Question

Which of the following is a benefit of the convergence between US GAAP and IFRS?

Group of answer choices

B. All companies now have a choice between different sets of financial reporting standards

C. The IASB and FASB use the exact same conceptual framework to generate accounting standards

D. All companies will produce financial statements in English

A. Increased comparability between financial statements produced in different countries

As a result of the convergence efforts since 2007:

Group of answer choices

A. the SEC began allowing foreign companies to report under IFRS without reconciliation to US GAAP.

B. IFRS was required to use for US (domestic) companies

C. US GAAP was defined as the high-quality, globally accepted accounting standard and thus no changes were introduced to it

D. US GAAP was required to use in more than 15 countries

IFRS and US GAAP are

Group of answer choices

D. largely grounded in the same principles

A. drastically different even for most commonly encountered transactions

B. different as US GAAP is accrual based and IFRS is the cash based

C. different as US GAAP is cash based and IFRS is the accrual based

IFRS and US GAAP differ because:

Group of answer choices

A. IFRS is more rules based and US GAAP is more principles based

D. IFRS is more prescriptive and US GAAP is more descriptive

C. IFRS is more principles based and US GAAP is more rules based

B. IFRS is more objective and US GAAP is more subjective

One significant difference between US GAAP and IFRS is:

Group of answer choices

A. IFRS does not allow the use of FIFO

D. US GAAP does not allow LIFO

C. IFRS does not capitalize shipping costs related to inventory

B. IFRS does not allow the use of LIFO

"Development" costs refer to costs firms incur in developing new products, process and services. They are part of "Research and Development' costs. Which of the following statements is true with respect to accounting for development costs:

Group of answer choices

D. US GAAP and IFRS have the same requirements for development costs.

B. IFRS requires development costs to be expensed as incurred unless addressed by guidance in another IASB Topic.

A. US GAAP requires development costs to be expensed as incurred unless addressed by guidance in another ASC Topic.

C. US GAAP requires development costs to be capitalized when technical and economic feasibility of a project can be demonstrated in accordance with specific criteria, including: demonstrating technical feasibility, intent to complete the asset and ability to sell the asset in the future.

Which of the following is TRUE regarding the convergence between US GAAP and IFRS?

Group of answer choices

A. The main justification for IFRS and US GAAP convergence was a drastic difference between two standards in all of the transactions

D. While convergence is not attainable in the nearest future, the goal to keep US GAAP and IFRS as comparable as possible is still in the FASB and IASB agendas.

C. Convergence will be achieved when IFRS and US GAAP will be completely eliminated and instead the new, superior quality single globally accepted accounting standard will be set up.

B. Convergence will be achieved when the differences in the way GAAP and IFRS account for and report transactions are eliminated.

Answer 1

(1)

OPTION A: Increased comparability between financial statements produced in different countries

EXPLANATION:

The different accounting practices followed under both the systems have largely eliminated because of the convergence between US GAAP and IFRS. This has led to increased comparability between financial statements produced in different countries.

(2)

OPTION A: the SEC began allowing foreign companies to report under IFRS without reconciliation to US GAAP

EXPLANATION

As a result of the convergence efforts, the SEC began allowing foreign companies to report under IFRS without reconciliation to US GAAP.

(3)

OPTION D: largely grounded in the same principles

EXPLANATION:

IFRS and US GAAP are largely grounded in the same principles

(4)

OPTION C. IFRS is more principles based and US GAAP is more rules based

EXPLANATION:

From the construction of both systems, it is evident that IFRS is more principles based and US GAAP is more rules based

(5)

OPTION B. IFRS does not allow the use of LIFO

EXPLANATION:

IFRS prohibits the use of LIFO