Question 1

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) 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) Income cannot be accurately calculated. 
D) There is inadequate aggregation of financial information.

Question 2

Imperial Chemical Industries,a U.K.corporation,recorded interest incurred in constructing fixed assets as an expense of £128,000,000. When reconciling ICI's 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) £128,000,000 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) £128,000,000 should be deducted from retained earnings. 
D) This amount should be charged to accumulated depreciation.

Question 3

What is the advantage of Morgan Stanley Dean Witter's "Apples to Apples" approach to comparing international financial statement data?

Accepted Answer

A) It provides complete conversion of foreign financial statements to U.S.GAAP,which may not be available from the reporting entities themselves. 
B) It focuses only on the industry-specific factors MSDW believes are most important to stock valuation,which eliminates the need for converting complete financial statements. 
C) It is not affected by differences in GAAP across countries. 
D) The same measures are used for all industries in all countries,which eliminate comparability issues. 
A) It provides complete conversion of foreign financial statements to U.S.GAAP,which may not be available from the reporting entities themselves. 
B) It focuses only on the industry-specific factors MSDW believes are most important to stock valuation,which eliminates the need for converting complete financial statements. 
C) It is not affected by differences in GAAP across countries. 
D) The same measures are used for all industries in all countries,which eliminate comparability issues.

Question 4

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

Accepted Answer

A) prospective analysis 
B) accounting analysis 
C) translation analysis. 
D) financial analysis 
A) prospective analysis 
B) accounting analysis 
C) translation analysis. 
D) financial analysis

Question 5

Which of the following is true about financial statement disclosure?

Accepted Answer

A) When account balances are aggregated,the analyst has the greatest amount of information. 
B) The amount of financial statement disclosure varies widely from one country to another. 
C) The concept of full disclosure has been universally adopted around the world. 
D) An analyst can always disaggregate financial statement disclosures to obtain needed information. 
A) When account balances are aggregated,the analyst has the greatest amount of information. 
B) The amount of financial statement disclosure varies widely from one country to another. 
C) The concept of full disclosure has been universally adopted around the world. 
D) An analyst can always disaggregate financial statement disclosures to obtain needed information.

Question 6

Which of the following is a potential problem in analyzing foreign financial statements?

Accepted Answer

A) language 
B) data accessibility 
C) terminology 
D) All of the above pose potential problems. 
A) language 
B) data accessibility 
C) terminology 
D) All of the above pose potential problems.

Question 7

Because 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 8

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 9

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 8.3% 
B) increase 8.3% 
C) decrease 9.1% 
D) no change 
A) decrease 8.3% 
B) increase 8.3% 
C) decrease 9.1% 
D) no change

Question 10

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

Question 11

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) ¥0.75 
B) 133% 
C) 75% 
D) 6)25% 
A) ¥0.75 
B) 133% 
C) 75% 
D) 6)25%

Question 12

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 13

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

Accepted Answer

A) Data 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) Data 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 14

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 15

What is the intent of using EBITDA for analyzing foreign financial statements?

Accepted Answer

A) Adding back interest,taxes,depreciation,and amortization to net income takes out elements of earnings that are greatly affected by accounting diversity. 
B) It makes foreign GAAP conform to local GAAP. 
C) EBITDA brings foreign net income in line with net income under U.S.GAAP. 
D) All of the above. 
A) Adding back interest,taxes,depreciation,and amortization to net income takes out elements of earnings that are greatly affected by accounting diversity. 
B) It makes foreign GAAP conform to local GAAP. 
C) EBITDA brings foreign net income in line with net income under U.S.GAAP. 
D) All of the above.

Question 16

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

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

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

What is the advantage of Morgan Stanley Dean Witter's "Apples to Apples" approach to comparing international financial statement data?

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

Which of the following is true about financial statement disclosure?

Which of the following is a potential problem in analyzing foreign financial statements?

Because differences in business traditions and practices could make cross-country ratio analysis difficult,what should an analyst do to overcome this problem?

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

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?

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

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?

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

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

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

What is the intent of using EBITDA for analyzing foreign financial statements?

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

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

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

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

What is the advantage of Morgan Stanley Dean Witter's "Apples to Apples" approach to comparing international financial statement data?

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

Which of the following is true about financial statement disclosure?

Which of the following is a potential problem in analyzing foreign financial statements?

Because differences in business traditions and practices could make cross-country ratio analysis difficult,what should an analyst do to overcome this problem?

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

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?

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

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?

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

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

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

What is the intent of using EBITDA for analyzing foreign financial statements?

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

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