Question 1

What is the probable reason that many foreign countries provide convenience translations of their financial statements into English?

Accepted Answer

A) U.S.GAAP is the most widely used set of financial accounting standards. 
B) Globalization of capital markets has increased the demand for English language financial statements. 
C) England is the home of more multinational corporations than any other country. 
D) The Securities and Exchange Commission requires all foreign companies doing business in the U.S.to provide English translations. 
A) U.S.GAAP is the most widely used set of financial accounting standards. 
B) Globalization of capital markets has increased the demand for English language financial statements. 
C) England is the home of more multinational corporations than any other country. 
D) The Securities and Exchange Commission requires all foreign companies doing business in the U.S.to provide English translations. B

Question 2

Which of the following statements is true about convenience translations?

Accepted Answer

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. 
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. D

Question 3

What is an advantage of using ratio analysis in comparing financial statements from different countries?

Accepted Answer

A) Ratios are expressed as percentages, making currency differences irrelevant to the analysis. 
B) Ratios highlight the holding gains or losses related to currency translation. 
C) Purchasing power gains and losses from currency translation show up clearly in ratio analysis. 
D) Comparing business ratios across countries removes the effect of economic conditions and business culture. 
A) Ratios are expressed as percentages, making currency differences irrelevant to the analysis. 
B) Ratios highlight the holding gains or losses related to currency translation. 
C) Purchasing power gains and losses from currency translation show up clearly in ratio analysis. 
D) Comparing business ratios across countries removes the effect of economic conditions and business culture. A

Question 4

Investing in several corporate stocks that have different characteristics is referred to as:

Accepted Answer

A) diversification. 
B) portfolio consolidation. 
C) asset translation. 
D) income determination. 
A) diversification. 
B) portfolio consolidation. 
C) asset translation. 
D) income determination.

Question 5

Which exchange rates should be used in order to appropriately analyze the trends in foreign financial statement data?

Accepted Answer

A) Historical exchange rates 
B) Beginning of year exchange rates 
C) Current exchange rates 
D) Average exchange rates 
A) Historical exchange rates 
B) Beginning of year exchange rates 
C) Current exchange rates 
D) Average exchange rates

Question 6

The Morgan Stanley Dean Witter "Apples to Apples" analysis relies on:

Accepted Answer

A) converting financial statements to U.S.GAAP to compare international investment opportunities. 
B) identifying the most significant factors affecting stock value and considering the effect of accounting diversity on these factors. 
C) the superiority of U.S.GAAP for determining the true value of international capital investments. 
D) converting all the accounts in foreign financial statements to a common set of accounting standards. 
A) converting financial statements to U.S.GAAP to compare international investment opportunities. 
B) identifying the most significant factors affecting stock value and considering the effect of accounting diversity on these factors. 
C) the superiority of U.S.GAAP for determining the true value of international capital investments. 
D) converting all the accounts in foreign financial statements to a common set of accounting standards.

Question 7

As one of the sources of accounting distortions, the intentional overstatement of an accrued restructuring charge is often referred to as a practice of:

Accepted Answer

A) earnings management. 
B) capital adjustment. 
C) asset management. 
D) risk management. 
A) earnings management. 
B) capital adjustment. 
C) asset management. 
D) risk management.

Question 8

Which of the following statements is true about convenience translations of financial statements?

Accepted Answer

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. 
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.

Question 9

What language will be used for the quarterly reports submitted by foreign companies to the U.S.Securities and Exchange Commission?

Accepted Answer

A) The quarterly reports may be in the company's local language 
B) English or German 
C) English or one of the languages of the European Union 
D) English only 
A) The quarterly reports may be in the company's local language 
B) English or German 
C) English or one of the languages of the European Union 
D) English only

Question 10

Evaluating liquidity and solvency to assess a company's ability to meet its obligations is an example of:

Accepted Answer

A) cash flow analysis. 
B) risk analysis. 
C) ROI analysis. 
D) accounting analysis. 
A) cash flow analysis. 
B) risk analysis. 
C) ROI analysis. 
D) accounting analysis.

Question 11

Timeliness of financial statements varies across nations.Which of the following countries has financial statements issued closest to year-end (on average)?

Accepted Answer

A) Japan 
B) Germany 
C) Canada 
D) Italy 
A) Japan 
B) Germany 
C) Canada 
D) Italy

Question 12

Foreign companies listed on U.S.stock exchanges must reconcile their net income and stockholders' equity to U.S.GAAP.Which ratios can be calculated with the information provided in this reconciliation?

