What does G3 represent?
A. An annual summit of countries committed to the reduction of GHGs
B. The third type of GHG
C. The United States, Canada and Mexico
D. The third generation of the GRI’s Sustainability Reporting Guidelines
Answer:
Under FASB ASC 830, Foreign Currency Matters, when the current rate method is
used, how are translation adjustments treated in the consolidated financial statements?
A. As gains or losses on the current period consolidated income statement
B. As prior period adjustments to retained earnings of the parent
C. As part of other comprehensive income on the consolidated balance sheet
D. None of the above because the temporal method is not allowed under FASB ASC
830.
Answer:
In an effort to harmonize international auditing standards on a regional level, the
European Union has issued directives pertaining to this end. Its Eighth Directive caused
the United Kingdom to change the country’s long-held standard for individuals wishing
to be auditors. Which of the following is a new requirement for auditors in the UK?
A. Auditors must be members of a recognized professional association, such as the
ICAEW.
B. New entrants to the auditing profession must hold a university degree in
accountancy.
C. Auditors may now be a citizen of any country in the European Union rather than just
the UK.
D. New members of the auditing profession must have a university degree.
Answer:
What result can be expected if a management control system encourages managers to
focus on inappropriate measures?
A. Managers will work extra hard to achieve the targets set in terms of those measures.
B. Managers will engage in dysfunctional behaviors.
C. Profits will go up for the foreign operation and for the corporation as a whole.
D. None of the above
Answer:
Which group is responsible for setting and developing auditing standards in the United
Kingdom?
A. Department of Trade and Industries (DTI)
B. Consultative Committee of Accountancy Bodies (CCAB)
C. Auditing Practices Board (APB)
D. Institute of Chartered Accountants in England and Wales (ICAEW)
Answer:
In what way does IAS 16 (Property, Plant, and Equipment) differ from U.S. GAAP
concerning fixed asset measurement subsequent to initial recognition?
A. IAS 16 allows for upward revaluation of the asset based on fair value.
B. IAS 16 does not allow accumulated depreciation to be shown on the balance sheet.
C. IAS 16 requires that fixed assets be carried at fair value less accumulated
impairment losses.
D. IAS 16 allows both upward and downward revaluation of fixed assets, whereas U.S.
GAAP only allows upward revaluation.
Answer:
The “Seventh Directive” issued by the European Commission is a statement to the
European Union (EU) members concerning:
A. adoption of the euro as the currency used throughout the EU.
B. consolidated financial statements.
C. rules for valuation, financial statement disclosures, and financial statement format.
D. authority of the European Commission to pass laws.
Answer:
How should U.S. companies record receivables and payables from international trade
that are denominated in foreign currencies?
A. All assets and liabilities of U.S. companies must be recorded in U.S. dollars.
B. Conservatism would dictate that liabilities should be recorded in the currency in
which they are payable, but assets should be recorded in U.S. dollars, regardless of
what currency will be received.
C. There should be separate receivable and payable accounts for each currency that is
used by the company.
D. The company should choose any one currency to use for recording receivable and
payables so that there is consistency in the accounts.
Answer:
Which of the following statements is a reason for using operating income or EBIT as a
measure of performance in a profit center of a multinational corporation?
A. It is much easier to calculate than other measures.
B. It is the only measure available to the senior management of the parent company.
C. It excludes interest and taxes, which are beyond the manager’s control.
D. Divisional managers will maximize output if this measure is used for management
control.
Answer:
Placo Ltd., a Scottish subsidiary of Limko, Inc., a U.S. company, showed cost of goods
sold on its income statement for the year ended December 31, 2010.
What amount should be used to consolidate Placo’s cost of goods sold into Limko’s
income statement under the current rate method?
A. $417,600
B. $437,600
C. $448,000
D. $443,900
Answer:
On 1 January, 2015, Hikers Inc., a U.S.-based company, borrowed £200,000 on a
two-year note at a per annum interest of 4.5%. The spot rate on this day was $1.65 per
pound. The spot rate on 31 December, 2015, was $1.64 per pound. The journal entries
to account for this foreign currency borrowing will include:
A. a debit to Cash for $200,000 on January 1, 2015.
B. a credit to Notes Payable for $330,000 on December 31, 2015.
C. a debit to Foreign Exchange Loss for $90 on December 31, 2015.
D. a debit to Interest Expense for $14,760 on December 31, 2015.
Answer:
What is a capital investment?
A. Using money to buy goods or services
B. Issuing shares of stock of the corporation
C. Authorizing and issuing shares of common stock by a multinational corporation
D. Committing resources to projects that have long period costs and benefits
Answer:
Under the Sarbanes-Oxley Act of 2002, who is responsible for paying the independent
auditor?
A. Management
B. Audit committee
C. Government who has jurisdiction over the corporation
D. American Institute of Certified Public Accountants (AICPA)
Answer:
IAS 38 requires the capitalization of development expenses in R&D. How does U.K.
GAAP handle such development expenses?
