Final Quiz

IAS 32 defines a financial instrument as:

• the currency of a foreign country in which the enterprise does business.

• a certified check.

• a recognized stock exchange.

• any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

What is a "strike price?"

• The exchange rate that is used to buy a foreign currency today

• The price that will be paid for goods in a forward contract

• The difference between the wholesale rate and the retail rate for foreign currency exchange

• The exchange rate that will be used if a foreign currency option is executed

Which of the following items should be shown as a component of comprehensive income?

• .Dividend paid to a shareholder.

• Foreign-currency translation adjustment.

• Additional capital contribution.

• Deferred revenue

A net liability balance sheet exposure exists and the foreign currency depreciates. Which of the following statements is generally true?

• There is no translation adjustment. 

• There is a positive translation adjustment.

• There is a negative translation adjustment. 

• There is a remeasurement loss. 

• There is a remeasurement gain. 

A company from the United Kingdom uses British pounds in its normal operations, reports in the European Union in euros, and reports in the United States in U.S. dollars. The company is owned by a private equity firm in Japan. What is the company's functional currency?

• The Euro

• The British pound. 

• The U.S. dollar. 

• The Japanese yen. 

Why is investing in foreign companies an effective way to diversify an individual's investment portfolio?

• Foreign economies are stronger than the Vietnamese economy.

• Foreign stocks are less risky than the stocks of Vietnamese corporations.

• Stock returns of companies in foreign companies are highly correlated with stock returns of Vietnamese companies.

• Returns on foreign company stocks do not always change in the same direction as returns on Vietnamese stocks

What is the best short - term solution to alleviate problems of financial statement analysis arising from international differences in accounting terminology?

• Require all countries to conform to IASB standards.

• Create standard financial statement terminology for all companies around the world

• Convert all financial statements into English.

• Analysts should carefully read the notes to financial statements and learn about the business environments of countries they analyze.

Which of the following is true about financial statement disclosure?

• When account balances are aggregated, the analyst has the greatest amount of information.

• The concept of full disclosure has been universally adopted around the world.

•  An analyst can always disaggregate financial statement disclosures to obtain needed information.

• The amount and types of financial statement disclosure vary widely from one country to another

Compared to balance sheet information, income statement information has been relatively more important and informative in

• United States
• France

• Mexico

• Japan

• Germany

Which is NOT one of the basic steps in financial statement analysis?

• Prospective analysis

• Accounting analysis

• Financial analysis

• Translation analysis