Accepted Answer

A) Operating profit margin 
B) Asset turnover 
C) Return on equity 
D) Current ratio 
A) Operating profit margin 
B) Asset turnover 
C) Return on equity 
D) Current ratio

Question 13

Dynasty Industries reported total liabilities of ¥9,000,000 and total assets of ¥12,000,000.If the exchange rate changes to ¥110 = $1, what will be the change in the debt ratio assuming the account balances remain constant?

Accepted Answer

A) Decrease by 8.3% 
B) Increase by 8.3% 
C) Decrease by 9.1% 
D) No change 
A) Decrease by 8.3% 
B) Increase by 8.3% 
C) Decrease by 9.1% 
D) No change

Question 14

Imperial Chemical Industries, a U.K.corporation, recorded interest incurred in constructing fixed assets as an expense of £128,000,000.When reconciling its financial statements to U.S.GAAP, what should be done with this interest?

Accepted Answer

A) It should be subtracted from the fixed asset account balance. 
B) It should be added to the fixed asset account balance. 
C) It should be deducted from retained earnings. 
D) This amount should be charged to accumulated depreciation. 
A) It should be subtracted from the fixed asset account balance. 
B) It should be added to the fixed asset account balance. 
C) It should be deducted from retained earnings. 
D) This amount should be charged to accumulated depreciation.

Question 15

Which of the following is true about reconciling foreign financial statements to U.S.GAAP?

Accepted Answer

A) A 10% increase in income when converting to U.S.GAAP means that stockholder's equity will increase by 10% after converting to U.S.GAAP. 
B) A 10% increase in income when converting to U.S.GAAP means that stockholder's equity will increase by 20% after converting to U.S.GAAP. 
C) A 10% increase in income when converting to U.S.GAAP means that stockholder's equity will decrease by 10% after converting to U.S.GAAP. 
D) None of the above statements is true. 
A) A 10% increase in income when converting to U.S.GAAP means that stockholder's equity will increase by 10% after converting to U.S.GAAP. 
B) A 10% increase in income when converting to U.S.GAAP means that stockholder's equity will increase by 20% after converting to U.S.GAAP. 
C) A 10% increase in income when converting to U.S.GAAP means that stockholder's equity will decrease by 10% after converting to U.S.GAAP. 
D) None of the above statements is true.

Question 16

Which of the following is most likely to affect an analyst's ability to make meaningful comparisons of financial statement ratios for companies in different countries?

Accepted Answer

A) Differences in currency 
B) Language differences 
C) Diversity of accounting principles and practices 
D) Mathematical degrees of magnitude 
A) Differences in currency 
B) Language differences 
C) Diversity of accounting principles and practices 
D) Mathematical degrees of magnitude

Question 17

British companies whose shares are publicly traded on exchanges in the United Kingdom have how long after year-end to file financial statements with regulators in the U.K.?

Accepted Answer

A) 6 months 
B) 90 days 
C) 60 days 
D) 30 days 
A) 6 months 
B) 90 days 
C) 60 days 
D) 30 days

Question 18

Which is NOT one of the common sources of distortions in financial statements?

Accepted Answer

A) Accounting standards that are inconsistent with economic reality 
B) Estimation errors made by managers in applying accounting standards 
C) Miscalculation of foreign currency translation 
D) Management of earnings 
A) Accounting standards that are inconsistent with economic reality 
B) Estimation errors made by managers in applying accounting standards 
C) Miscalculation of foreign currency translation 
D) Management of earnings

Question 19

What U.S.term was equivalent to "inventories" as it was used in financial statements of companies located in the United Kingdom, prior to adoption of IFRS in 2005?

Accepted Answer

A) Operating assets 
B) Consumables 
C) Stocks 
D) Merchandise 
A) Operating assets 
B) Consumables 
C) Stocks 
D) Merchandise

Question 20

Lack of information about accounting methods used, operating segments, and interim financial results is a problem of:

Accepted Answer

A) disclosure. 
B) relevance. 
C) comparability. 
D) format. 
A) disclosure. 
B) relevance. 
C) comparability. 
D) format.

What is the probable reason that many foreign countries provide convenience translations of their financial statements into English?

Which of the following statements is true about convenience translations?

What is an advantage of using ratio analysis in comparing financial statements from different countries?

