According to legitimacy theory, corporate social reports:
A. capture the impact of culture on the annual reports.
B. is a means to deal with a firm’s exposure to political, economic, and social
pressures.
C. is in response to the stakeholders demand for environmental and social information.
D. should not vary country wise on the basis of methods of disclosure.
Answer:
Which of the following terms is used to describe the combining of the financial
statements of all subsidiaries, both foreign and domestic, into the financial statements
of the parent?
A. Convergence
B. Hedging
C. Consolidation
D. Incorporation
Answer:
In Germany, who do external auditors consider as their clients?
A. The government
B. Board of directors
C. Society as a whole
D. All of the above
Answer:
Which of the following is NOT a perspective under the balanced scorecard approach?
A. Parent company perspective
B. Internal business perspective
C. Customer perspective
D. Financial perspective
Answer:
How is goal congruence achieved in decentralized organizations?
A. Forcing managers to take on corporate goals as their personal goals
B. Creating incentives for managers to make decisions that are consistent with
corporate goals
C. Setting policies that direct managers in the way decisions should be made
D. Eliminating the authority for divisional managers to make operating decisions
Answer:
How many trustees of the IFRS Foundation will normally be senior partners of
prominent international accounting firms?
A. 0
B. 2
C. 5
D. 10
Answer:
In designing an effective management control system for a multinational corporation,
the accountant should measure factors appropriate for each unit’s level of responsibility.
Which of the following measures would be appropriate for evaluating the performance
of an investment center?
A. Output on costs of input
B. Residual income
C. EBIT
D. All of the above
Answer:
Under IFRS 2, Share-based Payment, what approach is used to account for the
transaction?
A. Comparable transaction approach
B. Fair value approach
C. Market approach
D. Notional value approach
Answer:
Camerata Construction borrowed €19,000,000 for 10 years at 6% specifically to
modernize its operations with new equipment. The average rate of interest on
Camerata’s debt after considering the most recent loan was 5.5%. What rate of interest
should be used for capitalizing the borrowing costs on the new equipment under IAS
23?
A. 5.5%
B. 6%
C. 5.75%
D. Some other amount
Answer:
Which of the following statements is true about convenience translations of financial
statements?
A. International Business Machines (IBM) is the only corporation in the U.S. that
currently provides convenience translation of its financial statements into a foreign
language.
B. Few U.S.-based companies translate their financial statements into another
language.
C. Convenience translation means that a company will translate its financial statements
into English.
D. All of the above statements are true.
Answer:
What is the journal entry required to recognize a deferred tax asset of $50,000?
A. Dr. Deferred Tax Asset $50,000, Cr. Income Tax Benefit $50,000
B. Dr. Deferred Tax Asset $50,000, Cr. Equity $50,000
C. Dr. Income Tax Expense $50,000, Cr. Deferred Tax Asset $50,000
D. Dr. Deferred Tax Asset $50,000, Cr. Deferred Tax Liability $50,000
Answer:
In international accounting, a “hedge” is:
A. a business transaction made to reduce the exposure of foreign exchange risk.
B. the legal barriers in various divisions of a multinational company.
C. the loss in US dollar resulting from a decline in the value of the US dollar relative to
foreign currencies.
D. a form of foreign direct investment.
Answer:
What organization is the only cap and trade system for all six greenhouse gases in
North America?
A. The Chicago Climate Exchange
B. The Toronto Climate Exchange
C. The Nuclear Regulatory Agency
D. The Los Angeles Climate Exchange
Answer:
Who is considered to be the client for external auditors in the United Kingdom?
A. Corporate shareholders
B. The government
C. Society as a whole
D. All of the above
Answer:
The number of Japanese yen (¥) required today to buy one U.S. dollar ($) today is
called:
A. the spot rate.
B. the exact rate.
C. the forward rate.
D. the retail rate.
Answer:
There are two major taxes imposed on profits earned by corporations in international
trade. One is the corporate income tax. What is the other type of tax on earnings of
multinational corporations?
A. Excise tax
B. Payroll tax
C. Withholding tax
D. Value-added tax
Answer:
What effect has social and environmental legislation had on top management in
Thailand?
A. Top management can be jailed for failure to make social and environmental
disclosures.
B. There has been no motivation towards increased corporate social and environmental
disclosures.
C. Top management is highly motivated to make social and environmental disclosures.
D. There is no social and environmental legislation in Thailand.
Answer:
What types of differences can cause issues between International Financial Reporting
Standards and U.S. GAAP?
