Question 1

Which of the following statements is true relative to accounting for leases internationally?

Accepted Answer

A) Operating lease disclosure for IFRS and U.S.GAAP is identical. 
B) Some analysts believe that all leases must be restated as if they were operating leases. 
C) Current rules under IFRS, U.S.GAAP, and other national accounting standards require leases to be capitalized under certain circumstances. 
D) U.S.GAAP requires that future minimum lease payment disclosures be made for each of the next ten years and for all years thereafter. 
A) Operating lease disclosure for IFRS and U.S.GAAP is identical. 
B) Some analysts believe that all leases must be restated as if they were operating leases. 
C) Current rules under IFRS, U.S.GAAP, and other national accounting standards require leases to be capitalized under certain circumstances. 
D) U.S.GAAP requires that future minimum lease payment disclosures be made for each of the next ten years and for all years thereafter.

Question 2

If an analyst saw a "Monetary position loss" in a company's annual report, where would that company be located?

Accepted Answer

A) The Netherlands 
B) Mexico 
C) China 
D) Sweden 
A) The Netherlands 
B) Mexico 
C) China 
D) Sweden

Question 3

During the 1990's, a major problem in evaluating the financial statements of Eastern European companies that had been under the control of the Soviet Union was:

Accepted Answer

A) that the statements had been used for government planning rather than for private investors. 
B) that few people spoke the languages in which the financial statements were written. 
C) that East European currencies had been greatly devalued relative to the U.S.dollar. 
D) that financial reporting had not been done since the Bolshevik Revolution. 
A) that the statements had been used for government planning rather than for private investors. 
B) that few people spoke the languages in which the financial statements were written. 
C) that East European currencies had been greatly devalued relative to the U.S.dollar. 
D) that financial reporting had not been done since the Bolshevik Revolution.

Question 4

Dynasty Industries reported total liabilities of ¥9,000,000 and total assets of ¥12,000,000.The current exchange rate is ¥120 = $1.What is Dynasty Industries' debt ratio?

Accepted Answer

A) ¥1.33 
B) 133% 
C) 75% 
D) 6.25% 
A) ¥1.33 
B) 133% 
C) 75% 
D) 6.25%

Question 5

While conducting trend analysis, financial statement amounts should be translated using:

Accepted Answer

A) current exchange rate to avoid translation adjustment. 
B) historical exchange rate to ensure compliance with IFRS. 
C) average exchange rate avoid translation adjustment. 
D) current rate at the end of each year. 
A) current exchange rate to avoid translation adjustment. 
B) historical exchange rate to ensure compliance with IFRS. 
C) average exchange rate avoid translation adjustment. 
D) current rate at the end of each year.

Question 6

On what SEC form must foreign corporations with shares listed on U.S.stock exchanges present a reconciliation of net income and stockholders' equity to U.S.GAAP?

Accepted Answer

A) Form 10-Q 
B) Form 10-K 
C) Form 20-F 
D) Form 8-Q 
A) Form 10-Q 
B) Form 10-K 
C) Form 20-F 
D) Form 8-Q

Question 7

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

Accepted Answer

A) Require all countries to conform to IASB standards. 
B) Create standard financial statement terminology for all companies around the world. 
C) Analysts should carefully read the notes to financial statements and learn about the business environments of countries they analyze. 
D) Convert all financial statements into English. 
A) Require all countries to conform to IASB standards. 
B) Create standard financial statement terminology for all companies around the world. 
C) Analysts should carefully read the notes to financial statements and learn about the business environments of countries they analyze. 
D) Convert all financial statements into English.

Question 8

Footnote disclosures in foreign financial statements are particularly helpful in:

Accepted Answer

A) overcoming differences in statement format among countries. 
B) reconciling statements from one country's GAAP to another country's GAAP. 
C) learning relevant information not required to be presented in the accounts. 
D) All of the above 
A) overcoming differences in statement format among countries. 
B) reconciling statements from one country's GAAP to another country's GAAP. 
C) learning relevant information not required to be presented in the accounts. 
D) All of the above

Question 9

What is the basis for Morgan Stanley Dean Witter's "Apples to Apples" system for financial statement analysis?

Accepted Answer

A) Adjustments needed to compare companies within a single country 
B) Adjustments needed to compare international companies within specific industries 
C) Adjustments needed to compare companies in specific countries to U.S.companies 
D) Adjustments needed to compare the performance of international brokerage firms 
A) Adjustments needed to compare companies within a single country 
B) Adjustments needed to compare international companies within specific industries 
C) Adjustments needed to compare companies in specific countries to U.S.companies 
D) Adjustments needed to compare the performance of international brokerage firms

Question 10

Differences in business traditions and practices could make cross-country ratio analysis difficult.What should an analyst do to overcome this problem?

