Question 1

Which of the following is true concerning inflation disclosures?

Accepted Answer

A)  The gearing adjustment was developed primarily for the auto industry. 
B)  The Dutch prefer to use historical cost accounting due to its objectivity. 
C)  Current cost adjustments are based on the fact that the value of money has fallen. 
D)  The IASB does not recommend one specific approach to account for inflation. 
A)  The gearing adjustment was developed primarily for the auto industry. 
B)  The Dutch prefer to use historical cost accounting due to its objectivity. 
C)  Current cost adjustments are based on the fact that the value of money has fallen. 
D)  The IASB does not recommend one specific approach to account for inflation. D

Question 2

Which of the following countries have not experienced hyperinflation

Accepted Answer

A)  Russia 
B)  Brazil 
C)  Mexico 
D)  United Kingdom 
A)  Russia 
B)  Brazil 
C)  Mexico 
D)  United Kingdom D

Question 3

Mexico has never had a hyperinflation problem.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following reflects the treatment of inflation accounting in the European Union?

Accepted Answer

A)  The 4th Directive does not allow an alternative to historical cost due to the influence of the Germans. 
B)  Firms are allowed to provide supplemental current cost information. 
C)  Firms are not allowed to put their financial statements in terms of current costs, even if they provide supplemental historical cost information. 
D)  none of the above. 
A)  The 4th Directive does not allow an alternative to historical cost due to the influence of the Germans. 
B)  Firms are allowed to provide supplemental current cost information. 
C)  Firms are not allowed to put their financial statements in terms of current costs, even if they provide supplemental historical cost information. 
D)  none of the above.

Question 5

IAS 16 requires the

Accepted Answer

A)  current value accounting on property, plant and equipment 
B)  general purchasing power on property, plant and equipment 
C)  current value accounting on all assets and liabilities 
D)  general purchasing power on all assets and liabilities 
A)  current value accounting on property, plant and equipment 
B)  general purchasing power on property, plant and equipment 
C)  current value accounting on all assets and liabilities 
D)  general purchasing power on all assets and liabilities

Question 6

FASB

Accepted Answer

A)  is the only standard setting body actively working to introduce general purchasing power accounting 
B)  is working with the IASB working to introduce general purchasing power accounting 
C)  is not considering a standard for general purchasing power accounting. 
D)  is in favor of a reserve account for inflation. 
A)  is the only standard setting body actively working to introduce general purchasing power accounting 
B)  is working with the IASB working to introduce general purchasing power accounting 
C)  is not considering a standard for general purchasing power accounting. 
D)  is in favor of a reserve account for inflation.

Question 7

General purchasing power accounting

Accepted Answer

A)  has continued use in the United States 
B)  has continued use in Britain 
C)  has switched to replacement value accounting 
D)  has been in use in South America 
A)  has continued use in the United States 
B)  has continued use in Britain 
C)  has switched to replacement value accounting 
D)  has been in use in South America

Question 8

Netherlands is well known for the development of replacement value accounting.

Accepted Answer

A) True 
 B)False

Question 9

US SFAS 33 inflation accounting

Accepted Answer

A)  used only current cost accounting 
B)  was only experimental 
C)  used only general purchasing power accounting 
D)  allowed the use of either general purchasing power or current cost disclosures 
A)  used only current cost accounting 
B)  was only experimental 
C)  used only general purchasing power accounting 
D)  allowed the use of either general purchasing power or current cost disclosures

Question 10

Cash does not lose purchasing power during an inflationary period.

Accepted Answer

A) True 
 B)False

Question 11

Assume that Costa Plc buys a machine in 2003 for $200,000 when the general price index is 150. At the end of 2006, the index has risen to 210 and the current cost of the machine is $300,000. What is the current cost gain or loss net of inflation?

Accepted Answer

A)  $100,000 
B)  $220,000 
C)  $120,000 
D)  $ 80,000 
E)  $ 20,000 
A)  $100,000 
B)  $220,000 
C)  $120,000 
D)  $ 80,000 
E)  $ 20,000

Question 12

Current value accounting results in holding gains and losses when nonmonetary assets are revalued.

Accepted Answer

A) True 
 B)False

Question 13

Professor Limperg believed
I..internal management decision-makers should use current value information
II..external investor decision-makers should use current value information

Accepted Answer

A)  only I 
B)  only II 
C)  I and II 
D)  neither I or II 
A)  only I 
B)  only II 
C)  I and II 
D)  neither I or II

Question 14

In Brazil, current company law requires a general indexation approach to restate historical costs in terms of current purchasing power as of the date of the financial statements.

Accepted Answer

A) True 
 B)False

Question 15

Professor Limperg believed

Accepted Answer

A)  in general purchasing power accounting 
B)  that income is a function of revenues and replacement values 
C)  in a weak relation between economics and accounting 
D)  in the gold standard 
A)  in general purchasing power accounting 
B)  that income is a function of revenues and replacement values 
C)  in a weak relation between economics and accounting 
D)  in the gold standard

Question 16

Current US GAAP requires SFAS 33 statements.