A. Expensed right away
B. Permits capitalization
C. Amortized at the firm’s choice
D. There is no specific requirement.
Answer:
What is Anglo-American Accounting?
A. It is an association of British and American accounting regulatory agencies.
B. The accounting systems used in the United States., United Kingdom, and other
English-speaking countries.
C. This refers to the basis used by the IASB to judge the appropriateness of
international accounting standards.
D. All of the above are true.
Answer:
The process of identifying, evaluating, and selecting projects that require substantial
amounts of resources and are expected to generate benefits for many years into the
future is called:
A. strategy formulation.
B. short-term planning.
C. capital budgeting.
D. operational budgeting.
Answer:
The following inventory information was taken from the records of Kleinfeld Inc.:
Assume that subsequent to your adjustment the expected selling price increases to
$13,000. (All the rest of the facts are the same.) What adjustment to inventory should be
made under IAS 2 after this event?
A. Inventory should be increased (debited) by $3,500.
B. Inventory should be increased (debited) by $4,000.
C. No adjustment should be made to inventory once it is written down.
D. Inventory should be increased (debited) by $1,000.
Answer:
Which of the following are the requirements of the laws of Sino-foreign joint ventures?
A. Tax returns of joint ventures must be audited by Chinese CPAs.
B. Annual financial reports of joint ventures must be audited by registered Chinese
CPAs.
C. Capital contributions by investors must be verified by Chinese CPAs.
D. All of the above statements are true about Chinese joint ventures.
Answer:
Since the 1980s accounting regulation in the United Kingdom has been legislated more
than it had been previously. What is the primary cause for this change from professional
self-regulation to government regulation?
A. High profile scandals in the British business community
B. Influence of the United States on the ICAEW
C. Directives from the European Union
D. All of the above
Answer:
What reason is given for the stagnation of accounting development during the “Cultural
Revolution” in China (1966-1976)?
A. Over-simplification of accounting was pursued to make it accessible to a broad
populace.
B. There was very little business being transacted in China during the Cultural
Revolution.
C. Businesses in China were converting to international accounting standards during
this period of time so they stopped developing new standards.
D. Auditors took over the development of accounting practice.
Answer:
What agency is responsible for setting accounting standards and regulations in the
People’s Republic of China?
A. Chinese Institute of CPAs
B. Ministry of Finance
C. Accounting Society of China (ASC)
D. State Council
Answer:
In 2012, what portion of total U.S. goods trade was made up of intercompany
transactions?
A. 20%
B. 82%
C. 42%
D. 11%
Answer:
What is an ad valorem import duty?
A. A requirement that a parent buys the output of a foreign subsidiary
B. A tariff charged by a government on the invoice price of goods coming into its
country
C. A requirement that a subsidiary acquires its material inputs from a foreign parent
D. A tax charged on intercompany transactions
Answer:
Which of the following is NOT within the power of the Internal Revenue Service (IRS)
under Internal Revenue Code (Section 482)?
A. Authority to audit international transfer prices
B. Authority to adjust international transfer prices
C. Authority to adjust a company’s tax liability if the transfer price is deemed to be
inappropriate
D. Authority to stop intercompany transactions
Answer:
The “Fourth Directive” issued by the European Commission, which administers the
European Union (EU), deals with which of the following?
A. Adoption of the euro as the currency used throughout the EU
B. Consolidated financial statements
C. Rules for valuation, disclosures requirements, and the format of financial statements
D. Authority of the European Commission to pass laws
Answer:
Which of the following is an advantage of having a single set of accounting standards
used worldwide?
A. Reduced accounting costs for multinational corporations
B. Increased power of the FASB
C. Reduced number of multinational corporations on the NYSE
D. Increased diversity of accounting methods used by multinational corporations
Answer:
In countries such as the U.S., there is great demand for public disclosure of accounting
information. What is the reason for this?
A. Corporate management isn’t trustworthy.
B. Businesses rely heavily on financing through issuance of stock to the public.
C. The American populace is better able to read financial statements than people in
other countries.
D. U.S. government officials are generally members of corporate boards of directors
and can get all the information they require.
Answer:
Which of the following is a difference between IAS 37 and U.S. GAAP with respect to
restructuring provisions?
A. U.S. GAAP does not allow recognition of a restructuring provision until a liability
has been incurred.
B. There is no difference between IAS 37 and U.S. GAAP with respect to restructuring
provisions.
C. IAS 37 does not allow recognition of a restructuring provision until a liability has
been incurred.
D. A restructuring provision and related loss is more likely to occur later under IAS 37
than under U.S. GAAP.
Answer:
Carbon offsets are mostly taken at:
A. market value by the buyer.
B. a premium by the seller.
C. face value by the buyer.
D. market value by the seller.
Answer:
What is the primary role of external auditing in multinational corporations?
A. Preparing the annual report to corporate shareholders
B. Designing a working system of internal accounting controls
C. Assuring that financial statement information is high quality
D. Selecting independent members for the board of directors
Answer: