Question 1

What international organization has been most active in promoting international tax treaties?

Accepted Answer

A) United Nations 
B) World Trade Organization 
C) Organization for Economic Co-operation and Development 
D) International Monetary Fund 
A) United Nations 
B) World Trade Organization 
C) Organization for Economic Co-operation and Development 
D) International Monetary Fund B

Question 2

A value added tax is assessed on:

Accepted Answer

A) the increase in the price of a product that results from inflation. 
B) the marginal value that is added to a product at each stage of production. 
C) the total value of a product. 
D) the sales price of a product. 
A) the increase in the price of a product that results from inflation. 
B) the marginal value that is added to a product at each stage of production. 
C) the total value of a product. 
D) the sales price of a product. B

Question 3

When the USD is deemed to be the functional currency of the subsidiary of an MNC,the ______________________ method is used to translate the accounts of the subsidiary.

Accepted Answer

A) temporal rate 
B) current rate 
C) modified current rate 
D) modified temporal rate 
A) temporal rate 
B) current rate 
C) modified current rate 
D) modified temporal rate A

Question 4

If no foreign tax credit is allowed,the effective tax rate paid by an MNC is:

Accepted Answer

A) the foreign tax rate. 
B) the sum of the foreign and domestic tax rates. 
C) the domestic tax rate. 
D) the higher of the foreign or domestic tax rates. 
A) the foreign tax rate. 
B) the sum of the foreign and domestic tax rates. 
C) the domestic tax rate. 
D) the higher of the foreign or domestic tax rates.

Question 5

If a country taxes entities within its taxing jurisdiction on all income wherever that income is earned,that country takes a ____________________ approach to taxation.

Accepted Answer

A) cross-border 
B) international 
C) world-wide 
D) multi-national 
A) cross-border 
B) international 
C) world-wide 
D) multi-national

Question 6

How can MNCs use payments received from subsidiaries to reduce the overall tax burden of the MNC-subsidiary group?

Accepted Answer

When a subsidiary makes payments to the

Question 7

Tax strategies involving transfer pricing depend on ________________ rather than ______________________.

Accepted Answer

A) marginal tax rates rather than average tax rates 
B) marginal tax rates;published tax rates 
C) average tax rates;published tax rates 
D) published tax rates;average tax rates 
A) marginal tax rates rather than average tax rates 
B) marginal tax rates;published tax rates 
C) average tax rates;published tax rates 
D) published tax rates;average tax rates

Question 8

Accounting for hedges acquired for speculative purposes requires that the hedges are recorded at :

Accepted Answer

A) their actual values and gains and losses from the hedges are not shown in the accounting records. 
B) as historical costs and always carried at those costs. 
C) at market value and gains and losses from the hedges are recorded periodically. 
D) at historical costs but their values are adjusted periodically to reflect market values. 
A) their actual values and gains and losses from the hedges are not shown in the accounting records. 
B) as historical costs and always carried at those costs. 
C) at market value and gains and losses from the hedges are recorded periodically. 
D) at historical costs but their values are adjusted periodically to reflect market values.

Question 9

What are the primary purposes of customs and excise taxes?

Accepted Answer

A) Protection of domestic industries and products and wealth transfer 
B) Discouraging the importation of lower-end products and revenue production 
C) Encouraging domestic production and protectionism 
D) Wealth transfer and revenue production 
A) Protection of domestic industries and products and wealth transfer 
B) Discouraging the importation of lower-end products and revenue production 
C) Encouraging domestic production and protectionism 
D) Wealth transfer and revenue production

Question 10

A tax haven is a:

Accepted Answer

A) country with very low corporate and withholding taxes. 
B) country with very low tax credits for foreign taxes paid. 
C) region in which companies from countries within the region pay lower taxes than companies from outside the region. 
D) country that allows the payment of taxes due over a long period of time. 
A) country with very low corporate and withholding taxes. 
B) country with very low tax credits for foreign taxes paid. 
C) region in which companies from countries within the region pay lower taxes than companies from outside the region. 
D) country that allows the payment of taxes due over a long period of time.

Question 11

If the income tax rate in a foreign country where an MNC has a subsidiary is lower than the tax rate in the MNC's home-country:

Accepted Answer

A) the MNC might sell goods or services to that foreign subsidiary at higher prices to increase the income in the low-tax-rate country. 
B) the MNC might sell goods or services to that foreign subsidiary at low prices to increase the income in the low-tax-rate country. 
C) the MNC might sell goods or services to that foreign subsidiary at higher prices to decrease the income in the higher-tax-rate country. 
D) the MNC might sell goods and services to that foreign subsidiary at prices that would allow the MNC and its subsidiary to have balanced income. 
A) the MNC might sell goods or services to that foreign subsidiary at higher prices to increase the income in the low-tax-rate country. 
B) the MNC might sell goods or services to that foreign subsidiary at low prices to increase the income in the low-tax-rate country. 
C) the MNC might sell goods or services to that foreign subsidiary at higher prices to decrease the income in the higher-tax-rate country. 
D) the MNC might sell goods and services to that foreign subsidiary at prices that would allow the MNC and its subsidiary to have balanced income.

Question 12

_____________________ can be used to allocate taxable income between different units of an MNC operating in different countries.

Accepted Answer

A) Tax pricing 
B) Unit pricing 
C) Transfer pricing 
D) After-the-fact pricing 
A) Tax pricing 
B) Unit pricing 
C) Transfer pricing 
D) After-the-fact pricing

Question 13

The return to creditors is limited since they are only entitled to recover their debt plus interest,so creditors are interested primarily in:

Accepted Answer

A) balance accounting information so that they can evaluate their downside risks. 
B) the downside risks they face,so creditors are interested in conservative accounting information. 
C) accounting information that reflects their risks in the best available light. 
D) the underlying value of the firm's assets. 
A) balance accounting information so that they can evaluate their downside risks. 
B) the downside risks they face,so creditors are interested in conservative accounting information. 
C) accounting information that reflects their risks in the best available light. 
D) the underlying value of the firm's assets.

Question 14

In the context of transfer pricing,what is an arm's-length transaction?

Accepted Answer

A) An arm's-length transaction is one in which both the buyer and the seller are satisfied with the transaction price. 
B) An arm's-length transaction is a transaction in which the transfer price is determined by the IRS. 
C) An arm's-length transaction is one in which the sales price is within 10% of the market price for the good or service being sold. 
D) An arm's-length transaction is a transaction in which the price is set by the market and the interaction of each party attempting to get the best possible price from their perspective. 
A) An arm's-length transaction is one in which both the buyer and the seller are satisfied with the transaction price. 
B) An arm's-length transaction is a transaction in which the transfer price is determined by the IRS. 
C) An arm's-length transaction is one in which the sales price is within 10% of the market price for the good or service being sold. 
D) An arm's-length transaction is a transaction in which the price is set by the market and the interaction of each party attempting to get the best possible price from their perspective.

Question 15

The traditional view of accounting is that its purpose is to:

Accepted Answer

A) explain how a firm reached the point it has reached and how it can expect to perform in the future. 
B) determine the profit that a firm made and the opportunities to make profit that is missed. 
C) calculate the taxable income of the firm. 
D) document the firm's current financial position. 
A) explain how a firm reached the point it has reached and how it can expect to perform in the future. 
B) determine the profit that a firm made and the opportunities to make profit that is missed. 
C) calculate the taxable income of the firm. 
D) document the firm's current financial position.

Question 16

What is the primary purpose of tax treaties?

Accepted Answer

A) To ensure that the maximum allowable corporate income tax is collected 
B) To prohibit more than one country taxing the same income 
C) To allow countries to change income tax rates without prior notice 
D) To reduce the incidents of double taxation 
A) To ensure that the maximum allowable corporate income tax is collected 
B) To prohibit more than one country taxing the same income 
C) To allow countries to change income tax rates without prior notice 
D) To reduce the incidents of double taxation

Question 17

How does the U.S.deal with issuing involving transfer pricing?

Accepted Answer

A) Section 482 of the Internal Revenue Code allows the IRS to disallow transfer pricing. 
B) Section 482 of the Internal Revenue Code makes transfer pricing illegal. 
C) Section 482 of the Internal Revenue Code allows the IRS to reallocate income,deductions and credits among related companies. 
D) Section 482 of the Internal Revenue Code allows firms to set whatever price they think is justified in transfer pricing situations. 
A) Section 482 of the Internal Revenue Code allows the IRS to disallow transfer pricing. 
B) Section 482 of the Internal Revenue Code makes transfer pricing illegal. 
C) Section 482 of the Internal Revenue Code allows the IRS to reallocate income,deductions and credits among related companies. 
D) Section 482 of the Internal Revenue Code allows firms to set whatever price they think is justified in transfer pricing situations.

Question 18

Reducing the variations in taxable income will:

Accepted Answer

A) lower the MNC's home-country tax burden. 
B) lower the overall tax burden of the MNC and its subsidiaries. 
C) lower the MNC's subsidiary's foreign tax burden. 
D) not affect the MNC's overall tax burden. 
A) lower the MNC's home-country tax burden. 
B) lower the overall tax burden of the MNC and its subsidiaries. 
C) lower the MNC's subsidiary's foreign tax burden. 
D) not affect the MNC's overall tax burden.

Question 19

How important are taxes to the economies of countries?

Accepted Answer

A) Taxes constitute at least one-third of the gross domestic product of a country,so taxes are vital to a country's economy. 
B) Taxes constitute for more than half of the money that governments have to spend,so the economies of countries depend on tax collections. 
C) Taxes are only a relatively small part of the economy of most countries and,therefore,are only moderately important to the economy of a country. 
D) Many countries,especially developing countries,do not collect taxes,so taxes are not an important part of the economy of most countries. 
A) Taxes constitute at least one-third of the gross domestic product of a country,so taxes are vital to a country's economy. 
B) Taxes constitute for more than half of the money that governments have to spend,so the economies of countries depend on tax collections. 
C) Taxes are only a relatively small part of the economy of most countries and,therefore,are only moderately important to the economy of a country. 
D) Many countries,especially developing countries,do not collect taxes,so taxes are not an important part of the economy of most countries.

Question 20

The notational value of a derivative:

Accepted Answer

A) is used to determine its market value. 
B) usually has nothing to do with its market value. 
C) is closer to its market value the longer the term of the hedge. 
D) is equivalent to the market value of the hedge in most cases. 
A) is used to determine its market value. 
B) usually has nothing to do with its market value. 
C) is closer to its market value the longer the term of the hedge. 
D) is equivalent to the market value of the hedge in most cases.

What international organization has been most active in promoting international tax treaties?

A value added tax is assessed on:

When the USD is deemed to be the functional currency of the subsidiary of an MNC,the ______________________ method is used to translate the accounts of the subsidiary.

If no foreign tax credit is allowed,the effective tax rate paid by an MNC is:

If a country taxes entities within its taxing jurisdiction on all income wherever that income is earned,that country takes a ____________________ approach to taxation.

How can MNCs use payments received from subsidiaries to reduce the overall tax burden of the MNC-subsidiary group?

Tax strategies involving transfer pricing depend on rather than ______.

Accounting for hedges acquired for speculative purposes requires that the hedges are recorded at :

What are the primary purposes of customs and excise taxes?

A tax haven is a:

If the income tax rate in a foreign country where an MNC has a subsidiary is lower than the tax rate in the MNC's home-country:

_____________________ can be used to allocate taxable income between different units of an MNC operating in different countries.

The return to creditors is limited since they are only entitled to recover their debt plus interest,so creditors are interested primarily in:

In the context of transfer pricing,what is an arm's-length transaction?

The traditional view of accounting is that its purpose is to:

What is the primary purpose of tax treaties?

How does the U.S.deal with issuing involving transfer pricing?

Reducing the variations in taxable income will:

How important are taxes to the economies of countries?

The notational value of a derivative:

Introduction

International Financial Markets: Structure and Innovation

Currency and Eurocurrency Derivatives

Currency Systems and Valuation

Currency Parity Conditions

Currency Risk Exposure Measurement

Currency Exposure Management

Capital Budgeting

Advanced Capital Budgeting

Long-Term Financing

Optimizing and Financing Working Capital

International Alliances and Acquisitions

International Trade

International Portfolio Investments

Filters

Exam 14: International Taxation and Accounting

What international organization has been most active in promoting international tax treaties?

A value added tax is assessed on:

When the USD is deemed to be the functional currency of the subsidiary of an MNC,the ______________________ method is used to translate the accounts of the subsidiary.

If no foreign tax credit is allowed,the effective tax rate paid by an MNC is:

If a country taxes entities within its taxing jurisdiction on all income wherever that income is earned,that country takes a ____________________ approach to taxation.

How can MNCs use payments received from subsidiaries to reduce the overall tax burden of the MNC-subsidiary group?

Tax strategies involving transfer pricing depend on ________________ rather than ______________________.

Accounting for hedges acquired for speculative purposes requires that the hedges are recorded at :

What are the primary purposes of customs and excise taxes?

A tax haven is a:

If the income tax rate in a foreign country where an MNC has a subsidiary is lower than the tax rate in the MNC's home-country:

_____________________ can be used to allocate taxable income between different units of an MNC operating in different countries.

The return to creditors is limited since they are only entitled to recover their debt plus interest,so creditors are interested primarily in:

In the context of transfer pricing,what is an arm's-length transaction?

The traditional view of accounting is that its purpose is to:

What is the primary purpose of tax treaties?

How does the U.S.deal with issuing involving transfer pricing?

Reducing the variations in taxable income will:

How important are taxes to the economies of countries?

The notational value of a derivative:

Introduction

International Financial Markets: Structure and Innovation

Currency and Eurocurrency Derivatives

Currency Systems and Valuation

Currency Parity Conditions

Currency Risk Exposure Measurement

Currency Exposure Management

Capital Budgeting

Advanced Capital Budgeting

Long-Term Financing

Optimizing and Financing Working Capital

International Alliances and Acquisitions

International Trade

International Portfolio Investments

Filters

Tax strategies involving transfer pricing depend on rather than ______.