ACCT 412 exam one
If most of a country's business financing comes from families, banks, and the government, what should we expect in terms of information disclosure to the public? a) Relatively little disclosure because the public isn't a major factor b) A great deal of disclosure because it will be the only way for interested parties to learn about the company c) Complete openness of accounting records d) No disclosure at all
a) Relatively little disclosure because the public isn't a major factor
Which of the following statements is true of the International Accounting Standards Board (IASB)? a) The Board consists of 12 members b) The Board should contain 6 part-time members c) The board member must have experience as auditors d) All members of the Board should be from a single country.
a) The Board consists of 12 members
What basis does the International Accounting Standards Board use in developing IFRS? a) Detailed rules to govern accounting practice b) A framework for deriving general principles c) Typical tax laws of western nations d) Exceptions or unusual circumstances that require special attention
b) A framework for deriving general principles
Which of the two methods is most common in Europe? a) Assets in order of liquidity, beginning with cash b) Assets in reverse order of liquidity, beginning with intangible assets c) Liability in order of eligibility d) Both assets in order of liquidity and liability in order of eligibility
b) Assets in reverse order of liquidity, beginning with intangible assets
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.? a) Historical costs are too difficult to calculate in the currencies used in Central and South America b) The countries of Latin America have experienced very high rates of inflation, which would make historical costs meaningless to readers of financial statements c) There is very little foreign direct investment in the countries of Latin America, so few assets need to be accounted for d) 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.
b) The countries of Latin America have experienced very high rates of inflation, which would make historical costs meaningless to readers of financial statements
olkswagen AG , based in Germany, is one of the largest automobile manufacturers in the world. The following information was provided in Volkswagen AG's 2016 annual report. Volkswagen AG 2016 Annual Report Sales Assets Germany43,634 84,525Africa94,445 40,717North America35,454 23,958South America7,973 3,320Asia35,761 3,064Total217,267 155,583 In millions of euros Calculate an index of multinationality based upon the geographical distribution of sales and assets (employee information is not available) for Volkswagen AG's 2016 Annual Report Multiple Choice a) 0.20 b) 0.36 c) 0.63 d) 1.2
c) 0.63
Which of the following is NOT a major concern related to convergence of international accounting standards? a) The complicated nature of particular standards b) The tax-driven nature of the national accounting regime c) An overload of guidance on the first-time application of IFRS d) IFRS language translation difficulties
c) An overload of guidance on the first-time application of IFRS
What is the intent of IFRS 1? a) To establish the guidelines for financial statement presentation b) To provide the working definitions of accounting elements c) To provide guidance on first-time application of IFRS d) To provide the framework for setting international accounting standards
c) To provide guidance on first-time application of IFRS
The factor used to convert from one country's currency to another country's currency is called the: a) interest rate b) cost of capital c) exchange rate d) strike price
c) exchange rate
What term is used to describe the process of reducing foreign exchange risk? a) International accounting b) Exposure c) Hedging d) Globalization
c) hedging
The accounting standards in code law countries tend to be: a) very detailed b) formulated by organizations such as the FASB c) stated generally without much guidance on accounting procedure d) very conservative.
c) stated generally without much guidance on accounting procedure
Why would a company want its stock cross-listed on the stock exchanges of several countries? a) To make financial reporting less burdensome for its accounting firm b) In order to use International Financial Reporting Standards c) To gain access to more financial resources than are available in its home country d) All of the above
c) to gain access to more financial resources than are available in its home country
What are the potential benefits derived from the international convergence of accounting standards? a) Reduction of financial reporting costs for multinational corporations that seek to list their stocks on foreign stock exchanges. b) Reduction of cost of preparing worldwide consolidated financial statements. c) Reduction of investor uncertainty by increasing comparability of worldwide financial statements d) All answers are correct
d) All answers are correct
What financial reporting issues arise as a result of making a foreign direct investment? a) Conversion of foreign GAAP to parent company GAAP b) Management of new company is difficult c) Translation of foreign currency to parent company reporting currency d) Both Conversion of foreign GAAP to parent company GAAP and translation of foreign currency to parent company reporting currency
d) Both Conversion of foreign GAAP to parent company GAAP and translation of foreign currency to parent company reporting currency
What are the hypothesized relationships between the cultural value of uncertainty avoidance and the accounting values of conservatism and secrecy? a) Strong uncertainty avoidance is associated with conservative measure of profit and assets b) Strong uncertainty avoidance is associated with optimistic measure of profit and assets c) Strong uncertainty avoidance is associated with secrecy (less disclosure) to restrict information and avoid conflict and competition d) Strong uncertainty avoidance is associated with both conservative measure of profit and assets and secrecy (less disclosure) to restrict information and avoid conflict and competition
d) Strong uncertainty avoidance is associated with both conservative measure of profit and assets and secrecy (less disclosure) to restrict information and avoid conflict and competition
It is known that national cultural values affect accounting values. If Country X ranks low on uncertainty avoidance, which of the following statements would be true? a) The country would rank high on the accounting values of uniformity b) The country would rank high on the accounting values of secrecy c) The country would rank low on the accounting values of professionalism d) The country would rank low on the accounting values of conservatism
d) The country would rank low on the accounting values of conservatism
What is the IASB's main objective? a) To advocate for accrual accounting to be used at the international level. b) To help to implement a going concern approach. c) To reduce risk of investment. d) To develop a set of high-quality standards for financial reporting by companies at the international level
d) To develop a set of high-quality standards for financial reporting by companies at the international level
The extent to which hierarchy and unequal authority distribution in institutions and organizations are accepted within a culture is referred to as: a) uncertainty avoidance b) masculinity c) individualism d) power distance
d) power distance