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Testbank

to accompany

Applying International
Accounting Standards
by
Alfredson, Leo, Picker, Pacter & Radford
Prepared by
Victoria Wise

John Wiley & Sons Australia, Ltd 2005

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CHAPTER 1 The IASB: history, current structure and processes


Question 1
The IASC Framework for the Preparation and Presentation of Financial Statements, now
reaffirmed by the IASB and renamed the IASB Framework, serves to guide the IASB in:
developing accounting standards
resolving accounting issues not addressed in IAS
preparing auditing standards
A
B
C
D

I
II
III IV
No Yes Yes Yes
Yes Yes No No
Yes No Yes No

I;
II;
III;
IV.

Question 2
As part of the restructuring of the IASC into the IASB in 2001, the Standing Interpretations
Committee (SIC) was replaced with the:
A
B
C
D

Urgent Issues Group (UIG);


Sarbanes-Oxley Committee (SOC);
International Financial Reporting Interpretations Committee (IFRIC);
Standards Advisory Council.

Question 3
The international accounting standards are:
A
B
C
D

rules based rather than principles based;


principle based rather than rules based;
based on regulations not concepts;
focussed on quantitative rules.

Question 4
The name that is now used for standards issued by the International Accounting Standards Board
is:
A

International Accounting Standards (IAS);

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C
D

International Generally Accepted Accounting Principles (IGAAP);


International Financial Accounting Interpretations (IFAI);
International Financial Reporting Standards (IFRS).

Question 5
The responsibilities of the International Financial Reporting Interpretations Committee include:
I.
II.
III.
IV.
V.

Report to the IASB and obtain its approval for final interpretations.
Interpret the application of IFRS.
Provide timely guidance on financial reporting issues not addressed in IFRS or IAS.
Publish draft interpretations for public comment.
Consider comments made on interpretations before finalising an interpretation.
A
B
C
D

I, II, III, IV and V;


I, II and III only;
II, III, and IV only;
III, IV and V only.

Question 6
A document that contains disclosures including financial statements, that is issued to potential
investors, by companies seeking capital, is known as a:
A
B
C
D

securities statement;
company constitution;
trust deed;
prospectus.

Question 7
Foreign registered companies in the United States can submit to the Securities and Exchange
Commission, financial statements prepared using their national GAAP provided they also
submit:
A
B
C
D

a reconciliation to US GAAP;
a reconciliation to IFRS;
a full set of financial statements conforming to US GAAP;
a full set of financial statements conforming the US Stock Exchange listing
requirements.

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Question 8
The Public Company Accounting Oversight Board has as its mission the protection of investors
in US securities markets and the furtherance of the public interest by ensuring that public
company financial statements are audited according to the highest standards of quality,
independence and ethics. This Board was created under the:
A
B
C
D

Income Tax Assessment Act;


Sarbanes-Oxley Act;
Corporations Act 2001;
IASB Framework.

Question 9
Under IFRS 2 Share-based Payment, the method that must be used to measure employee stock
options and other payments given to employees in the form of equity securities, is:
A
B
C
D

initial cost;
discounted cash flows;
fair value;
selling price.

Question 10
A company is regarded as a first-time adopter of International Financial Reporting Standards if,
for the first time, it makes an explicit and unreserved statement that:
A
B
C
D

its general purpose financial statements comply with IFRS;


it has prepared its financial statements using national GAAP;
it has selected accounting policies that are based on IFRS in force prior to 31
December 2005;
it will prospectively adjust its comparative financial statements by applying IFRS in
force at 1 January 2006.

Question 11
International Financial Reporting Standards are applicable to the following entities:
A
B
C
D

not-for-profit entities;
government activities;
government business enterprises;
public sector non-profit organisations.

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Question 12
The standards of the International Auditing and Assurance Standards Board include international
standards on:
I.
II.
III.
IV.
A
B
C
D

Quality control.
Auditing.
Review Engagements.
Assurance Engagements.

I, II and III only;


II, II and IV only;
I, III and IV only;
II, II, III and IV.

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ANSWERS
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Applying International Accounting Standards Chapter 1

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