MULTIPLE CHOICE:

1. All of the following are reasons for international accounting diversity:

A) the culture of a nation

B) differences in the purpose of the financial information

C) the nature of a country's financing system

D) the institutional structures of a country

E) taxes

2. The culture of a country determines the nature of a country's financing system. What type of funding system leads to what kind of accounting?

A) A system of external financing of weak capital equity leads to an accounting system for external shareholders.

B) An external financing system of weak capital equity leads to an accounting system for individual owners.

C) An external financing system of strong capital equity leads to an accounting system for external shareholders.

D) An external financing system of strong capital equity leads to a system of accounting for taxes.

E) A strong external equity equity financing system leads to an accounting system for creditors.

3. By April 2001, what is the name of the organization responsible for setting international accounting standards?

A) International Accounting Standards Committee

B) International Organization of securities Commissions

C) International Accounting Standards Board

D) European Union

E) World Trade Organization

4. One of the FASB's convergence initiatives was intended to eliminate a variety of individual differences between IFRS and US GAAP. This resulted in changes in all of the following, except for:

A) earnings per share.

B) inventory costs.

C) accounting changes.

D) research and development.

E) asset exchanges.

 5. Diversity in accounting practices causes the following problems, except: A) difficulty in accessing foreign markets. B) a lower cost of capital. C) the lack of comparability of financial statements between companies from different countries. D) higher costs in the preparation of consolidated financial statements by companies with operations abroad. E) difficulty for investors to determine attractive acquisitions in foreign countries.