The Canadian Institute of Chartered Accountants (CICA) has taken a principles-based
approach to auditor independence, whereas the Federation des Experts Comptables
Europeens (FEE) has taken a conceptual approach. What is the difference?
A. The principles-based approach has been effective, but the conceptual approach has
not.
B. The principles-based approach offers more flexibility in compliance than the
conceptual approach does.
C. The principles-based approach gives specific rules and prohibitions that must be
followed, but the conceptual approach asks auditors to focus on the aim of
independence rather than rules.
D. The conceptual approach is only theoretical and hasn’t yet been applied, whereas the
principles-based approach is currently in practice.
Answer:
Which of the following qualitative characteristics make financial statement information
useful?
A. Relevance
B. Understandability
C. Reliability
D. All of the above.
Answer:
What does “harmonization” mean in the context of international accounting?
A. The process of combining the financial statements of foreign subsidiaries into the
parent company’s financial statements
B. The process of reducing accounting differences across countries
C. Disclosing the accounting methods used in preparing the financial statements
D. Assessing the exposure resulting from inadequate internal controls
Answer:
Which of the following items are controlled by the parent company?
A. Lost production due to labor strikes
B. Foreign exchange losses
C. Sales revenue determined by discretionary transfer pricing
D. Restrictions on foreign exchange spending
Answer:
What is the optimal tax objective for multinational corporations?
A. Minimize domestic taxes paid on worldwide income
B. Minimize worldwide taxes paid, within the limitations of applicable tax law
C. Minimize the credit for worldwide taxes paid
D. Minimize foreign taxes
Answer:
Why is international harmonization of auditing standards important?
A. To be consistent with harmonized international accounting standards.
B. To ensure the independence of external auditors of multinational corporations.
C. To assure international capital markets that auditing has been consistent across
companies.
D. To reduce the authority of individual governments to enact accounting laws.
Answer:
In what way does the IASB standard on leases (IAS 17) differ from U.S. GAAP?
A. It is less specific than U.S. GAAP in terms of defining what constitutes a finance
lease.
B. U.S. GAAP requires more professional judgment in accounting for leases than does
IAS 17.
C. IAS 17 is more specific than U.S. GAAP in defining an operating lease.
D. Operating leases are capitalized under IAS 17 but are not capitalized under U.S.
GAAP.
Answer:
For the purpose of financial reporting under IASB standards, what is a “group?”
A. A parent corporation and all of its subsidiary corporations
B. Any multinational corporation under the jurisdiction of the IASB
C. All countries that have adopted IASB standards
D. A company that is comprised of foreign corporations dissolved into one entity
Answer:
Which of the following terms is often used to describe the equity method of
accounting?
A. The 20% rule
B. One-line consolidation
C. Significant influence
D. Disaggregated consolidation
Answer:
How is the international standard for translating foreign currency financial statements
(IAS 21) different from U.S. GAAP with respect to subsidiaries in hyperinflationary
economies?
A. IAS 21 requires that the subsidiary’s financial statements be restated to account for
the inflation before using the current exchange rate for all balance sheet accounts.
B. IAS 21 requires that the temporal method be used for translating the foreign
currency financial statement.
C. IAS 21 requires the current rate method without taking into consideration any
inflation adjustment.
D. U.S. GAAP requires that foreign subsidiary financial statements be restated to
account for inflation before applying the current rate method.
Answer:
Mexico has had a professional association of public accountants since what year?
A. 1821
B. 1917
C. 1929
D. 1964
Answer:
What is “transfer pricing?”
A. The cost to convert from one country’s GAAP to another country’s GAAP
B. The value of sales made in a foreign country
C. The prices established to record an intercompany sale
D. The taxes paid on sales in a foreign country
Answer:
Which of the following is NOT part of the capital budgeting process?
A. Project identification
B. Project evaluation
C. Project monitoring
D. All of the above are parts of the capital budgeting process.
Answer:
The subsidiary of a U.S. corporation located in Country Y generated income of
$1,000,000 on which it paid $200,000 in taxes to Country Y. The subsidiary paid a
dividend to the U.S. parent of $150,000. How much tax is currently owed to the U.S.
government if the federal tax rate is 35%?
A. $35,625
B. $28,125
C. $52,500
D. $32,500
Answer:
In which of the following levels can international accounting be defined?
A. Supranational organizations
B. Company
C. Country
D. All of the above
Answer:
How is Goodwill resulting from business combinations treated under Japanese GAAP?
