9. The United States requires foreign companies that wish to have securities tra

Question

9. The United States requires foreign companies that wish to have securities traded on U.S. exchanges to reconcile their reporting methods to U.S.:
congressional law.
generally accepted accounting principles.
generally accepted auditing standards.
tax law.


10. When compared to U.S. GAAP, international accounting standards allow:
about the same latitude.
less latitude.
much more latitude.
no tolerance from U.S. GAAP.


11. According to the SEC's Statement on International Accounting Standards, the SEC requires three key elements for acceptance of the IASC's proposed core standards. Which one of the following is a required element?
The standards must be routinely interpreted and applied.
The standards must be in accordance with U.S. governmental accounting (Yellow Book) standards.
The standards must comply with U.S. GAAP.
The standards must include a core set of accounting pronouncements that constitute a comprehensive, generally accepted basis of accounting.


12. A decline in the purchasing power of a country's currency is:
abnormal.
deflation.
inflation.
mandatory inflation.


13. When a company uses the current cost accounting approach for dealing with inflation, all nonmonetary assets are reflected on the balance sheet at:
current costs at the balance sheet date.
future value.
net realizable value as of the beginning of the year.
price-level adjusted historical cost.

Explanation / Answer

9. Generally Accepted Accounting Principles is the correct answer.     The securities and Exchange Commission an agency of the U.S. government, has authority over the accounting, and financial disclosures for companies whose shares of ownership are traded and sold to the public. The SEC normallly accepts the accounting principles set forth by the FASB. However the SEC may issue staff Accounting Bulletins on accounting matters that may not have been addressed by the FASB. 10.Same latitude is the correct answer. Many countries outside the United States use generallly accepted accounting principles adopted by the International Accounting Standards Board(IASB).The IASB issues International Fiancial Reporting Standars .Significant differences currently exist between FASB and IASB accountng principles. 11.The standards must include a core set of accounting pronouncements that constitute a comprehensive, generally acccepted basis of accounting. World wide accounting principles would help facilitate investment and business in an increasinglly global economy. 12.Inflation is the correct answer. Often decline in the purchasing power causes to inflation. 13. Current costs at the balance sheet date. Whenever a company uses the current cost accounting approach for dealing with inflation all nonmonetary assets are reflected on the balance sheet date because current costs are taken to prepare the balance sheet.

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