In following the international norm concerning tax jurisdiction, how would double
taxation be eliminated?
A. The subsidiary’s home country would allow tax credits for taxes paid to the parent’s
home country.
B. The parent company’s home country would allow tax credits for taxes paid to the
subsidiary’s home country.
C. The home countries of both the parent and the subsidiary would forego taxation on
the income earned by the subsidiary.
D. None of the above
Answer:
What is China’s policy regarding revaluation of intangible assets?
A. It is encouraged.
B. It is prohibited.
C. It is permitted only if the asset trades in an active market.
D. It has offered no guidance on the issue.
Answer:
Part I of the GRI Sustainability Guidelines defines all but which one of the following?
A. Report content
B. Quality
C. Boundary
D. Standards for disclosure
Answer:
What language will be used for the quarterly reports submitted by foreign companies to
the U.S. Securities and Exchange Commission?
A. The quarterly reports may be in the company’s local language
B. English or German
C. English or one of the languages of the European Union
D. English only
Answer:
What countries are collectively known as “the triad”?
A. France, Spain, and Italy
B. Germany, Russia, and China
C. United States, Japan, and members of the European Union
D. United States, Canada, and Mexico
Answer:
In what way does the public accounting profession in the United Kingdom differ from
the profession in the United States?
A. Public accountants in the U.K. may not sign audit reports.
B. Auditors in the U.K. do not need to be independent from their audit clients.
C. Public accountants in the U.K. are paid by the government for their audit services.
D. Public accountants in the U.K. are not required to have a university education.
Answer:
Which of the following ratios is used in the calculation of the multinationality index
(MNI)?
A. Foreign working capital to total working capital
B. Foreign cash to total cash
C. Foreign employment to total employment
D. Foreign loans to total loans
Answer:
Which of the following is NOT true of the due process followed by the IASB in
formulating International Financial Reporting Standards?
A. A period of public comment is provided after discussion papers are prepared.
B. Standards are approved by a unanimous vote of the 16-member board.
C. Exposure drafts are published prior to taking a vote of the board.
D. National accounting standards and practices are studied before preparing exposure
drafts.
Answer:
In which of the following cities was the first professional accounting association in the
United Kingdom was established in 1853?
A. London
B. Belfast
C. Edinburgh
D. Canterbury
Answer:
In Gray’s framework for accounting system development, optimism is a value of
accounting standards that would most likely be found in _____.
A. Japan
B. Australia
C. Mexico
D. Brazil
Answer:
Why is accounting conservatism NOT a basic principle underlying accounting
standards in the People’s Republic of China?
A. It is perceived to manipulate accounting numbers for the benefit of owners by
exploiting workers.
B. It too closely reflects the views of the masses, which are not considered in
establishing accounting standards.
C. Conservatism has been shown to cause economic hardship for companies operating
in China.
D. Conservatism overstates assets, which is perceived to distort financial results.
Answer:
In Japan, what is the most commonly used ending date for accounting periods?
A. December 31
B. March 31
C. June 30
D. September 30
Answer:
Which of the following is NOT a major concern related to convergence of international
accounting standards?
A. The complicated nature of particular standards
B. The tax-driven nature of the national accounting regime
C. An overload of guidance on the first-time application of IFRS
D. IFRS language translation difficulties
Answer:
What is the reason given for a relatively low emphasis on public disclosure of financial
information in Japan?
A. Significant reliance on bank credit for financing
B. Long-term cross-corporate ownership of stock
C. Income is not viewed as a measure of corporate performance
D. All of the above
Answer:
Under ARB 51, “controlling financial interest” is:
A. criterion for consolidation purposes.
B. defined as 50% ownership of another entity’s voting shares.
C. the ability to make decisions about another entity’s activities indirectly.
D. the right to contribute to the expected residual returns of another entity as they
occur.
Answer:
Many countries have recently liberalized their investment laws. What is the primary
reason for these actions?
A. To make it more difficult for multinational companies to compete with domestic
corporations
B. To encourage foreign direct investment
C. To enable funds to flow out of their country more easily
D. To make taxing foreign companies easier
Answer:
The corporate social reporting (CSR) theory that social reporting is a means to deal
with the firm’s exposure to political, economic and social pressures is called the:
A. government accountability theory.
B. depletable resource theory.
C. legitimacy theory.
D. stakeholder theory.
Answer:
The early (1973-1988) harmonization efforts of the International Accounting Standards
Committee (IASC) created standards that have been described as a
“lowest-common-denominator” approach. What was the effect of these first
international accounting standards?
A. The IASC standards accommodated existing accounting practices in various
countries.
B. Comparability of financial statements across countries was achieved.
C. It resulted in few companies being in compliance with IASC standards.
D. All of the above
Answer:
Which of the following is NOT measured by the accounting system of a multinational
corporation?
A. Translation exposure
B. Economic exposure
C. Transaction exposure
D. None of the above is measured by the accounting system.
Answer:
Which of these European countries does NOT use the Euro as its domestic currency?
A. France
B. United Kingdom
C. Ireland
D. The Netherlands
Answer:
What is the primary difficulty of using market-based transfer prices for intercompany
transactions?
A. Markets that are too complex
B. Lack of a well-developed market
C. Lack of objectivity
D. Operating inefficiencies are transferred from one subsidiary to another
Answer:
Which of the following statements is true about accounting in China?
A. Accounting has a long history, dating back thousands of years.
B. The first professional accounting body in the People’s Republic of China was
established in 1988.
C. Its roots can be found in the teachings of the philosopher and educator Confucius.
D. All of the above statements are true.
Answer:
Which of the following has the least frequent reporting requirements for publicly traded
corporations?
A. United States of America
B. United Kingdom
C. European Union directives
D. Canada
Answer:
Schlamp & Co. is considering building a manufacturing facility in Country Z, which
has changed it labor laws frequently and dramatically in the past decade. What kind of
risk is created by these legislative actions?
A. Physical risk
B. Political risk
C. Financial risk
D. Economic risk
Answer:
Under U.S. GAAP, interest on loans secured to acquire fixed assets must be:
A. expensed in the period they are incurred.
B. capitalized as part of the fixed asset cost.
C. either expensed currently or capitalized as part of the fixed asset cost.
D. charged against revenue in the year the asset is put into service.
Answer:
Under the U.S. model tax treaty, which of the following statements is correct?
A. Interest and royalties are exempt from withholding.
B. Dividends are subject to a maximum 20% withholding.
C. Interest and royalties are subject to a maximum 15% withholding.
D. No passive income is exempt from withholding.
Answer:
Under IAS 1, Presentation of Financial Statements, how must deferred taxes be
classified on the balance sheet?
A. As either a current asset or a current liability
B. As always a noncurrent asset or a noncurrent liability
C. As either a current or noncurrent asset or liability based on the expected timing of
realization
D. As a separately stated positive or negative component of equity
Answer:
What information is needed to determine the fair value of a foreign currency forward
contract?
A. The forward rate at the date the contract was entered
B. The current forward rate for a contract that matures on the same dates as the forward
contract that was entered into
C. A discount rate to determine the present value of the contract
D. All of the above information is needed
Answer:
For an upcoming trip, Pat wants to buy Euros at the local bank when the current
exchange rate quoted on OANDA.com was $1.563 per €1. What should Pat plan to pay
for €1,000?
A. exactly $1,563
B. more than $1,563
C. about $640
D. less than $640
Answer:
What term is used for the characteristic of a tax system whereby a company’s decisions
to invest domestically or abroad is not affected by taxation?
A. Foreign tax credit
B. Unbiased
C. Capital export neutrality
D. Capital investment irrelevance
Answer: