Which of the following statements is true about international transfer pricing?
A. It is a violation of the Foreign Corrupt Practices Act.
B. It is accomplished using guidelines set up by the FASB.
C. It can be used to minimize the amount of worldwide taxes.
D. It cannot be regulated by countries.
Answer:
Accountability is defined as what kind of a concept?
A. Reactive
B. Financial
C. Proactive
D. Regulatory
Answer:
Harmonization of accounting standards:
A. is the same as convergence of accounting standards.
B. always ensures resulting of comparable financial statements internationally.
C. forces accounting differences to be resolved through litigation.
D. refers to the reduction of alternatives while retaining a high degree of flexibility in
accounting practices.
Answer:
Who oversees the work of the IFAC committees?
A. PIOB
B. PCAOB
C. IOSCO
D. OECD
Answer:
Under IAS 39, Financial Instruments: Recognition and Measurement, which of the
following is NOT a category into which a financial asset must be classified?
A. Property, plant, and equipment
B. Held-to-maturity investments
C. Loans and receivables
D. Available-for-sale financial assets
Answer:
How might a parent company’s home country eliminate double taxation on foreign
source income?
A. Tax credits for taxes paid to foreign countries
B. Tax deductions for taxes paid to foreign countries
C. Taking a territorial approach to taxing income
D. All of the above
Answer:
What has occurred when one company purchases the right to buy a foreign currency
sometime in the future at an exchange rate quoted today?
A. The company has acquired a call option.
B. The company has entered a forward contract.
C. The currency has appreciated relative to the dollar.
D. The company has acquired a put option.
Answer:
In code law countries such as Germany, France, and Japan, tax law and accounting
standards tend to be:
A. unrelated.
B. very different.
C. general.
D. detail oriented.
Answer:
Under the current rate method of translating foreign currency financial statements, what
is the amount of the balance sheet exposure?
A. It is equal to the amount of assets recorded by the subsidiary.
B. It is equal to the amount of liabilities recorded by the subsidiary.
C. It is equal to the foreign operation’s net asset position.
D. It is equal to total assets plus total liabilities.
Answer:
How does Japanese GAAP differ from IFRS with respect to preoperating costs?
A. Japanese GAAP requires expensing of preoperating costs, whereas IFRS allows
capitalization.
B. Japanese GAAP requires expensing of preoperating costs, whereas IFRS requires
capitalization.
C. Japanese GAAP requires capitalizing preoperating costs, whereas IFRS requires
expensing.
D. Japanese GAAP allows capitalizing preoperating costs, whereas IFRS requires
expensing.
Answer:
According to IAS 27, how can effective control be achieved without owning more than
50% of another company’s voting shares?
A. Representation on the company’s board of directors
B. Being the primary entity exercising voting rights
C. Through a contract between the entities
D. All of the above may result in control by one corporation over another.
Answer:
How does the definition of asset impairment differ between IAS 36 and U.S. GAAP?
A. U.S. GAAP does not consider selling price in determining impairment, but IAS 36
does.
B. U.S. GAAP considers cash flows in assessing value of continued use, but does not
discount them, whereas IAS 36 requires discounting in assessing asset impairment.
C. Asset impairment is more likely to occur under IAS 36 than under U.S. GAAP.
D. All of the above are differences between IAS 36 and U.S. GAAP.
Answer:
What does the Foreign Corrupt Practices Act have to do with accounting?
A. It requires that U.S. companies properly record bribes made to obtain business from
foreign clients.
B. It requires that appropriate internal control systems be maintained by publicly traded
U.S. companies.
C. It mandates the use of the temporal method of translating assets obtained illegally in
foreign countries.
D. It demands that publicly traded U.S. companies follow international best-practices
when auditing illegal operations abroad.
Answer:
What is the best short-term solution to alleviate problems of financial statement
analysis arising from international differences in accounting terminology?
A. Require all countries to conform to IASB standards.
B. Create standard financial statement terminology for all companies around the world.
C. Analysts should carefully read the notes to financial statements and learn about the
business environments of countries they analyze.
D. Convert all financial statements into English.
Answer:
Where would a divisional manager look to find the targets she is expected to reach in
the next fiscal year?
A. Strategic plan
B. Capital budget
C. Operating budget
D. Strategic formulation
Answer:
Under U.S. tax law, what is the basis for the overall foreign tax credit limitation?
A. To make sure that foreign governments get their fair share of a foreign subsidiary’s
income
B. To ensure that the foreign tax credit taken by a corporation does not exceed the
actual foreign tax it paid
C. To make sure that the foreign tax credit taken by a corporation does not exceed the
amount of taxes the foreign affiliate would have paid in the U.S.
D. To minimize world-wide taxes on the U.S. corporation
Answer:
Under IFRS 2, with respect to cash-settled share-based payments, when an employee
has received stock appreciation rights, how is the fair value of those rights measured?
A. Using the consolidation method
B. Using an option pricing model
C. Using the dividend discount approach
D. All of the above
Answer:
According to both IFRS 8 and U.S. GAAP, which of the following information should
be disclosed for each separate reportable operating segment?
A. The factors used to identify operating segments
B. Total liabilities for each operating segment
C. Total compensation expense for each operating segment
D. Total rent expense for each operating segment
Answer:
Which of the following statements is NOT true about Anglo-Saxon Accounting?
A. There is a strong reliance on professional judgment.
B. Financial reporting focuses on the firm with an investor orientation.
C. There is a strong emphasis on measurement of taxable income.
D. Principle of fair presentation is predominant in financial reporting.
Answer:
Companies listed on the stock exchange in Mexico City must provide annual audited
financial statements to:
A. the public through the national media.
B. shareholders only.
C. government only.
D. shareholders and the government.
Answer:
What reasons have been given by the Institute of Chartered Accountants in England and
Wales (ICAEW) for following a principles-based approach in setting accounting
standards?
A. Lawmakers and standard setters cannot anticipate every situation.
B. Accountancy profession should be about exercising judgment and integrity.
C. The profession needs to attract people of high intellect.
D. All of the above
Answer:
In addition to the International Accounting Standards Committee (IASC), which of the
following organizations was considered to be one of the two most important forces in
efforts to harmonize accounting standards?
A. U.S. Financial Accounting Standards Board (FASB)
B. United Nations (UN)
C. North Atlantic Treaty Organization (NATO)
D. European Union (EU)
Answer:
Accounting and financial reporting in Japan is regulated by its Commercial Code,
which is patterned after the Commercial Code of:
A. United States of America.
B. United Kingdom.
C. Germany.
D. France.
Answer:
Holding monetary assets during a period of inflation results in:
A. purchasing power gains.
B. purchasing power losses.
C. transaction gains.
D. translation losses.
Answer:
What basis does the International Accounting Standards Board use in developing
IFRS?
A. Detailed rules to govern accounting practice
B. A framework for deriving general principles
C. Typical tax laws of western nations
D. Exceptions or unusual circumstances that require special attention
Answer: