Why must the two-transaction perspective be used for recording foreign currency
transactions under U.S. GAAP?
A. The two-transaction perspective is required under IFRS.
B. U.S. GAAP requires conservatism in financial reporting.
C. All other methods are excessively complicated to use and therefore obscure the
essence of the transaction.
D. Management made two decisions: one to sell and another to extend credit in a
foreign currency.
Answer:
Which of the following inventory valuation methods, commonly used under the U.S.
GAAP, is NOT allowed under IAS 2 (Inventories)?
A. LIFO
B. FIFO
C. Weighted average
D. Retail inventory method
Answer:
Under U.S. GAAP, foreign exchange losses should be recorded by:
A. debiting “Foreign Exchange Loss”.
B. crediting “Foreign Exchange Loss”.
C. debiting “Retained Earnings”.
D. debiting “Sales Revenue”.
Answer:
Under IAS 10 (Events after the Reporting Period), adjusting events that occur after the
balance sheet date are:
A. recognized through adjustment of the financial statements.
B. disclosed in a footnote only.
C. treated as a prior period adjustment.
D. not disclosed, since they occurred after the fact.
Answer:
Under IAS 37, how are contingent liabilities treated in the financial statements?
A. IAS 37 does not address contingent liabilities.
B. They are recorded as current liabilities if the amount is reasonably measured.
C. They are disclosed in the notes to the financial statements when there is more than a
remote possibility of an outflow of resources.
D. They are not disclosed.
Answer:
Which of the following is a factor influencing the probability that an auditor will report
a detected error or irregularity?
A. Competence of the auditor.
B. Independence of the auditor.
C. Quality review and monitoring.
D. Financial reporting requirements.
Answer:
What is the primary role of internal auditing in a multinational corporation?
A. To assist the external auditors in completing the financial statement audit in a timely
fashion
B. To make sure that employees comply with local customs and traditions
C. To ensure that corporate policies and procedures are being followed and to assess
operating efficiency
D. To prepare the consolidated financial statement of the corporation in compliance
with international accounting standards
Answer:
Belmonte Corporation, with a division located in Germany, must translate its financial
statements from euros to U.S. dollars. What is the major accounting issue involved in
translation?
A. Most accountants are not conversant in foreign currency exchange.
B. U.S. GAAP may differ from German GAAP.
C. The U.S. dollar has been steadily falling relative to the euro.
D. The resulting balance sheet may not balance.
Answer:
What is the U.S. policy concerning taxing income of a U.S. corporation’s foreign
subsidiary?
A. Tax is imposed on the foreign subsidiary income in the year it is earned.
B. Tax is paid on the foreign subsidiary’s income when the profits are returned to the
U.S. parent as dividends.
C. The government of the U.S. does not tax foreign source income.
D. Tax credits for losses incurred by the foreign subsidiary are recognized by the parent
currently, but taxes on profits are deferred until dividends are paid.
Answer:
Under U.S. GAAP, what method is required to account for foreign currency
transactions?
A. A one-transaction perspective must be used.
B. The two-transaction perspective must be used.
C. A sale is not recorded until payment is received and converted to U.S. dollars.
D. A sale is not recorded until payment is received in the foreign currency.
Answer:
What are GHGs?
A. Governmental heating guides
B. Governmental hierarchy of gases
C. Greenhouse gases
D. Good health guides
Answer:
Influencing subordinates to behave in accordance with the goals and objectives of the
organization is referred to as:
A. performance evaluation.
B. management control.
C. strategic planning.
D. goal congruence.
Answer:
Under a joint Exposure Draft issued by the IASB and FASB in June 2010, Revenue
from Contracts with Customers, which of the following is NOT one of the steps to be
applied in the recognition of revenue across a wide range of transactions and
industries?
A. Identify the contract with a customer.
B. Do not separate the transaction price for separate performance obligations if the
contract is a bundled contract where goods and services are not sold separately.
C. Identify the separate performance obligations in the contract.
D. Determine the transaction price.
Answer:
Which of the following statements is true relative to accounting for leases
internationally?
A. Operating lease disclosure for IFRS and U.S. GAAP is identical.
B. Some analysts believe that all leases must be restated as if they were operating
leases.
C. Current rules under IFRS, U.S. GAAP, and other national accounting standards
require leases to be capitalized under certain circumstances.
D. U.S. GAAP requires that future minimum lease payment disclosures be made for
each of the next ten years and for all years thereafter.
Answer:
How is goodwill handled for U.K. GAAP purposes?
A. Expensed right away
B. Capitalized and never amortized
C. Amortized at the firm’s choice
D. There is no specific requirement.
Answer:
Under International Accounting Standards Board rules, what method is required to
account for foreign currency transactions?