Accepted Answer

A) True 
 B)False

Question 17

The International Accounting Standards Board

Accepted Answer

A)  takes a particular stand on the type of inflation accounting that it wants firms to use. 
B)  relies more on accounting for inflation than it does disclosure. 
C)  requires that firms restate their financial statements for general purchasing power when they are operating in hyperinflationary economies. 
D)  does not want firms to account for inflation, except in hyperinflationary countries. 
A)  takes a particular stand on the type of inflation accounting that it wants firms to use. 
B)  relies more on accounting for inflation than it does disclosure. 
C)  requires that firms restate their financial statements for general purchasing power when they are operating in hyperinflationary economies. 
D)  does not want firms to account for inflation, except in hyperinflationary countries.

Question 18

Inflation is

Accepted Answer

A)  only experienced in developing countries 
B)  most likely in the midst of a country's recession 
C)  never going to take place in a developed country 
D)  a worldwide phenomenon 
A)  only experienced in developing countries 
B)  most likely in the midst of a country's recession 
C)  never going to take place in a developed country 
D)  a worldwide phenomenon

Question 19

What is the trend in inflation accounting in South American countries of Argentina and Brazil

Accepted Answer

A)  change to current cost accounting 
B)  dropping of inflation accounting 
C)  change to general purchasing power adjustments 
D)  continued use of an index in general purchasing power statements 
A)  change to current cost accounting 
B)  dropping of inflation accounting 
C)  change to general purchasing power adjustments 
D)  continued use of an index in general purchasing power statements

Question 20

A major influence of Dutch interest in current value accounting

Accepted Answer

A)  is the extensive training of accountants in business economics 
B)  is the tulip bulb financial bubble 
C)  is the favoring of reserve accounting 
D)  is the Spanish occupation 
A)  is the extensive training of accountants in business economics 
B)  is the tulip bulb financial bubble 
C)  is the favoring of reserve accounting 
D)  is the Spanish occupation

Which of the following is true concerning inflation disclosures?

Which of the following countries have not experienced hyperinflation

Mexico has never had a hyperinflation problem.

Which of the following reflects the treatment of inflation accounting in the European Union?

IAS 16 requires the

FASB

General purchasing power accounting

Netherlands is well known for the development of replacement value accounting.

US SFAS 33 inflation accounting

Cash does not lose purchasing power during an inflationary period.

Assume that Costa Plc buys a machine in 2003 for $200,000 when the general price index is 150. At the end of 2006, the index has risen to 210 and the current cost of the machine is $300,000. What is the current cost gain or loss net of inflation?

Current value accounting results in holding gains and losses when nonmonetary assets are revalued.

Professor Limperg believed I..internal management decision-makers should use current value information II..external investor decision-makers should use current value information

In Brazil, current company law requires a general indexation approach to restate historical costs in terms of current purchasing power as of the date of the financial statements.

Professor Limperg believed

Current US GAAP requires SFAS 33 statements.

The International Accounting Standards Board

Inflation is

What is the trend in inflation accounting in South American countries of Argentina and Brazil

A major influence of Dutch interest in current value accounting

International Accounting and International Business

International Accounting Patterns, Culture and Development

Comparative International Financial Accounting I

Comparative International Financial Accounting II

International Financial Statement Analysis

International Transparency and Disclosure

International Accounting Standards and Global Convergence

International Business Combinations, Goodwill and Intangibles

International Segment Reporting

Foreign Currency Transactions and Translation

Corporate Governance and Control of Global Operations

Foreign Exchange Risk Management

International Budgeting and Performance Evaluation

International Auditing Issues

International Taxation Issues

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Exam 11: International Accounting for Price Changes

Which of the following is true concerning inflation disclosures?

Which of the following countries have not experienced hyperinflation

Mexico has never had a hyperinflation problem.

Which of the following reflects the treatment of inflation accounting in the European Union?

IAS 16 requires the

FASB

General purchasing power accounting

Netherlands is well known for the development of replacement value accounting.

US SFAS 33 inflation accounting

Cash does not lose purchasing power during an inflationary period.

Assume that Costa Plc buys a machine in 2003 for $200,000 when the general price index is 150. At the end of 2006, the index has risen to 210 and the current cost of the machine is $300,000. What is the current cost gain or loss net of inflation?

Current value accounting results in holding gains and losses when nonmonetary assets are revalued.

Professor Limperg believed I..internal management decision-makers should use current value information II..external investor decision-makers should use current value information

In Brazil, current company law requires a general indexation approach to restate historical costs in terms of current purchasing power as of the date of the financial statements.

Professor Limperg believed

Current US GAAP requires SFAS 33 statements.

The International Accounting Standards Board

Inflation is

What is the trend in inflation accounting in South American countries of Argentina and Brazil

A major influence of Dutch interest in current value accounting

International Accounting and International Business

International Accounting Patterns, Culture and Development

Comparative International Financial Accounting I

Comparative International Financial Accounting II

International Financial Statement Analysis

International Transparency and Disclosure

International Accounting Standards and Global Convergence

International Business Combinations, Goodwill and Intangibles

International Segment Reporting

Foreign Currency Transactions and Translation

Corporate Governance and Control of Global Operations

Foreign Exchange Risk Management

International Budgeting and Performance Evaluation

International Auditing Issues

International Taxation Issues

Filters