Which of the following is the role of a performance evaluation system in a
multinational corporation?
A. Monitor organizational effectiveness
B. Identify areas that need improvement
C. Assess how well division managers are doing
D. All of the above
Answer:
In hedge accounting, which of the following exposure should be hedged by foreign
currency derivative?
A. Temporal exposure
B. Fair value exposure
C. Derivative exposure
D. Forward contract exposure
Answer:
Which of the following are significant shortcomings with voluntary CSR practices?
A. Reliability of the disclosures
B. Biased and self-laudatory disclosures
C. Minimal disclosure of negative information
D. All of the above
Answer:
IAS 38 states that an intangible asset is deemed to have an indefinite life when there is
no foreseeable end to the expected cash flows the asset is likely to generate. What is the
impact of an indefinite life on amortization of the intangible asset’s cost under IAS 38?
A. Management may choose any number of years over which to amortize the cost.
B. No amortization is taken as long as the life is considered indefinite.
C. The cost of the asset should be amortized over 20 years.
D. The cost of the asset should be expensed in the period the intangible asset is
acquired.
Answer:
How does IAS 38 (Intangible Assets) differ from U.S. GAAP with respect to
development costs?
A. U.S. GAAP does not allow capitalization of development costs, whereas IAS 38
allows capitalization of these costs.
B. U.S. GAAP requires capitalization of development costs, whereas IAS 38 makes
capitalization of these costs optional.
C. U.S. GAAP treats development costs as part of “Goodwill”, whereas IAS 38 treats
these costs as an intangible asset.
D. U.S. GAAP requires expensing of all development costs, and IAS 38 requires
capitalizing all development costs.
Answer:
Which of the following sectors does NOT report financial savings from their actions to
improve their social targets?
A. Information technology
B. Financial services
C. Oil and gas
D. Pharmaceuticals
Answer:
Under IAS 12, current and deferred taxes are measured on the basis of:
A. rates that have been enacted or substantively enacted by the balance sheet date.
B. current rates and rates anticipated when temporary differences reverse.
C. rates anticipated when temporary differences reverse.
D. rates prevailing when the entity provided goods or services.
Answer:
Recently enacted listing requirements of the New York Stock Exchange focuses
attention on independent directors. How does the NYSE define an independent
director?
A. No material relationship with the listed corporation
B. Not a member of corporate management
C. Owns fewer than 10,000 shares of the corporation’s stock
D. Does not meet regularly with the board of directors
Answer:
What is the probable reason that many foreign countries provide convenience
translations of their financial statements into English?
A. U.S. GAAP is the most widely used set of financial accounting standards.
B. Globalization of capital markets has increased the demand for English language
financial statements.
C. England is the home of more multinational corporations than any other country.
D. The Securities and Exchange Commission requires all foreign companies doing
business in the U.S. to provide English translations.
Answer:
According to the Framework for Preparation and Presentation of Financial Statements
of the IASB, what is the definition of income?
A. Assets minus liabilities
B. Revenue minus expenses
C. Increase in equity (other than from transactions with owners)
D. Inflow of resources with future economic benefit
Answer:
Under what condition should the gain or loss from translating foreign currency profit of
subsidiary into the parent’s home currency be included in the subsidiary’s measure of
performance?
A. If the subsidiary manager is authorized to hedge the translation exposure
B. If there is a translation gain, but not if there is a translation loss
C. If the multinational corporation is using the same method of translation for
performance evaluation as it does for financial reporting
D. If the impact on cash flows from foreign exchange is minimal
Answer:
Under U.S. GAAP, what is the proper treatment of unrealized foreign exchange gains?
A. They should be deferred on the Balance Sheet until cash is received.
B. The principle of conservatism requires that they should never be recognized.
C. They should not be recorded until cash is received and the exchange transaction is
completed.
D. They should be recognized in income on the date the exchange rate changes.
Answer:
In what area is external auditing consistent internationally?
A. Audit report
B. Auditing standards
C. Regulation of the profession
D. None of the above
Answer:
Under U.S. tax laws, how are taxes paid by U.S. corporations to foreign governments
treated?
A. Total domestic taxes paid in U.S. are deductions in calculating taxable income.
B. Domestic income taxes owed are credits against U.S. taxes owed.
C. Taxpayers may choose to deduct total foreign taxes paid or take credit for foreign
income taxes.
D. None of the above
Answer:
Through 50 years of high quality service, Domo Diagnostics Laboratory has created
goodwill with its clients that management estimates is worth at least $20,000,000.
Under IAS 38, how should this be recognized?
