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| 1 | |
Over the last 50 years, accounting standards have evolved in response to U.S. directives on accounting. |
| | A) | True |
| | B) | False |
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| 2 | |
The technical process whereby an independent person gathers evidence for determining if financial accounts conform to required accounting standards and if they are reliable is known as auditing standards. |
| | A) | True |
| | B) | False |
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| 3 | |
Most industrialized countries require consolidated financial statements. |
| | A) | True |
| | B) | False |
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| 4 | |
Firms prefer the temporal methods of currency translation because it ensure that the balance sheet will balance. |
| | A) | True |
| | B) | False |
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| 5 | |
Most accountants argue that managers of different subsidiaries should be evaluated using the same quantitative criteria to create consistency. |
| | A) | True |
| | B) | False |
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| 6 | |
Accounting is |
| | A) | usually established and development by governments to get a fair picture for taxation. |
| | B) | is essentially the same in all countries after adjusting for exchange rates. |
| | C) | is the means by which companies communicate their financial position to outsiders. |
| | D) | stands apart from the environment in which it operates to maintain its integrity. |
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| 7 | |
The Coca-Cola brand name is an example of a firm's ___________. |
| | A) | equity premium |
| | B) | accounting advantage |
| | C) | goodwill |
| | D) | book value premium |
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| 8 | |
_________ and ________ are both main variables that influence the development of a country's accounting system. |
| | A) | a country's level of economic development, exchange rates |
| | B) | monetary policy, inflation rates |
| | C) | the WTO, the prevailing culture |
| | D) | the relationship between business and the providers of capital, political and economic ties with other countries |
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| 9 | |
The major external sources of capital for businesses are all of the following except |
| | A) | individual investors |
| | B) | the government |
| | C) | subsidiaries |
| | D) | banks |
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| 10 | |
The U.S. influence on the development of accounting practices in Mexico and Canada is an example of how __________ influence(s) national accounting systems. |
| | A) | the level of inflation |
| | B) | political and economic ties |
| | C) | the level of economic development |
| | D) | national culture |
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| 11 | |
Under the historic cost principle |
| | A) | the currency unit used to report financial results is assumed to be losing its value |
| | B) | firms record transactions using the original transactions and make no further adjustments later |
| | C) | a firm's assets are overestimated when inflation is high |
| | D) | depreciation charges are overestimated |
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| 12 | |
The _________ of accounting adjusts all items in a financial statement to factor out the effects of inflation. |
| | A) | historic cost principle |
| | B) | current cost method |
| | C) | total cost principle |
| | D) | depreciation cost method |
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| 13 | |
Researchers have found that Hofstede's ________________ characteristic of national culture affects its accounting system with its emphasis on rules, instructions and control. |
| | A) | power distance |
| | B) | individualism versus collectivism |
| | C) | uncertainty avoidance |
| | D) | masculinity versus femininity |
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| 14 | |
Accounting standards are |
| | A) | useful for providing individual investors with the information they need to make decisions about purchasing or selling corporate bonds, but not stocks |
| | B) | useful for providing individual investors with the information they need to make decisions about purchasing or selling corporate stocks, but not bonds |
| | C) | rules for preparing financial statements |
| | D) | the rules for performing an audit |
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| 15 | |
Historically, the differences in national accounting systems meant financial statements were not always comparable. Which of the following changes has not had an impact on moving toward creating more comparable statements. |
| | A) | Firms are seeking capital in global markets. |
| | B) | Governments are seeking new sources of revenue from taxation. |
| | C) | Subsidiaries need to report activities to headquarters in other countries. |
| | D) | Investors are seeking information about potential investments in other countries. |
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| 16 | |
The International Accounting Standards Board: |
| | A) | is the old name for the International Accounting Standards Committee. |
| | B) | establishes a single standard for all participating countries to use. |
| | C) | is able to enforce its standards through the WTO. |
| | D) | works to create reasonable alternatives that national accounting systems can use. |
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| 17 | |
The impact of IASB standards has been least noticeable in |
| | A) | Japan |
| | B) | Germany |
| | C) | France |
| | D) | the United States |
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| 18 | |
As compared to the IASB, the EU is ______________ in its efforts to harmonize accounting standards. |
| | A) | expected to be less successful |
| | B) | expected to be more successful |
| | C) | expected to be more encompassing |
| | D) | expected to be less encompassing |
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| 19 | |
The purpose of ___________ is to provide accounting information about a group of companies that recognize their economic interdependence. |
| | A) | accounting statements |
| | B) | shareholder agreements |
| | C) | consolidated financial statements |
| | D) | corporate interdependency statements |
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| 20 | |
Foreign subsidiaries of MNE usually keep records in their own currencies. To then translate these statements to send back to headquarters they will generally use one of the methods: |
| | A) | spot exchange rate; forward exchange rate |
| | B) | IASB exchange rate; FASB exchange rate |
| | C) | fiscal; calendar year |
| | D) | current rate; temporal |
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| 21 | |
In the U.S., the local currency of a self-sustaining foreign subsidiary is its ________ currency. |
| | A) | functional |
| | B) | temporal |
| | C) | translation |
| | D) | integral |
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| 22 | |
Headquarters or parent organizations use the following accounting control systems to ensure subsidiaries achieve the best possible performance EXCEPT: |
| | A) | forward exchange rates |
| | B) | comparing budgeted to actual profits |
| | C) | comparing budgeted to actual sales |
| | D) | evaluating managers by their financial performance |
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| 23 | |
To make it easier for headquarters management to compare the performance of subsidiaries throughout the world, subsidiaries usually submit statements in the "corporate currency, " which is generally: |
| | A) | the U.S. dollar |
| | B) | the euro |
| | C) | a basket of leading currencies to "smooth out" currency fluctuations |
| | D) | the home currency |
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| 24 | |
Lessard and Lorange recommend that firms use the ______ exchange rate to translate both budget and performance figures into the corporate currency. |
| | A) | existing spot rate |
| | B) | projected spot rate |
| | C) | forward rate |
| | D) | futures rate |
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| 25 | |
International businesses often manipulate __________ to minimize their worldwide tax liability, minimize import duties and avoid government restrictions on capital flows. |
| | A) | transfer prices |
| | B) | financial statement |
| | C) | reports to home country taxing authorities |
| | D) | reports to financial analysts |
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