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WorksheetsAccounting Quiz
Total questions: 27
Worksheet time: 14mins
What is the intent of IFRS 1?
To provide the framework for setting international accounting standards
To establish the guidelines for financial statement presentation
To provide the working definitions of accounting elements
To provide guidance on first-time application of IFRS
What term is used to describe the process of reducing foreign exchange risk?
International accounting
Exposure
Hedging
Globalization
As per U.S. corporate tax laws, which of the following statements is true of a company that is incorporated in the U.S. and has a branch in a foreign country?
The credit for the amount of taxes already paid is given to arrange for double taxation.
The credit for the amount of taxes already paid is given to charge for the taxes not paid in the home country.
The credit for the amount of taxes already paid is given to give relief for the taxes paid in the foreign country.
The credit for the amount of taxes already paid is given to refund the taxes already paid in the home country
Which of the following is an advantage of having a single set of accounting standards used worldwide?
Reduced number of multinational corporations on the NYSE
Reduced accounting costs for multinational corporations
Increased power of the FASB
Increased diversity of accounting methods used by multinational corporations
Which of the following qualitative characteristics make financial statement information useful?
Relevance
Understandability
Reliability
All of the above
Which of the following is not one of the three forms of business organization?
Proprietorships.
Partnerships.
Corporations.
Investors
What is the advantage of foreign direct investment?
Helps in retaining advantage over competition.
Reduces transportation costs.
Creates a company tailored to a foreign market's unique characteristics.
All of the above
Why does the IASB believe that a principles-based approach to standard setting is superior to a rules-based approach?
Principles-based standard setting is less costly to undertake than rules-based standard formulation.
A conceptual framework for standard setting has demonstrated to encourage the greatest economic development.
It is desirable to have all corporations in all countries using the same accounting practice.
Detailed guidance or rules encourage accountants to look for ways around the rules rather than trying to provide useful information
It is generally believed that the 1997 financial crisis in East Asia was partly due to accounting factors in that part of the world. Which of the following accounting values was lacking in that part of the world and thereby contributed to the crisis?
Professionalism
Statutory control
Uniformity
Transparency
How are International Financial Reporting Standards enforced?
Regulatory bodies of individual countries
All of the above
Enforcement Committee of the International Accounting Standards Board
International Securities and Exchange Commission
A and B
In countries such as the U.S., there is great demand for public disclosure of accounting information. What is the reason for this?
Corporate management isn’t trustworthy.
The American populace is better able to read financial statements than people in other countries.
U.S. government officials are generally members of corporate boards of directors and can get all the information they require.
Businesses rely heavily on financing through issuance of stock to the public.
What does 'harmonization' mean in the context of international accounting?
Assessing the exposure resulting from inadequate internal controls
The process of combining the financial statements of foreign subsidiaries into the parent company's financial statements
Disclosing the accounting methods used in preparing the financial statements
The process of reducing accounting differences across countries
Assume that ABCO is a U.S. multinational corporation. Its foreign subsidiaries must report income in their respective countries according to GAAP in those countries. How must ABCO report its consolidated financial statements?
Since ABCO is a U.S. corporation, U.S. generally accepted accounting principles (US GAAP) must be used for the consolidated financial statements.
ABCO must choose any one country's accounting standards and combine the subsidiary reports into the parent company's statements using that one country's GAAP.
Since the company is operating in several different countries, International Financial Reporting Standards (IFRS) must be used for the consolidated financial statements.
On the consolidated financial statements, each subsidiary's financial results must be shown in the currency of the country where the subsidiary is located.
Under a joint exposure draft issued by the IASB and FASB, what is one of the most significant proposals?
IFRS and U.S. GAAP would have identical quantifiable criteria for lease classification.
Lessors would recognize income immediately at the inception of the lease.
There would be no lease disclosure required in the notes to the financial statements.
Leases would no longer be classified as finance or operating.
None of the above
A major accounting value that relates to accounting disclosure is
Uniformity
Individualism
Professionalism
Transparency
Collectivism
International Financial Reporting Standards is generally comprised of which of the following?
International Financial Reporting Standards
International Accounting Standards
Interpretations from the International Financial Reporting Interpretations Committee
Interpretations from Standing Interpretations Committee
all of above
Which of the following items should be included in the cost of property, plant, and equipment under IAS 16?
All costs directly attributable to getting the asset to the proper location
Import duties and taxes
Estimated costs of removing the asset
All of these should be considered part of the cost of the asset.
Which of the following is NOT true about Luca Pacioli?
He was not the person who first developed double entry accounting.
He was a Franciscan monk.
He started the first accounting program in Italy.
He was not a merchant or bookkeeper
Historical cost is the primary basis for asset valuation under U.S. GAAP. Why is historical cost NOT as important in the accounting systems of Latin America as in the U.S.?
Historical costs are too difficult to calculate in the currencies used in Central and South America.
There is very little foreign direct investment in the countries of Latin America, so few assets need to be accounted for.
In Latin America, asset prices are very stable, making historical costs equal to replacement costs, so it doesn't matter which valuation basis is used.
The countries of Latin America have experienced very high rates of inflation, which would make historical costs meaningless to readers of financial statements.
What is the equivalent of the common stock account on a U.S. balance sheet on the balance sheet of a British company?
Capital redemption reserve
Share premium account
Own shares held
Called-up share capital
Which of the following statements is NOT true concerning reasons for analyzing foreign financial statements?
It is important to determine the financial stability of foreign suppliers.
In a global economy, managers may use foreign competitors as benchmarks for evaluating performance.
Managers should determine the financial health of foreign customers before extending credit.
The stock returns of foreign corporations are nearly perfectly correlated with returns on U.S. stocks
ABC Corporation has its two wholly owned subsidiaries, Delta and Parry, in Country A and Country B, respectively. Parry purchases a part for its production from Delta. Country B has a higher tax rate than Country A. To minimize the corporation's overall income tax, how should ABCO set its transfer prices between its subsidiaries?
Delta should sell parts to Parry at high prices.
Delta should sell parts to Parry at low prices.
It doesn't matter what transfer price is used because the subsidiaries are part of the same company.
Transfer pricing does not affect the total tax paid by the corporation.
The emergence of corporations has influenced financial accounting by
Removing limited liability as a way of hiding corporate responsibility.
Combining ownership and control.
Emphasizing disclosure as part of the necessary means of regulating corporate behavior.
Making transparency less important.
Which of the following is generally true about the differences between U.S. GAAP and IFRS?
IFRS tends to be more rules-based and U.S. GAAP tends to be principles-based.
More professional judgment is required to apply U.S. GAAP than is required for implementing IFRS.
In all cases, U.S. GAAP is more detailed than the IFRS.
IFRS is more flexible than U.S. GAAP
Under IAS 2, what adjustment needs to be made after an inventory write-down if the selling price subsequently increases?
No adjustment necessary. Once inventory is written down, it cannot be increased under IFRS.
It should be sold at the replacement cost.
Recover of inventory loss should be debited to reflect the increase in inventory value.
The inventory write-down should be reversed to bring it in line with the new net realizable value.
Which of the following is NOT an objective of the International Accounting Standards Board (IASB)?
To develop a single set of enforceable global accounting standards
To promote the use and application of global accounting standards
To encourage convergence of national accounting standards and international accounting standards
To establish worldwide uniformity of accounting practice
Which of the following is an example of a greenfield investment?
Nike contracts with a footwear company in China to make athletic shoes.
A Chinese oil company buys a U.S. oil company.
Toyota, a Japanese automaker, builds an assembly plant in Ohio.
Daimler, a German automaker, merges with Chrysler, a U.S. automaker
