. Inventory
d. Investment in bonds
10) Which of the following accounts is a monetary item?
a. Accounts receivable
b. Depreciation expense
c. Equipment
d. Inventory
11) In general price level (Constant dollar) accounting, restatement gains & losses on non-monetary assets are:
a. Adjusted to owners equity
b. Recorded & reported as extraordinary gains or losses on income statement
c. Recorded & reported as ordinary gains or losses on income statement
d. Recorded & reported as unearned revenue