A. An intangible asset “Goodwill” should be debited for $20,000,000.
B. The $20,000,000 should be expensed over a period of 20 years.
C. The $20,000,000 should be expensed over a period of 50 years.
D. It should not be recognized in Domo’s accounting records at all.
Answer:
To determine U.S. taxable income, foreign branch net income is grossed up by:
A. adding taxes paid to the foreign government translated at the exchange rate at the
end of the year.
B. deducting taxes paid to the domestic government translated at the exchange rate at
the date of payment.
C. adding taxes paid to the foreign government translated at the exchange rate at the
date of payment.
D. deducting taxes paid to the foreign government translated at the exchange rate at the
date of payment.
Answer:
Dynasty Industries reported total liabilities of ¥9,000,000 and total assets of
¥12,000,000. The current exchange rate is ¥120 = $1. What is Dynasty Industries’ debt
ratio?
A. ¥1.33
B. 133%
C. 75%
D. 6.25%
Answer:
Countries such as the U.S. tend to value self-regulation of accounting. What term is
used to define this subculture?
A. Uniformity
B. Flexibility
C. Conservatism
D. Professionalism
Answer:
What is another name for the worldwide approach of tax jurisdiction?
A. Nationality approach
B. Global approach
C. International approach
D. Boundary approach
Answer:
Holding managers accountable only for the factors over which they have control is
called:
A. management control systems.
B. responsibility accounting.
C. decentralization.
D. centralization.
Answer:
What steps can be taken by an analyst to alleviate the timeliness problem encountered
in comparing financial statements between countries that have different time frames for
reporting?
A. Use interim financial statements instead of annual reports.
B. Convert all financial statement items to a common year using current exchange
rates.
C. Request financial statements from foreign corporations as soon as they are available.
D. Nothing can be done by the analyst do deal with this challenge.
Answer:
Hyperinflation causes what kind of risk for a multinational corporation?
A. Economic risk
B. Physical risk
C. Financial risk
D. Political risk
Answer:
Which of the following entity-wide disclosures is NOT required under both IFRS 8 and
U.S. GAAP?
A. Information about products and services
B. Information about intersegmental transfer pricing
C. Information about major customers
D. Information about geographic areas
Answer:
Synergy Ltd. purchased a building in 2008 for €20,000,000 and as of December 31,
2014 had recorded accumulated depreciation on the building of €6,000,000. On
December 31, 2014, the company conducted its first revaluation when the fair value
was €24,000,000. Under IAS 16, the journal entry recorded on this date would include:
A. a credit to Revaluation SurplusBuilding for €10,000,000.
B. a debit to Revaluation SurplusBuilding for €14,000,000.
C. a debit to Loss on RevaluationBuilding for €14,000,000.
D. a credit to Loss on RevaluationBuilding for €10,000,000.
Answer:
Which of the following is a benefit of tax treaties?
A. They can be used to define tax jurisdiction.
B. They may be used to reduce withholding taxes.
C. They facilitate the exchange of information between countries.
D. All of the above
Answer:
IRS code Section 482 describes appropriate transfer prices as “the prices which would
have been agreed upon between unrelated parties engaged in the same or similar
transactions under the same or similar conditions in the open market.” How does it refer
to such prices?
A. Arm’s-length prices
B. Market prices
C. International prices
D. Comparable prices
Answer:
What term is used to describe the process involving revising existing goals and
adopting new goals?
A. Strategy formulation
B. Strategic planning
C. Strategy implementation
D. Capital budgeting
Answer:
Under IAS 16 (Property, Plant, and Equipment), subsequent revaluation decreases are:
A. never recognized.
B. credited to a revaluation surplus account.
C. recognized as an expense on the income statement.
D. first recognized as a reduction in any related revaluation surplus.
Answer:
Why inflation accounting is NOT required in the United States and the United Kingdom
since late 1980s?
A. Accounting regulators in the U.S. and U.K. have not addressed the issue of inflation
accounting in their pronouncements.
B. Inflation is insignificant in the U.S. and the U.K. since late 1980’s.
C. Accounting regulators could not agree on a method for adjusting financial
statements for the effect of inflation.
D. Corporations in the U.S and U.K. voluntarily report inflation-adjusted financial
statements, making the regulations unnecessary.
Answer:
To calculate U.S. tax, what exchange rate must be used to translate foreign branch net
income?
A. Current rate
B. Rate at the beginning of the year
C. Average rate for the year
D. Rate at the end of the year
Answer:
The Institute of Chartered Accountants in New Zealand (ICANZ) proposed a policy of
proportionate liability to replace the country’s existing “joint and several liability”
approach. Why was the proposal denied?
A. Proportionate responsibility for damages cannot be determined objectively.
B. Fairness to the defendants was not relevant to ensuring fairness to the injured party.
C. Large auditing firms would be paying proportionately higher damage awards than
small firms.
D. Such a policy is inconsistent with harmonization of international auditing standards.
Answer: