Privatization of Mexican businesses has been encouraged by:
A. North American Free Trade Agreement (NAFTA).
B. governmental attempts to improve long-term economic growth.
C. loosening restrictions on foreign investment.
D. All of the above
Answer:
What would be a logical first step that should be taken to restate foreign financial
statements to conform to U.S. GAAP, assuming a four-column worksheet will be used
to post debit and credit adjustments and reclassifications to arrive at U.S. GAAP
statements?
A. Convert the foreign currency amounts to U.S. dollars.
B. Restate historical costs to current cost basis.
C. Re-order foreign financial statements to U.S. format.
D. Determine the amount of foreign exchange gains or losses.
Answer:
GRI’s fourth-generation guidelines (G4):
A. represent a standardized approach to reporting, encouraging the degree of
transparency and consistency.
B. represent the right to emit or discharge a specific volume of the specified pollutant.
C. create an incentive to increase the efficiency of fuel use, and thereby reduce
greenhouse gas emissions from fuel.
D. are a function of the attitude of top management toward its stakeholders.
Answer:
Under general purchasing power accounting, how is the gain or loss in purchasing
power reported?
A. As a prior period adjustment to Retained Earnings
B. As an element of accumulated comprehensive income on the Balance Sheet
C. As an element of income in the current year
D. All of the above methods are acceptable
Answer:
OECD is an important supranational entity. What do the letters OECD stand for?
A. Organization of Electrical Companies Directorate
B. Oil Exporting Countries and Developers
C. Organization for Economic Cooperation and Development
D. Oil Exporting Corporations and Divisions
Answer:
Accounting in Mexico is oriented towards fairness, not:
A. professional judgment.
B. legal compliance.
C. correctness.
D. taxable income.
Answer:
Which of the following is a reason for analyzing the financial statements of foreign
corporations?
A. Making credit decisions about foreign customers
B. Evaluating international business combinations
C. Diversifying an investment portfolio
D. All of the above are reasons for analyzing foreign financial statements.
Answer:
The OECD believes which group in a multinational corporation should oversee the
financial reporting function to ensure that appropriate controls are in place to safeguard
information integrity?
A. Mid-level management
B. External auditors
C. Board of directors
D. Information systems department
Answer:
When the current rate method is used, the sign (+ or -) of the translation adjustment is
the result of:
A. appreciation or depreciation of the foreign currency.
B. the nature of the balance sheet exposure.
C. both (A) and (B).
D. None of the above
Answer:
What act of the U.S. Congress advocated creating the Public Company Accounting
Oversight Board, required financial statement certification by the CEO and CFO, and
requires external auditors to report directly to an audit committee?
A. Securities Act of 1933
B. Securities and Exchange Act of 1934
C. Sherman Anti-Trust Act of 1890
D. Sarbanes-Oxley Act of 2002
Answer:
SilverStone Inc. supplies emission systems worth $100,000 to Horizon Enterprises. As
per the terms of sale contract, SilverStone takes back all unused emission systems.
Horizon estimates that 5% of the emission systems will be returned. Under IAS 18,
only four out of the five conditions for recognizing revenue from the sale of goods are
met as economic benefits of 95% of sale will flow to SilverStone. How much revenue
should be recognized by SilverStone Inc.?
A. The recognition of the entire sale must be deferred until the fifth condition has been
met.
B. $75,000 of the sales price can be currently recognized as revenue and $25,000 will
be treated as a deferred revenue (liability).
C. The entire $100,000 sales price can be currently recognized since most of the
conditions have been met.
D. None of the above represents a proper treatment of this sale.
Answer:
Which of the following is a potential problem in analyzing foreign financial
statements?
A. Language
B. Data accessibility
C. Terminology
D. All of the above pose potential problems.
Answer:
What language is used to develop the International Financial Reporting Standards
(IFRS)?
A. French
B. German
C. English
D. Spanish
Answer:
Which method of accounting for inflation is used under U.S. GAAP?
A. Current Replacement Cost method
B. General Purchasing Power method
C. Both Current Replacement Cost and General Purchasing Power methods must be
used
D. Inflation accounting is not required under U.S. GAAP.
Answer:
How do Australian managers tend to view the annual corporate social report?
A. It is required by Australian statute and is not an option.
B. It has been greeted with skepticism.
C. It is doomed to fail as a legitimating vehicle.
D. It is useful in maintaining or reestablishing legitimacy.
Answer:
What is the primary difference between transaction exposure and accounting exposure?
A. Transaction exposure results from changes in currency exchange rates, whereas
accounting exposure is the result of changes in accounting method.
B. Transaction exposure results in changes in cash flow, whereas accounting exposure
does not necessarily result in changes in cash flow.
C. Transaction exposure must be hedged, but accounting exposure does not need to be
hedged.
D. Transaction exposure affects only monetary assets and liabilities, whereas
accounting exposure affects all assets and liabilities.
Answer:
Under IAS 18, when it is probable that the economic benefits of interest, royalties, and
dividends will flow to the enterprise and can be measured reliably, how should revenue
be recognized?
A. Interest income shall be recognized based on an effective yield basis.
B. Royalties are recognized on an accrual basis with reference to the terms of the
agreement.
C. Dividends are recognized when the shareholders’ right to receive payment is
established.
D. All of the above govern revenue recognition under these circumstances.
Answer:
In proposed PCAOB Rule 4012, “Inspection of Foreign Registered Public Accounting
Firms” issued for comment in December 2007, which of the following is NOT one of
the broad principles upon which the board may place full reliance on the inspection
program of qualified non-U.S. auditor oversight entities?
A. Transparency of the oversight system
B. Adequacy and integrity of the oversight system
C. Rigidity of professional standards mandated by the oversight system
D. Independence of the oversight system’s source of funding
Answer:
Which of the following terms is NOT defined by statute in the Companies Act of the
United Kingdom?
A. Accountant
B. Auditor
C. Independence
D. None of the above terms is defined in the Companies Act of the UK.
Answer:
Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia
joined the European Union in 2004. Besides membership in the EU, what do these
countries have in common?
A. They share a common language.
B. They were members of the former Soviet bloc.
C. All were under the political control of Germany until the early 1960’s.
D. They were former British colonies until after World War II.
Answer:
Individualism, power distance, uncertainty avoidance, and masculinity are examples
of:
A. accounting values.
B. ecological factors.
C. cultural dimensions.
D. external forces.
Answer:
The term “provision” as it is used in IAS 37, is most closely related to what term in U.S.
GAAP?
A. Contingent liability, where the outflow of resources is “remote.”
B. Contingent liability, where the outflow of resources is “probable.”
C. Current liability, where the outflow is difficult to measure.
D. Reserve for bad debt, where the amount recoverable is “uncertain.”
Answer:
The following information was taken from the fixed asset records of Bosco Ltd. as of
December 31, 2010:
Using IAS 36, what is the recoverable amount?
A. €85,000
B. €82,000
C. €63,000
D. €75,000
Answer:
Under IAS 40 (Investment Property), gains or losses from revaluation are:
A. recognized in revaluation surplus.
B. recognized in current income.
C. not permitted.
D. recognized either in current income or revaluation surplus at the option of
management.
Answer:
What body currently enforces financial accounting requirements in Germany?
A. German Accounting Standards Committee
B. Bundestag
C. Financial Reporting Enforcement Panel
D. Financial Accounting Standards Board
Answer:
Which of the following is true of monetary assets?
A. Monetary assets are translated at historical exchange rates under all translation
methods.
B. Monetary assets are those assets whose values do not fluctuate over time.
C. Monetary assets include current assets like marketable securities.
D. Monetary assets are always translated at current exchange rates.
Answer:
Mega Corporation acquired 65% of the voting shares of Forko Ltd. Mega consolidated
its accounts by restating assets and liabilities of the subsidiary at fair value on the date
the shares were acquired. Which of the following methods for accounting for the
business combination is being used by Mega Corporation?
A. Purchase method
B. Fair value method
C. Pooling method
D. Current replacement cost method
Answer:
The 1993 study by Doupnik and Salter found that a cluster of Latin American countries
indicated that the similarity of their accounting systems was related to:
A. a common currency.
B. the importance of inflation.
C. the colonial influence of Spain.
D. the colonial influence of the United States of America.
Answer:
Under the Sarbanes-Oxley Act of 2002, to whom does the audit committee report?
A. Management of the corporation
B. External auditor
C. Board of directors
D. Internal audit department
Answer:
A U.S. corporation is subject to an income tax rate of 35% and has a branch in the U.K.,
which paid the national corporate tax rate of 30% on its earnings there. The branch
generated taxable income from operations in the U.K. equivalent to $2,000,000. What is
the amount of the taxes owed to the U.S. government on the income generated in the
U.K.?
A. $600,000
B. $700,000
C. $100,000
D. $0
Answer:
Under the temporal method of translating foreign currency financial statements, what
exchange rate should be used for cost of goods sold?
A. Spot rate at the end of the year
B. Average rate during the year
C. Spot rate mid-year
D. There is no single rate that can be used for this purpose
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