Exam 1: The Economic and Institutional Setting for Financial Reporting

Differences between IFRS and U.S.GAAP include all of the following except

Comparability across companies allows analysts to identify real economic similarities in and differences between underlying economic events because those similarities or differences are not obscured by accounting methods or disclosure practices.

In the United States,the accounting rules that businesses use for external financial reporting purposes differ from the accounting rules required for taxation purposes.

Which of the following statements regarding IFRS is incorrect?

Employees demand financial information to monitor the health of company-sponsored pension plans.

Management has a responsibility to ensure that the company's financial information is properly classified,characterized,and presented clearly and concisely in order to make it understandable.

Briefly explain the forces behind the rise of IFRS.

The FASB endeavors to draft pronouncements that clearly identify the accounting objective,explain the accounting principle(s)being applied,avoid bright-line rules,and provide enough implementation guidance for consistent application.

Politically vulnerable firms with high earnings (like oil companies)are often attacked in the financial and popular media,which alleges that those earnings are evidence of anticompetitive business practices.

When financial information is measured and reported in a similar manner across different companies in the same industry it is

GAAP financial reports in the U.S.are intended to reflect the economic condition and performance of the reporting entity.

Currently,publicly traded companies located in the European Union must adopt IFRS for financial reporting in consolidated statements.

International accounting rules are currently established by the

One factor that considerably affects the ease with which users employ financial reports is that accounting is an exact science.

For information to be relevant it must possess either predictive value or confirmatory value.

The network of conventions,rules,guidelines,and procedures used by the accounting profession is known as generally accepted

Companies can change accounting methods,but the changes are restricted to situations where it can be persuasively argued that the newly adopted accounting method is preferable to the old one.

Investors are uncertain about the quality of each company's debt or equity offerings because the ultimate return from the security depends on future events.