A. It is capitalized and amortized over a period of no more than 40 years.
B. It is allowed to be expensed in the year the subsidiary is acquired.
C. It is capitalized and written down when its fair value becomes less than its carrying
value.
D. It is amortized over between 5 and 40 years.
Answer:
Jane, a citizen of Country X, received a corporate dividend in the amount of £10,000
from a company in the U.K. Country X did not tax Jane’s dividend. Country X is using
what kind of approach toward foreign source income?
A. Nationality approach
B. Worldwide approach
C. Legalistic approach
D. Territorial approach
Answer:
What functional area dominates the accounting profession in Germany?
A. Taxation
B. Auditing
C. Financial reporting
D. Managerial Accounting
Answer:
Under U.S. GAAP, with respect to equity-settled share-based payments, if the fair value
of the equity instrument is used, the value is determined:
A. at the earlier of the date a commitment for performance is reached or the date the
services are actually completed.
B. at the date the services are actually completed.
C. at the date a commitment for performance is reached.
D. None of the above
Answer:
The “Fair Presentation/Full Disclosure Model” is a classification scheme used by:
A. Germany.
B. Japan.
C. the United States and the United Kingdom.
D. Brazil.
Answer:
If only one currency is used for evaluating subsidiary performance in a multinational
corporation, what currency is it most likely to be?
A. Euros
B. Local currency of the subsidiary
C. Currency of the parent company’s home country
D. None of the above
Answer:
What is the major limitation of using the payback period as a tool in capital budgeting?
A. It is difficult to calculate without a computer.
B. It favors large investments.
C. It ignores the time value of money.
D. It does not consider cash flows.
Answer:
Of the following British professional accounting associations, whose members
CANNOT sign an audit report?
A. Institute of Chartered Accountants in England and Wales (ICAEW)
B. Association of Chartered Certified Accountants (ACCA)
C. Chartered Institute of Public Finance and Accountancy (CIPFA)
D. Institute of Chartered Accountants in Scotland (ICAS)
Answer:
Which of the following statements is true about hedge accounting under U.S. GAAP?
A. Companies may choose whether to account for derivatives as cash flow hedges or
fair value hedges.
B. If a derivative qualifies as a cash flow hedge, the hedging instrument is adjusted to
fair value on each balance sheet date.
C. If a derivative is elected by the company not to be designated as a cash flow hedge,
it must be accounted for as such.
D. Hedge accounting is only advantageous when a foreign currency depreciates
between the transaction date and the payment date.
Answer:
Which of the following is the responsibility of an audit committee?
A. Oversee the internal control systems
B. Oversee internal auditing and the independent public accounting function
C. Monitor the financial reporting process
D. All of the above
Answer:
Which of the following factors is generally considered in performing the environmental
analysis phase of strategy formulation?
A. Competitors
B. Government regulations
C. Customer demand
D. All of the above
Answer:
In preparation for admission to the European Union, Hungary, Poland, and the Czech
Republic passed new accounting laws based on EU Directives. How were these new
laws different from their previous accounting laws?
A. The new laws are easier to enforce than the previous laws.
B. The new accounting regulations are written in English, whereas the earlier
accounting standards were written in Russian.
C. The new laws are less flexible than their earlier accounting laws.
D. The new laws are market-oriented whereas their earlier accounting laws were
Soviet-style.
Answer:
The International Accounting Standards Board was preceded by:
A. the IOSCO.
B. the ASEAN.
C. the IASC.
D. the NRC.
Answer:
In which country has the “GRI-Certified Training Program” been implemented?
A. Brazil
B. India
C. The United States
D. All of the above
Answer:
Zen Energies is a Chinese branch of Super Sigma Inc., incorporated in U.S. In the year
ending Dec. 31, 2014, the net income of Zen was 25 million Yuan before tax of 25%.
During the year the average exchange rate was 0.16379 Yuan per dollar. The exchange
rate on the date of payment of taxes is was 0.16474 Yuan per dollar. Determine the
amount of U.S. taxable income.
A. $3.0711 million
B. $114.475 million
C. $18.75 million
D. $4.1007 million
Answer:
A unit of a multinational corporation that creates little or no knowledge but rather uses
the ideas and processes developed by other units is referred to as a(n):
A. implementer.
B. local innovator.
C. integrated player.
D. team player.
Answer:
Cash flows related to a proposed capital investment project are subject to what kind of
risk?
A. Economic risk
B. Financial risk
C. Political risk
D. All of the above
Answer: