Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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Chapter A1, Problem 2MCQ
To determine
Concept introduction:
International financial reporting framework (IFRS):
International
To choose:
The true statement.
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Do you believe that the current international accounting standard-setting arrangements, based around the IASB, are at risk of regulatory capture? Why or why not?
Any effort towards standardizing accounting practices on an international basis implies a belief that a globalized ‘one size fits all’ approach is appropriate. Is this naive?
discuss some of the issues that some U.S. accountants have with IFRS. There are some fundamental differences between U.S. GAAP and IFRS that many believe should prevent the U.S. from convergence.
Chapter A1 Solutions
Cornerstones of Financial Accounting
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- Which of the following events caused international accounting standards to become more widely adopted? A. The creation of the International Accounting Standards Committee in 1973. B. The announcement by the European Union (EU) that listed companies within EU countries would have to adopt international reporting standards.' C. The creation of the International Accounting Standards Board in 2001. D. the U.S. Securities and Exchange Commission acceptance of international reporting standards for companies listed on the U.S. securities exchanges.arrow_forwardIn its Final Staff Report (issued in 2012), what type of convergence between U.S. GAAP and IFRS did the SECstaff argue was not feasible? What reasons did the SEC staff give for that conclusion?arrow_forwardShould U.S. public accounting firms try to audit internationally in cultures they may not understand? If so, how can they maintain quality audits?arrow_forward
- What is the so-called Norwalk Agreement?a. An agreement between the FASB and SEC to allow foreign companies to use IFRS 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.arrow_forwardChoose the correct. What is the so-called Norwalk Agreement?a. An agreement between the FASB and SEC to allow foreign companies to use IFRS 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.arrow_forwardThe purpose of the IFRS Interpretations Committee is to: Consider accounting issues that are likely to receive unintended or unacceptable treatment in the absence of any other form of guidance Ensure accurate translation from English into the other principal languages utilised by the IASB Provide initial technical advice and service for companies wishing to adopt International Accounting Standards Provide a compliance function to ensure the timely and accurate adoption of new International Accounting Standards by companies with listed securities.arrow_forward
- Which of the following historical reasons for accounting diversity could explain why accounting standards would be more detailed in some countries than in others? Choose the correct.a. Different rates of inflation across countries.b. Different legal systems across countries.c. Differences across countries in the extent to which financial statements are the basis for taxation.d. Political and economic ties between countries.arrow_forwardWhich of the following is not a reason for establishing international accounting standards? Choose the correct.a. Some countries do not have the resources to develop accounting standards on their own.b. Comparability of financial reporting 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.arrow_forwardHow do differences in accounting standards and regulations across countries pose challenges for the accurate and consistent analysis of international transactions, and what strategies can be employed to address these challenges?arrow_forward
- What are some of the differences between International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (GAAP)? What are some advantages and disadvantages of adopting IFRS in the US?arrow_forwardExplain whether or not the adoption of IFRS by different countries will result in the adoption of consistent and comparable accounting practices internationally.arrow_forwardThe following comments were made at an Annual Conference of the Financial Executives Institute (FEI).There is an irreversible movement toward the harmonization of financial reporting throughout the world. The international capital markets require an end to:1. The confusion caused by international companies announcing different results depending on the set of accounting standards applied.2. Companies in some countries obtaining unfair commercial advantages from the use of particular national accounting standards.3. The complications in negotiating commercial arrangements for international joint ventures caused by different accounting requirements.4. The inefficiency of international companies having to understand and use a myriad of different accounting standards depending on the countries in which they operate and the countries in which they raise capital and debt. Executive talent is wasted on keeping up to date with numerous sets of accounting standards and the never-ending changes…arrow_forward
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