Investing in several corporate stocks that have different characteristics is referred to as:

Which exchange rates should be used in order to appropriately analyze the trends in foreign financial statement data?

The Morgan Stanley Dean Witter "Apples to Apples" analysis relies on:

As one of the sources of accounting distortions, the intentional overstatement of an accrued restructuring charge is often referred to as a practice of:

Which of the following statements is true about convenience translations of financial statements?

What language will be used for the quarterly reports submitted by foreign companies to the U.S.Securities and Exchange Commission?

Evaluating liquidity and solvency to assess a company's ability to meet its obligations is an example of:

Timeliness of financial statements varies across nations.Which of the following countries has financial statements issued closest to year-end (on average)?

Foreign companies listed on U.S.stock exchanges must reconcile their net income and stockholders' equity to U.S.GAAP.Which ratios can be calculated with the information provided in this reconciliation?

Dynasty Industries reported total liabilities of ¥9,000,000 and total assets of ¥12,000,000.If the exchange rate changes to ¥110 = $1, what will be the change in the debt ratio assuming the account balances remain constant?

Imperial Chemical Industries, a U.K.corporation, recorded interest incurred in constructing fixed assets as an expense of £128,000,000.When reconciling its financial statements to U.S.GAAP, what should be done with this interest?

Which of the following is true about reconciling foreign financial statements to U.S.GAAP?

Which of the following is most likely to affect an analyst's ability to make meaningful comparisons of financial statement ratios for companies in different countries?

British companies whose shares are publicly traded on exchanges in the United Kingdom have how long after year-end to file financial statements with regulators in the U.K.?

Which is NOT one of the common sources of distortions in financial statements?

What U.S.term was equivalent to "inventories" as it was used in financial statements of companies located in the United Kingdom, prior to adoption of IFRS in 2005?

Lack of information about accounting methods used, operating segments, and interim financial results is a problem of:

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Comparative Accounting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Additional Financial Reporting Issues

International Taxation

International Transfer Pricing

Strategic Accounting Issues in Multinational Corporations

Comparative International Auditing and Corporate Governance

International Corporate Social Reporting

Filters

Exam 10: Analysis of Foreign Financial Statements

What is the probable reason that many foreign countries provide convenience translations of their financial statements into English?

Which of the following statements is true about convenience translations?

What is an advantage of using ratio analysis in comparing financial statements from different countries?

Investing in several corporate stocks that have different characteristics is referred to as:

Which exchange rates should be used in order to appropriately analyze the trends in foreign financial statement data?

The Morgan Stanley Dean Witter "Apples to Apples" analysis relies on:

As one of the sources of accounting distortions, the intentional overstatement of an accrued restructuring charge is often referred to as a practice of:

Which of the following statements is true about convenience translations of financial statements?

What language will be used for the quarterly reports submitted by foreign companies to the U.S.Securities and Exchange Commission?

Evaluating liquidity and solvency to assess a company's ability to meet its obligations is an example of:

Timeliness of financial statements varies across nations.Which of the following countries has financial statements issued closest to year-end (on average)?

Foreign companies listed on U.S.stock exchanges must reconcile their net income and stockholders' equity to U.S.GAAP.Which ratios can be calculated with the information provided in this reconciliation?

Dynasty Industries reported total liabilities of ¥9,000,000 and total assets of ¥12,000,000.If the exchange rate changes to ¥110 = $1, what will be the change in the debt ratio assuming the account balances remain constant?

Imperial Chemical Industries, a U.K.corporation, recorded interest incurred in constructing fixed assets as an expense of £128,000,000.When reconciling its financial statements to U.S.GAAP, what should be done with this interest?

Which of the following is true about reconciling foreign financial statements to U.S.GAAP?

Which of the following is most likely to affect an analyst's ability to make meaningful comparisons of financial statement ratios for companies in different countries?

British companies whose shares are publicly traded on exchanges in the United Kingdom have how long after year-end to file financial statements with regulators in the U.K.?

Which is NOT one of the common sources of distortions in financial statements?

What U.S.term was equivalent to "inventories" as it was used in financial statements of companies located in the United Kingdom, prior to adoption of IFRS in 2005?

Lack of information about accounting methods used, operating segments, and interim financial results is a problem of:

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Comparative Accounting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Additional Financial Reporting Issues

International Taxation

International Transfer Pricing

Strategic Accounting Issues in Multinational Corporations

Comparative International Auditing and Corporate Governance

International Corporate Social Reporting

Filters