Worldwide Accounting Diversity Answer Key Part 2

28) In Gray's framework for accounting system development, which of the following countries tends to show a relatively high preference for conservative accounting standards? A) Norway B) United Kingdom C) United States of America D) Japan Answer: D 29) In Gray's framework for accounting system development, optimism is a value of accounting standards that would most likely be found in ________. A) Japan B) Australia C) Mexico D) Brazil Answer: B 30) In Gray's framework for accounting system development, the cultural dimensions of individualism, power distance, uncertainty avoidance, and masculinity directly affect: A) accounting systems. B) accounting values. C) external influences. D) ecological influences. Answer: B 31) Individualism, power distance, uncertainty avoidance, and masculinity are examples of: A) accounting values. B) ecological factors. C) cultural dimensions. D) external forces. Answer: C 32) The concepts of professionalism, uniformity, conservatism, and secrecy are classified in Gray's framework for accounting system development as: A) accounting values. B) accounting systems. C) institutional consequences. D) cultural dimensions. Answer: A 33) 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? A) Accounting values B) Accounting systems C) Institutional consequences D) Cultural dimensions Answer: D 34) According to Gray's framework for accounting system development, the counterpart to the accounting value of "secrecy" is: A) professionalism. B) transparency. C) optimism. D) flexibility. Answer: B 35) 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 the United Kingdom to: A) the superiority of the Anglo accounting model. B) the predominant influence of Great Britain in the world economy. C) the colonial influence of Great Britain on accounting development. D) the fact that more of the world's people speak English than any other language. Answer: C 36) A cluster of Latin American countries indicated that the similarity of their accounting systems was related to: A) a common currency. B) the importance of inflation. C) the colonial influence of Spain. D) the colonial influence of the United States of America. Answer: B 37) The term "Class A Accounting" as it is used by the researcher Christopher Nobes refers to: A) conservative accounting systems. B) the most efficient accounting systems. C) accounting systems that primarily serve external shareholders. D) accounting systems developed primarily for creditors and taxing authorities. Answer: C 38) The term "Class B Accounting" as it is used by the researcher Christopher Nobes refers to: A) less preferred accounting systems. B) less efficient accounting systems. C) accounting systems that primarily serve external shareholders. D) accounting systems that were developed primarily for creditors and taxing authorities. Answer: D 39) Which financial statement is provided by virtually all corporations worldwide? A) Statement of Cash Flows B) Statement of Changes in Financial Position C) Balance Sheet D) Statement of Changes in Non-current Assets Answer: C 40) Which of the following financial statements is NOT universally included in annual reports? A) Balance sheet B) Statement of cash flows C) Income statement D) All of the above statements are included in annual reports worldwide. Answer: B 41) International accounting diversity can be found in terms of: A) the terminology used in the financial statements. B) the amount of information disclosed in the financial statements. C) the order of items in the financial statements. D) All of the above evidence of accounting diversity. Answer: D 42) What term is used to refer to the decision about whether to report an item in the financial statements? A) Capitalization B) Recognition C) Realization D) Conservatism Answer: B 43) What method of fixed asset valuation would most likely be used in countries that regularly experience high rates of inflation? A) Historical cost at subsequent balance sheet dates B) Historical cost adjusted for changes in general purchasing power (GPP) C) Fair value D) Net present value at subsequent balance sheet dates Answer: B 44) Under U.S. GAAP, fixed assets are generally reported on the balance sheet at their: A) historical cost. B) net realizable value. C) fair value. D) market value. Answer: A 45) Which of the following bases for fixed asset valuation was being used by Mexico until 2008? A) Historical cost B) Historical cost later restated in terms of GPP C) Historical replacement cost D) Net realizable value Answer: B 46) The methods allowed by the IFRS for valuing property, plant, and equipment are: A) historic cost and general purchasing power. B) historic cost and fair value. C) fair value and general purchasing power. D) fair value and inflation-adjustment. Answer: B 47) In terms of level of detail provided in the individual financial statements, the U.S. tends to: A) emphasize more line items on the face of the financial statements. B) rely less on footnote disclosure. C) condense the amount of line items and supplement with more footnote detail. D) use footnotes only when absolutely required by GAAP. Answer: C 48) Which of the following is found in a Mexican income statement in the "Comprehensive Financing Result" section? A) Non-controlling interest net income B) Purchasing power gain or loss during inflationary periods C) Income taxes D) Equity in income of associates Answer: B 49) Assets are commonly shown in order of their liquidity, or in reverse order of their liquidity. What is liquidity? A) Liquidity refers to how easily the assets are converted to cash. B) Liquidity means that assets are inflation-adjusted. C) Liquidity refers to whether the asset is depreciable or not. D) Liquidity means that the assets are closely matched to specific liabilities. Answer: A 50) Which of the following statements is true about the comparability of financial statement of the United States and the United Kingdom? A) The result of Latin American colonialism is the large number of countries with the United Kingdom's influence on their accounting practices. B) The financial statements of companies in the United States and the United Kingdom are comparable as they are prepared after adjusting inflation, which is a critical factor affecting accounting practice. C) The basic principle followed by both countries in preparing financial statements is government economics and government tax and legal framework. D) The accounting practices of both the countries are oriented toward the decision needs of a large number of investors and creditors. Answer: D 51) 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? A) Accounting system development is mainly influenced by a country's constitutional framework. B) Countries following limited disclosures adhere less strictly to the notion of conservatism in the measurement of assets and liabilities. C) Accounting system development is influenced by a less conservative approach resulting in the development of short-term oriented accounting practices. D) The external factors have a direct influence on the development of institutional framework leading to the development of accounting systems. Answer: C 52) Which of the following is the primary purpose of preparing a statement of added value? A) To show the value added to products while at production B) To show the distribution of added value by the company among shareholders C) To calculate the net taxable income of the company D) To show the costs in addition to gross payroll that the company incurs related to its labor force Answer: B 53) 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? A) The country would rank high on the accounting values of uniformity. B) The country would rank high on the accounting values of secrecy. C) The country would rank low on the accounting values of professionalism. D) The country would rank low on the accounting values of conservatism. Answer: D