Accepted Answer

A) Learn more about the business environment in relevant countries. 
B) Make all decisions using nominal monetary differences rather than ratios. 
C) Translate all ratios to a common currency. 
D) Avoid recommending investments in foreign companies. 
A) Learn more about the business environment in relevant countries. 
B) Make all decisions using nominal monetary differences rather than ratios. 
C) Translate all ratios to a common currency. 
D) Avoid recommending investments in foreign companies.

Question 11

How should currency translation be done in order to conveniently compare a financial statement presented in Japanese yen to a financial statement presented in Chinese yuan?

Accepted Answer

A) The temporal method should be used. 
B) The historical exchange rates should be used to convert financial statement amounts. 
C) All amounts should be converted at the current exchange rate. 
D) Current year statements should be converted at the current exchange rate, and prior year statements should be converted at prior year exchange rate. 
A) The temporal method should be used. 
B) The historical exchange rates should be used to convert financial statement amounts. 
C) All amounts should be converted at the current exchange rate. 
D) Current year statements should be converted at the current exchange rate, and prior year statements should be converted at prior year exchange rate.

Question 12

Some European companies do not report cost of goods sold as a separate expense item.What affect does this have on financial statement analysis?

Accepted Answer

A) It would not be possible to determine the company's total expenses. 
B) Any measure that relies on knowing gross profit cannot be calculated. 
C) Net income cannot be accurately calculated. 
D) There is inadequate aggregation of financial information. 
A) It would not be possible to determine the company's total expenses. 
B) Any measure that relies on knowing gross profit cannot be calculated. 
C) Net income cannot be accurately calculated. 
D) There is inadequate aggregation of financial information.

Question 13

What information would most likely NOT be available on the EDGAR system?

Accepted Answer

A) Form 10-K for a U.S.corporation listed on the New York Stock Exchange (NYS
E)  
B) Quarterly financial statements for a foreign corporation listed on the American Stock Exchange (AMEX) 
C) The annual report for a corporation listed only on the London and Tokyo stock exchanges 
D) The notes to the financial statements of a foreign corporation listed on the NYSE 
A) Form 10-K for a U.S.corporation listed on the New York Stock Exchange (NYS
E)  
B) Quarterly financial statements for a foreign corporation listed on the American Stock Exchange (AMEX) 
C) The annual report for a corporation listed only on the London and Tokyo stock exchanges 
D) The notes to the financial statements of a foreign corporation listed on the NYSE

Question 14

Which of the following statements is NOT true concerning reasons for analyzing foreign financial statements?

Accepted Answer

A) It is important to determine the financial stability of foreign suppliers. 
B) The stock returns of foreign corporations are nearly perfectly correlated with returns on U.S.stocks. 
C) In a global economy, managers may use foreign competitors as benchmarks for evaluating performance. 
D) Managers should determine the financial health of foreign customers before extending credit. 
A) It is important to determine the financial stability of foreign suppliers. 
B) The stock returns of foreign corporations are nearly perfectly correlated with returns on U.S.stocks. 
C) In a global economy, managers may use foreign competitors as benchmarks for evaluating performance. 
D) Managers should determine the financial health of foreign customers before extending credit.

Question 15

For which of the following purposes are cookie jar reserves primarily used?

Accepted Answer

A) Increasing reserves in less profitable years 
B) Increasing profits in less profitable years 
C) Decreasing expenses in profitable years 
D) Decreasing the risk of non-payment of receivables 
A) Increasing reserves in less profitable years 
B) Increasing profits in less profitable years 
C) Decreasing expenses in profitable years 
D) Decreasing the risk of non-payment of receivables

Question 16

What is OIBD?

Accepted Answer

A) This is the Organization of International Boards of Directors, which is attempting to harmonize accounting standards. 
B) It stands for "operating income before depreciation," which some analysts recommend to remove the effect of international accounting standard diversity. 
C) It is the Organization of International Bond Dealers, whose financial analysts developed EBITDA. 
D) None of the above 
A) This is the Organization of International Boards of Directors, which is attempting to harmonize accounting standards. 
B) It stands for "operating income before depreciation," which some analysts recommend to remove the effect of international accounting standard diversity. 
C) It is the Organization of International Bond Dealers, whose financial analysts developed EBITDA. 
D) None of the above

Question 17

Why should financial analysts endorse the adoption of IFRS worldwide?

Accepted Answer

A) It would eliminate the time lag between the end of the year and the publication of financial statements that varies considerably across countries. 
B) It would increase the comparability of financial statements across countries. 
C) It would increase the demand for the services of international financial analysts. 
D) The services of financial analysts would become more valuable to investors. 
A) It would eliminate the time lag between the end of the year and the publication of financial statements that varies considerably across countries. 
B) It would increase the comparability of financial statements across countries. 
C) It would increase the demand for the services of international financial analysts. 
D) The services of financial analysts would become more valuable to investors.

Question 18

Which of the following is a limitation of using commercial databases to access foreign company financial statements?

Accepted Answer

A) Information may be lost when a standard financial statement format is imposed on foreign statements. 
B) Errors may occur during data entry. 
C) Notes to the financial statements may not be included, or only partially included. 
D) All of the above are limitations. 
A) Information may be lost when a standard financial statement format is imposed on foreign statements. 
B) Errors may occur during data entry. 
C) Notes to the financial statements may not be included, or only partially included. 
D) All of the above are limitations.

Question 19

Which of the following is true about the format of financial reports?

Accepted Answer

A) All multinational corporations report Sales Revenue on their income statements. 
B) Gross margin is a standard line item on income statements throughout the world. 
C) Notes to financial statements may clarify international differences in statement formats. 
D) In all countries, total assets are shown on the left side of the balance sheet and liabilities and owners' equity are shown on the right side. 
A) All multinational corporations report Sales Revenue on their income statements. 
B) Gross margin is a standard line item on income statements throughout the world. 
C) Notes to financial statements may clarify international differences in statement formats. 
D) In all countries, total assets are shown on the left side of the balance sheet and liabilities and owners' equity are shown on the right side.

Question 20

Which of the following has the least frequent reporting requirements for publicly traded corporations?

Accepted Answer

A) United States of America 
B) United Kingdom 
C) European Union directives 
D) Canada 
A) United States of America 
B) United Kingdom 
C) European Union directives 
D) Canada

Which of the following statements is true relative to accounting for leases internationally?

If an analyst saw a "Monetary position loss" in a company's annual report, where would that company be located?

During the 1990's, a major problem in evaluating the financial statements of Eastern European companies that had been under the control of the Soviet Union was:

Dynasty Industries reported total liabilities of ¥9,000,000 and total assets of ¥12,000,000.The current exchange rate is ¥120 = $1.What is Dynasty Industries' debt ratio?

While conducting trend analysis, financial statement amounts should be translated using:

On what SEC form must foreign corporations with shares listed on U.S.stock exchanges present a reconciliation of net income and stockholders' equity to U.S.GAAP?

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

Footnote disclosures in foreign financial statements are particularly helpful in:

What is the basis for Morgan Stanley Dean Witter's "Apples to Apples" system for financial statement analysis?

Differences in business traditions and practices could make cross-country ratio analysis difficult.What should an analyst do to overcome this problem?

How should currency translation be done in order to conveniently compare a financial statement presented in Japanese yen to a financial statement presented in Chinese yuan?

Some European companies do not report cost of goods sold as a separate expense item.What affect does this have on financial statement analysis?

What information would most likely NOT be available on the EDGAR system?

Which of the following statements is NOT true concerning reasons for analyzing foreign financial statements?

For which of the following purposes are cookie jar reserves primarily used?

What is OIBD?

Why should financial analysts endorse the adoption of IFRS worldwide?

Which of the following is a limitation of using commercial databases to access foreign company financial statements?

Which of the following is true about the format of financial reports?

Which of the following has the least frequent reporting requirements for publicly traded corporations?

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

Which of the following statements is true relative to accounting for leases internationally?

If an analyst saw a "Monetary position loss" in a company's annual report, where would that company be located?

During the 1990's, a major problem in evaluating the financial statements of Eastern European companies that had been under the control of the Soviet Union was:

Dynasty Industries reported total liabilities of ¥9,000,000 and total assets of ¥12,000,000.The current exchange rate is ¥120 = $1.What is Dynasty Industries' debt ratio?

While conducting trend analysis, financial statement amounts should be translated using:

On what SEC form must foreign corporations with shares listed on U.S.stock exchanges present a reconciliation of net income and stockholders' equity to U.S.GAAP?

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

Footnote disclosures in foreign financial statements are particularly helpful in:

What is the basis for Morgan Stanley Dean Witter's "Apples to Apples" system for financial statement analysis?

Differences in business traditions and practices could make cross-country ratio analysis difficult.What should an analyst do to overcome this problem?

How should currency translation be done in order to conveniently compare a financial statement presented in Japanese yen to a financial statement presented in Chinese yuan?

Some European companies do not report cost of goods sold as a separate expense item.What affect does this have on financial statement analysis?

What information would most likely NOT be available on the EDGAR system?

Which of the following statements is NOT true concerning reasons for analyzing foreign financial statements?

For which of the following purposes are cookie jar reserves primarily used?

What is OIBD?

Why should financial analysts endorse the adoption of IFRS worldwide?

Which of the following is a limitation of using commercial databases to access foreign company financial statements?

Which of the following is true about the format of financial reports?

Which of the following has the least frequent reporting requirements for publicly traded corporations?

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