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Question 1
Question
Which of the following is not a characteristic of the Continental European model of financial accounting and its regulation?
Answer
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It has been strongly influenced by government and the banking sector.
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It relies on qualitative requirements, such as 'true and fair', rather than accounting rules.
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There is a strong association between accounting methods and the tax rules in place.
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Information tends to be of the nature that protects creditors rather than investors.
Question 2
Question
Which of the following of Gray's accounting sub-culture values describes a preference for substance over legal form regulation?
Answer
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Professionalism versus statutory control
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Uniformity versus flexibility
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Conservatism versus optimism
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Secrecy versus transparency
Question 3
Question
Which of the following does not equate with Gray's hypothesised linkages between accounting values and accounting practice?
Answer
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The higher the degree of optimism, as opposed to conservatism, the stronger the ties with traditional measurement practice.
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The higher the degree of uniformity, the lower the extent of professional judgment and the stronger the level of enforcement in applying rules and procedures.
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The higher the degree of secrecy preferred, the lower the amount of disclosure.
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The higher the degree of professionalism, the greater the degree of self-regulation and the lower the need for government intervention.
Question 4
Question
The type of business ownership and financing system, and the taxation system, influence the nature of accounting practice in different countries. Which of the following describes the institutional influence more conducive to the increasing scale of globalised business and development of international accounting standards?
Answer
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Outsider systems, where finance is mainly provided by external shareholders, and where the tax system is separate from the accounting system
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Insider systems, where finance is mainly provided by family owners, banks and government, and the tax system dominates the accounting system
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Outsider systems, where finance is mainly provided by family owners, banks and government, and the tax system is separate from the accounting system
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Insider systems, where finance is mainly provided by external shareholders, and where the tax system dominates the accounting system
Question 5
Question
Which of the following is not necessarily a benefit of harmonisation and convergence?
Answer
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Increased relevance, functionality and appropriateness for all countries
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Improved understanding and interpretation of financial reports by users in different countries
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Increased comparability and consistency
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Lower preparation costs for companies that have to produce different financial reports in different countries
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