How does the lack of global accounting standards affect U.S.-based companies?
A) Unethical U.S. companies will use whichever standard creates the most benefit for them.
B) Using standards in countries where they do business allows for greater opportunity in the international market.
C) Reporting performance in a variety of consolidated statements for global affiliates will minimize understanding, thereby minimizing attempted leveraged buyouts.
D) There may be inconsistent and conflicting information that create confusion for stakeholders.
E) Assets can be values according to one standards, revenue and debt according to other standards, in an overall goal of presenting positive performance levels.
Answer: D
Explanation: D) U.S.-based global companies may prepare different financial reports using local accounting practices for each country in which they conduct business. This can result in vastly different pictures of a firm's financial health. Income statements, balance sheets, and statements of cash flows using local GAAPs versus IASB practices may contain conflicting information with inconsistencies leading to confusion and misunderstandings among investors and other constituents.
You might also like to view...
Before any internal control procedure is initiated, which of the following questions must be primarily addressed by a company?
A) Will this put an end to theft? B) Is this the best security money can buy? C) How much benefit will be derived from the cost of the procedure? D) Will this prevent accounting errors?
The initial rate on an ARM will typically be
A) relatively low, which benefits the homeowner. B) relatively high to allow the bank to recoup costs. C) about the same as a fixed rate loan on the same maturity. D) set by state law.