What is one thing that few companies tend to report on in their corporate social report
disclosures?
A. International disaster response
B. The risk of legal action or business disruptions caused by climate issues
C. The level of GHG reduction
D. Community involvement
Answer:
The subsidiary of a U.S. corporation located in Country Y generated income of
$1,000,000 on which it paid $400,000 (40%) in taxes to Country Y. The subsidiary paid
a dividend to the U.S. parent of $54,000. How much tax is currently owed to the U.S.
government if the federal tax rate is 35%?
A. $18,900
B. $350,000
C. $140,000
D. $0
Answer:
Which exchange rates should be used in order to appropriately analyze the trends in
foreign financial statement data?
A. Historical exchange rates
B. Beginning of year exchange rates
C. Current exchange rates
D. Average exchange rates
Answer:
Why is it difficult to compare IAS 18, Revenue, to U.S. GAAP?
A. The IASB definition of revenue is very complicated, whereas the definition of
revenue under U.S. GAAP is straightforward.
B. Revenue is not defined under U.S. GAAP.
C. There is no single standard in U.S. GAAP that deals solely with revenue.
D. Under U.S. GAAP, revenue is defined in terms of cash, whereas IAS 18 defines
revenue in terms of a variety of resources.
Answer:
What is the advantage of an advance pricing agreement?
A. IRS (Internal Revenue Service) will not challenge the transfer price after the tax
return is filed if the agreement is followed.
B. Worldwide taxes will be minimized.
C. The brief form explaining the transfer price to be used can be completed with
minimal effort by the taxpayer but will reduce a tremendous amount of work later.
D. All of the above are advantages of APA.
Answer:
Which of the following is a positive area identified in the 2008 IFAC report “Financial
Reporting Supply ChainCurrent Perspectives and Directions”?
A. Governance not in name but in spirit
B. Limited liability for directors and senior management
C. More transparency in reporting
D. Good relation of remuneration to performance
Answer:
When a currency is allowed to increase or decrease freely according to market forces,
the currency is said to:
A. be pegged to another currency.
B. be less valuable.
C. have independent float.
D. devalue.
Answer:
What was the “Norwalk Agreement?”
A. A pledge between the Financial Accounting Standards Board in the U.S. and the
IASB to make their reporting standards compatible.
B. A concession by the Financial Accounting Standards Board in the U.S. to adopt
IFRS as soon as possible.
C. It is a treaty between the United States and the European Union to make their
accounting standards converge.
D. It was an agreement signed in Norwalk, Connecticut in 2002 to make English the
official language of the IASB.
Answer:
What is the likely result when accounting rules are left up to professional associations
rather than being legislated by governmental bodies?
A. Very general accounting rules are created, as in code law countries.
B. Very detailed rules for practice are created, as in common law countries.
C. Very general accounting rules are created, as in common law countries.
D. Very detailed rules for practice are created, as in code law countries.
Answer:
In multinational corporations, to whom are the external auditors responsible according
to OECD guidelines?
A. Corporate management
B. Shareholders
C. Government of the host country
D. Creditors
Answer:
The central bank of Country X buys and sells its own currency to ensure that the
currency is always exchanged in a ratio of 2:1 with the currency of Country Y. What
can we conclude about these two currencies?
A. Country X is using the Euro.
B. Country X has pegged its currency to the currency of Country Y.
C. Country X has an undesirable currency.
D. Country X allows its currency to float relative to the currency of Country Y.
Answer:
Auditors in the United States may form limited liability partnerships. What does this
mean for civil liability of auditors?
A. It allows negligent auditors to escape civil litigation for their failures.
B. Auditors are limited to serving clients that agree not to pursue litigation for audit
negligence.
C. The personal wealth of partners who are not negligent is protected from litigation
against the audit firm.
D. It has no impact on civil liability because it provides limitations only on criminal
liability.
Answer:
Using the temporal method of translating foreign currency financial statements, what
basis should be employed when using the “lower of cost or market” rule for inventory
valuation?
A. Lower of parent currency cost or parent currency market at current exchange rate
B. Lower of subsidiary currency cost or subsidiary currency market at appropriate
exchange rate
C. Lower of parent currency cost or parent currency market at appropriate exchange
rate
D. Lower of subsidiary currency cost or parent currency market at current exchange
rate
Answer:
Which of the following represents the primary source of funds for Japanese
businesses?