A. Measurement
B. Alternatives available
C. Disclosure
D. All of the above may be different between IFRS and U.S. GAAP.
Answer:
What is the primary provision of the Foreign Corrupt Practices Act?
A. To specify which corrupt practices are acceptable under U.S. law
B. To specify how to account for bribes paid by U.S. corporations to obtain business
from foreign governments
C. To inform internal auditors how to detect fraud in multinational corporations
D. To prohibit U.S. companies from paying bribes to foreign government officials to
obtain business
Answer:
What are the two main theories of corporate governance?
A. Audit reliance and board of directors’ responsibility
B. Agency and stakeholder
C. Common law and code law
D. Internal auditing and external auditing
Answer:
Which of the following functional areas is included in the study of international
accounting?
A. Financial accounting
B. Accounting information systems
C. Taxation
D. All of the above
Answer:
Which of the following affect the effective corporate tax rate?
A. Tax-based incentives
B. Local corporate tax rate
C. Method of determining taxable income
D. All of the above
Answer:
What term is used to describe the process of reducing foreign exchange risk?
A. International accounting
B. Exposure
C. Hedging
D. Globalization
Answer:
International accounting standards define functional currency as:
A. the currency of the parent company.
B. the currency of the primary economic environment in which the subsidiary operates.
C. the currency of the primary economic environment in which the parent operates.
D. the currency used by a subsidiary for its financial reporting.
Answer:
Estimating the expected cash inflows and outflows from proposed projects is performed
in what step of the capital budgeting process?
A. Project identification
B. Project evaluation
C. Project monitoring
D. Project review
Answer:
Agro-World Technologies Inc. incurred $1,000,000 to construct a pilot plant to study
the feasibility of building agricultural machinery more inexpensively for emerging
economies. How would this cost be classified under IAS 38 (Intangible Assets)?
A. Research costs
B. Development costs
C. Neither research nor development
D. It could be either research or development, depending on management’s wishes.
Answer:
Holding monetary liabilities during a period of inflation results in:
A. purchasing power gains.
B. purchasing power losses.
C. transaction gains.
D. translation losses.
Answer:
A noncancelable sales order that specifies foreign currency price and date of delivery is
known as a:
A. hedge.
B. foreign currency firm commitment.
C. forward contract.
D. put option.
Answer:
Under what condition may it be to the taxpayer’s advantage to take a deduction for total
foreign taxes paid rather than a tax credit for foreign income taxes?
A. If the foreign income tax rate is greater than the U.S. federal income tax rate
B. If the foreign income tax rate is less than the U.S. federal income tax rate
C. If foreign source income is less than domestic income
D. If foreign taxes other than income taxes are substantial
Answer:
Which of the following statements is true about convenience translations?
A. Convenience translation eliminates the problems associated with comparing
financial statements in the same language.
B. Convenience translation means that a company converts both the language and the
currency of its financial statements for the convenience of potential investors.
C. Convenience translations require reconciliation to U.S. GAAP, U.S. format, as well
as conversion to English.
D. None of the above statements is true.
Answer:
Mexican corporations can issue three types of stockSeries A, Series B, and Series N.
Series A stock can only be owned by Mexican nationals. These shares must constitute at
least what percentage of corporate voting rights?
A. 51%
B. 49%
C. 25%
D. 10%
Answer:
What does ISA 700 say about the interpretation of an audit opinion?
A. It enhances the credibility of the financial statements of corporation.
B. It guarantees the future viability of the corporation.
C. It assures readers that no errors have been made in the financial statements.
D. It tells shareholders that management has operated the corporation efficiently.
Answer:
What is “asset exposure” to foreign exchange risk?
A. The possibility that an asset denominated in domestic currency will decline in value
because of changes in the foreign exchange rate
B. The possibility that an asset denominated in a foreign currency will change in value
because of a change in the foreign exchange rate
C. The loss resulting from an import purchase when a foreign currency appreciates
D. The loss resulting from an import purchase when a foreign currency depreciates
Answer:
In order to address accounting diversity, financial analysts have adopted which of the
following strategies?
A. Limiting the geographic spread of their investments
B. Taking a diversification strategy within a foreign country
C. Investing only in foreign government bonds
D. All of the above
Answer:
Under U.S. tax law, what happens to excess foreign tax credit?
A. It reduces taxes on ordinary income in the current year.
B. It can be carried back one year to calculate a refund on additional taxes paid in U.S.
on foreign source income.
C. It is lost unless the average foreign tax rate paid by the company in the future is
greater than the U.S. tax rate.
D. None of the above
Answer: