Exercises for Chapter 1一、Multiple Choice Questions1.Which of the following variables play a role in shaping accounting development?a. nature of capital marketsb. type of reporting regimec. type of business entitiesd. All of the above.e. Both a and c.2. High levels of financial disclosure are generally found in countriesa. where businesses raise their capital from a large and diverse investor/creditor group.b. where businesses raise their capital from the government.c. where there is a limited number of owners.d. where the sophistication of the financial community is not very high.e. where the cost of publishing financial statements is high.3. In countries where business capital needs are provided by only a few very large banksa. the level of disclosure in financial statements tends to be high.b. companies tend to devote significant resources to make their annual reports attractive.c. companies tend to use income-increasing accounting methods.d. companies tend to understate少报reported earnings.e. All of the above.4. Which of the following does not affect a country's financial accounting orientation?a. The level of inflation.b. Political and economic ties with other countries.c. Status of the accounting profession.d. Quality of accounting education.e. All of the above affect a country's financial accounting orientation.5. In countries with micro-oriented accounting systems, the role of accounting isa. to provide investors with information on the true position of companies.b. to reflect the effect of government economic policies in company accounts.c. to provide inputs for industry or national accounting reports.d. to determine the tax liability of business entities.e. All of the above.6. Which of the following is not true about accounting's role in a macro-oriented environment,a. to provide investors with information on the true position of companies.b. to reflect the effect of government economic policies in company accounts.c. to provide inputs for industry or national accounting reports.d. to determine the tax liability of business entities.e. All of the above.7. Which of the following is not an environmental factor affecting accounting?a. Level of enforcement of regulationsb. Nature of capital marketsc. Type of legal systemd. Languagee. Level of inflation8. Companies in which country produce annual reports to attract potential investors:a. Germanyb. Switzerlandc. United Statesd. Japane. France9. In which pair of countries is there a strong private sector influence on financial accounting standardsetting?a. France and Germany.b. China and Russia.c. France and the United Kingdom.d. Germany and Japan.e. The United Kingdom and the United States.10. Which of the following is an impetus for international accounting standards?a. The linkage of capital markets worldwide.b. Emerging democracies in Latin Americac. The new activist role of the OECDd. The collapse of communism in the former Soviet Unione. The emergence of the World Trade Organization (WTO)11. Among the factors affecting accounting development are the economic and political ties between countries.Which of the following pairs of countries do not have such ties with each other?a. Philippines and the United Statesb. Singapore and the United Kingdomc. Malaysia and Argentinad. Indonesia and the Netherlandse. France and Germany12. The status of the accounting profession is a factor that affects accounting development in countries. Inwhich of the following countries is accounting not regarded favorably as a career choice?a. United Statesb. New Zealandc. Russiad. Australiae. Canada13. Which of the following is not typically included in an accounting conceptual framework?a. a statement of objectives of financial accountingb. targeted users of financial statementsc. limitations of financial statementsd. licensing criteria for public accountantse. characteristics of good financial accounting14. Which of the following countries have conceptual frameworks for accounting?a. Singaporeb. Malaysiac. Indonesiad. Canadae. All of the above15. Identify the benefit(s) of classifying countries according to their accounting systems.a. Countries can learn from the accounting experiences of other countries in their group.b. Countries can use other countries in their group as models for setting standards.c. Global standard-setters can anticipate the reaction to their proposed standards.d. MNCs can plan on the type of disclosure they need to provide in various countries.e. All of the above.16. Which of the following accounting patterns did Mueller [1967] identify in his pioneering classificationstudy on Western, market-oriented economies?a. Macroeconomic patternb. Microeconomic patternc. Independent discipline approachd. Uniform approache. All of the above17. Which of the following was not among the accounting patterns identified by Mueller [1967] in hispioneering classification study on Western, market-oriented economies?a. Macroeconomic patternb. Independent discipline approachc. Socialist approachd. Uniform approache. Microeconomic pattern18. Nobes' [1983] classification study had the following European countries in the macro-uniform, continental,tax-based family:a.Italy, France, W. Germany, Swedenb. Belgium, Spain, Italy, W. Germanyc. Italy, France, Spain, Swedend. Italy, France, Ireland, Spaine. Italy, France, Belgium, Spain19. Nobes' [1983] classification study had the following countries in the micro-based, U.K. influence, family:a.Ireland, Netherlands, Canada, Australiab. Australia, New Zealand, U.K., Irelandc. Netherlands, Australia, U.K., U.S.Ad. Australia, Canada, U.K., Irelande. Netherlands, Australia, Canada, U.S.A.20. The major immediate challenges that face accounting in the global arena include:a. Global harmonizationb. Financial reporting in emerging economiesc. Social and environmental reportingd. Financial reporting in the high technology erae. All of the above二、True/False Questions1.The purpose of accounting is to provide information that is useful for making economic decisions.2. In order to make informed decisions in a global environment, one needs to have an understanding ofinternational accounting issues.3. The flow of goods and services across national borders requires that accounting standards becountry-specific.4. The phenomenal pace of globalization of capital markets in recent years points to the need for capitalmarket participants to understand accounting information that originates in other countries.5. Being educated in international accounting is among the portfolio of skills required of managers incompanies engaged in international business.6. While accounting is a product of its environment it does not affect the environment in which it exists.7. In the United States, financial accounting information is directed primarily toward the needs of investorsand creditors, and decision usefulness is the main criterion for judging its quality.8. Accounting in the United States is increasingly feeling the influence of Swiss accounting standards, asmore and more Swiss companies enter U.S. capital markets.9. The factors that impact accounting at the national level do not contribute to acco unting diversity at theinternational level.10. In equity-oriented capital markets, companies rely on the fairness of their bankers to obtain the necessarycapital.11. Whether a country's capital market is equity-oriented or debt-oriented has no impact on the financialreporting that develops in the country.12. In countries such as Germany, Japan, and Switzerland companies have traditionally turned to the stockmarket as their primary source of capital.13. In countries such as Canada and the United States, once companies reach a certain size they turn to banksas their primary source of capital.14. The type of capital market that exists in a country impacts financial reporting at both the cosmetic and thesubstantive level.15. Considerably more resources are devoted to the preparation of annual reports in debt-oriented capitalmarkets than in equity-oriented capital markets.16. Countries such as Austria and Germany set detailed financial reporting rules which have to be compliedwith for both tax reporting and external financial reporting.17. In code law countries such as France and Germany, accounting is regulated mainly through an accountingcode which is generally set by the legislature.18. Financial reporting in common law countries tends to be more transparent and timely than in code lawcountries.19. While it is relatively inexpensive to adopt the sophisticated accounting standards of another country, ittakes considerable resources to actually implement such standards.20. Recent statistics show that the U.S. has the highest number of auditors relative to the size of its population(i.e., auditors per 100,000 population).21. The lack of financial reporting transparency and the inconsistent application of audit standards were amongthe factors that exacerbated the recent financial crisis in Southeast Asia.22. In macro-user oriented systems, government entities such as tax and economic planning agencies are theprincipal users of accounting reports.23. In micro-user oriented accounting systems such as those in France, Germany, and Sweden, the role ofaccounting is viewed in terms of contributing to enterprise stability and continuity.24. Financial accounting diversity between countries imposes additional costs on capital market participantsworldwide.25. The object of classification (or clustering) in international accounting research is to group countriesaccording to the common elements and distinctive characteristics of their accounting systems.。