A. Government grants
B. Bank credit and cross-corporate ownership
C. Corporate bonds
D. Outside equity financing
Answer:
Which method most closely represents the requirement of IAS 29 for reporting
financial statements of companies in hyperinflationary economies?
A. Current replacement cost.
B. General purchasing power.
C. Historical cost for non-monetary assets and current replacement cost for monetary
assets.
D. Companies have a choice between current replacement cost and general purchasing
power methods.
Answer:
Which of the following is NOT one of Gray’s accounting values?
A. Secrecy vs. transparency
B. Conservatism vs. optimism
C. Capitalizing vs. expensing
D. Uniformity vs. flexibility
Answer:
Zenith Company, a calendar-year entity, amends its defined benefit pension plan on
January 1, 2013 and must recognize the increase in past service costs of its vested and
non-vested employees as of that date in the calculation of its net 2013 pension expense
(or revenue). The pertinent facts as of January 1, 2013 are:
Calculate the past service costs included in 2013 net pension expense (or revenue)
under IAS 19.
A. $5,100
B. $5,400
C. $600
D. $7,000
Answer:
What is the “disappearing plant” problem that is addressed by FASB ASC 830, Foreign
Currency Matters?
A. This refers to the accelerated depreciation methods that are popular for fixed asset
valuation.
B. High inflation can result in extreme decreases in the reported amounts for foreign
fixed assets.
C. Cheap foreign currency results in U.S. companies moving factory operations
offshore.
D. Investment in fixed assets was not being reported on foreign subsidiary financial
statements.
Answer:
The practice of having the stock listed and traded on several foreign stock exchanges is
known as:
A. SEC registration.
B. initial public offering.
C. consolidation.
D. cross-listing.
Answer:
In 2011, the country with the largest amount of exports was:
A. the United States of America.
B. China.
C. Japan.
D. Germany.
Answer:
What is the role of internal auditing?
A. To substitute for the external auditor whenever possible
B. To provide assurance and consulting services to improve an organization’s
operations
C. To assist the audit committee in negotiations with the external auditor
D. To mediate disagreements between the external auditor and corporate management
Answer:
A cultural emphasis on values of performance and achievement rather than values of
relationships, caring, and nurturing is referred to as:
A. uncertainty avoidance.
B. masculinity.
C. individualism.
D. power distance.
Answer:
How does U.S. GAAP require the prior service cost related to retirees to be
recognized?
A. Amortize over the average remaining working lives of active employees
B. Recognize immediately
C. Don’t recognize at all
D. Amortize over remaining expected life of the retirees
Answer:
Which of the following is NOT a problem caused by accounting diversity?
A. Lack of qualified international auditors
B. Preparation of consolidated financial statements
C. Access to foreign capital markets
D. Comparability of financial statements
Answer:
What is the basis for the People’s Republic of China’s current economic system?
A. Government ownership of all businesses and economic resources
B. Private ownership of all business enterprises
C. Competition between state-run entities and private businesses
D. Congressional planning of industrial output and consumption
Answer:
What was the “Big Bang” in Japan?
A. The stock market crash of 1929
B. The unprecedented decline in exports and stock prices in the late 1980’s
C. The changes in accounting regulation that occurred in the late 1990’s
D. The growth of the Japanese economy from the 1950’s to the 1980’s
Answer:
Which of the following is a strategy adopted internationally to limit the auditor’s
liability?
A. Decreasing the amount of disclosure in financial statements
B. Limiting the amount of foreign direct investment in audit firms
C. Increasing dependence of auditors on management of the company
D. Changing the ownership structure of audit firms
Answer:
Footnote disclosures in foreign financial statements are particularly helpful in:
A. overcoming differences in statement format among countries.
B. reconciling statements from one country’s GAAP to another country’s GAAP.
C. learning relevant information not required to be presented in the accounts.
D. All of the above
Answer:
Which of the following groups is responsible for translating International Financial
Reporting Standards into languages other than the official language of the IASB?
A. The International Accounting Standards Board
B. The International Accounting Standards Committee Foundation
C. The United Nations
D. The national accountancy bodies of individual countries
Answer:
What body currently develops accounting standards in Germany?
A. German Accounting Standards Committee
B. German Ministry of Justice
C. Bundestag
D. Chamber of Auditors
Answer:
What is the primary characteristic of a decentralized organization?
A. Size of divisions
B. Number of divisions
C. Delegation of decision making authority
D. Diversity of foreign operations
Answer: