All of the Following Statements Regarding Accounting Treatments for Liabilities

question 111

Multiple Choice

All of the following statements regarding accounting treatments for liabilities under U.S.GAAP and IFRS are true except:

• A)Accounting for bonds and notes under U.S.GAAP and IFRS is similar.
• B)Both U.S.GAAP and IFRS require companies to distinguish between operating leases and finance leases.
• C)The criteria for identifying a lease as a finance lease are more general under IFRS.
• D)Both U.S.GAAP and IFRS require companies to record costs of retirement benefits as employees work and earn them.
• E)Use of the fair value option to account for bonds and notes is not acceptable under U.S.GAAP or IFRS.

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Definitions:

Dividends

Distributions of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Journal Entries

Recorded transactions in the accounting system that show the effects of financial events on the accounts of a company.

Investment Account

An account held at a financial institution that contains securities, cash, and other investment vehicles.

Related Income

Income that arises from transactions or relationships between entities that have a special connection or are part of the same group.