A. A one-transaction perspective must be used.
B. The two-transaction perspective must be used.
C. A sale is not recorded until payment is received and converted to U.S. dollars.
D. A sale is not recorded until payment is received in the foreign currency.
Answer:
Part II of the GRI Sustainability Guidelines identifies all but which of the following
types of disclosure?
A. Strategy and profile
B. Management approach
C. Reduction in GHG emissions
D. Performance indicators
Answer:
The Organization for Economic Cooperation and Development (OECD) has established
guidelines to eliminate tax havens. Why, then, can the OECD (as of 2004) still identify
over 30 countries as tax havens?
A. The definition of tax haven continuously changes.
B. The concept of tax haven is supported by the United Nations.
C. The OECD has no enforcement powers.
D. The OECD lacks the willingness to enforce the guidelines.
Answer:
In the context of international taxation, the Bahamas, Lichtenstein, and Monaco are
considered by the OEDC as:
A. tax holidays.
B. tax shelters.
C. tax havens.
D. tax centers.
Answer:
In the 2002 study by the world’s six largest public accounting firms concerning
convergence with IFRS, what was the most frequently cited concern about
convergence?
A. Language translation difficulties
B. Lack of perceived benefit of using IFRS
C. Complexity of specific IFRS
D. Preference for national standards
Answer:
Determination of net present value involves:
A. forecasting future profits and cash flows.
B. discounting future cash flows back to their present value.
C. analysis on an after-tax basis.
D. All of the above
Answer:
In Gray’s framework for accounting system development, the cultural dimensions of
individualism, power distance, uncertainty avoidance, and masculinity directly affect:
A. accounting systems.
B. accounting values.
C. external influences.
D. ecological influences.
Answer:
The process of management control by which managers influence others members of
the organization to achieve organization’s goals is known as:
A. performance evaluation.
B. operational planning.
C. strategy implementation.
D. capital budgeting.
Answer:
IASB standards address related party transactions. According to these standards, which
of the following is considered a “related party?”
A. Parent companies
B. Subsidiary companies
C. Key members of management
D. All of the above could be related parties.
Answer:
To create an appropriate mix of members of the IASB, since 2012 the board includes:
A. eight auditors.
B. eight academic representatives.
C. four members of the FASB.
D. a diverse geographical balance of members.
Answer:
Which of the following is NOT considered a part of GAAP in Mexico?
A. MIPA Bulletins
B. MIPA Interpretations
C. International Financial Reporting Standards
D. NBSC Statements on Accounting Practice
Answer:
According to FASB ASC 830, Foreign Currency Matters, which of the following
conditions would indicate that a foreign subsidiary’s functional currency is the foreign
currency?
A. Sales price not affected by changes in exchange rate in the short-run
B. High volume of intercompany transactions
C. Sales in the local market not significant
D. Most of the subsidiary’s financing comes from the parent.
Answer:
Under IAS 17, in a sale-leaseback transaction, how must the initial owner treat any gain
on a finance lease?
A. Defer it and amortize it into income over the life of the lease.
B. Recognize it in income immediately.
C. Defer it until the end of the lease term, including extensions.
D. He/she can choose to either defer it or recognize it in income immediately.
Answer:
What is the main source of corporate financing in the United Kingdom?
A. Banks
B. Capital markets
C. Government grants
D. Royal families
Answer:
The term “Class B Accounting” as it is used by the researcher Christopher Nobes refers
to:
A. less preferred accounting systems.
B. less efficient accounting systems.
C. accounting systems that primarily serve external shareholders.
D. accounting systems that were developed primarily for creditors and taxing
authorities.
Answer:
What is a tax haven?
A. A jurisdiction where taxes are abnormally low
B. A location where tax cheats live to escape prosecution
C. A tax jurisdiction where world-wide tax is eliminated
D. Locations that provide tax-based incentives to corporations
Answer:
As per U.S. corporate tax laws, which of the following statements is true of a company
that is incorporated in the U.S. and has a branch in a foreign country?
A. The credit for the amount of taxes already paid is given to arrange for double
taxation.
B. The credit for the amount of taxes already paid is given to charge for the taxes not
paid in the home country.
C. The credit for the amount of taxes already paid is given to refund the taxes already
paid in the home country.
D. The credit for the amount of taxes already paid is given to give relief for the taxes
paid in foreign country.
Answer:
In which country do companies tend to focus on nonmonetary disclosures that are more
favorable to the company, especially around the time of negative events?
A. Libya
B. Ireland
C. Australia
D. China
Answer: