Question 1

At Cooper Industries, Jake is responsible for evaluating potential acquisitions abroad, managing cash flow, tax planning, and internal auditing.Which of the following is most likely Jake's position at Cooper?

Accepted Answer

A) CEO 
B) treasurer 
C) regulator 
D) controller

Question 2

Budget versus actual comparisons, followed by some form of ROI, are most likely used by ________ MNEs.

Accepted Answer

A) Japanese 
B) American 
C) British 
D) German

Question 3

A company can hedge their foreign-currency risk by using ________ financial contracts such as forward contracts and options.

Accepted Answer

A) cash flow 
B) multidomestic 
C) lead 
D) derivative

Question 4

Larson Shoes is a British company.Which balance sheet format is most likely used by Larson?

Accepted Answer

A) assets + liabilities = shareholders' equity 
B) liabilities + shareholders' equity = assets 
C) noncurrent assets + current assets - current liabilities - noncurrent liabilities = shareholders' equity 
D) noncurrent assets - net current assets = liabilities + capital and reserves

Question 5

In which quadrant of a disclosure/assessment matrix for accounting systems would you most likely find less-developed Latin countries?

Accepted Answer

A) conservatism and secrecy 
B) transparency and conservatism 
C) secrecy and transparency 
D) optimism and secrecy

Question 6

Which of the following is true concerning the International Accounting Standards Board?

Accepted Answer

A) The IASB is an EU institution designed to harmonize accounting standards among EU member countries. 
B) The EU has voted to not adopt IFRS issued by the IASB so that it will not hurt its own convergence efforts. 
C) The IASB and the FASB of the United States are working closely to harmonize accounting standards. 
D) FASB has been ordered by the SEC to not work with the IASB in setting accounting standards.

Question 7

How do U.S.companies recognize transaction gains and losses in the financial statements?

Accepted Answer

A) They are recognized as gains and losses in the income statement. 
B) They are recognized as gains and losses in owners' equity. 
C) Gains are recognized in the income statement, but losses are not. 
D) Losses are recognized in the income statement, but gains are recognized in owners' equity.

Question 8

All of the following forces are leading to convergence of accounting standards around the world EXCEPT ________.

Accepted Answer

A) global integration of capital markets 
B) need of MNE's to raise capital outside of their home markets 
C) pressure from investors for more uniform standards 
D) regional and political harmonization

Question 9

Germanic countries tend to be more transparent than the United States and the United Kingdom in terms of financial reporting due to their reliance on bank financing.

Accepted Answer

A) True 
 B)False

Question 10

Which legislation triggered many foreign MNEs to exit the New York Stock Exchange?

Accepted Answer

A) Davis-Bacon Act 
B) Sarbanes-Oxley Act 
C) Norris-LaGuardia Act 
D) McCarran-Ferguson Act

Question 11

One problem for companies that borrow locally in weak-currency countries is that interest rates tend to be higher.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is NOT a method of capital budgeting in a global context?

Accepted Answer

A) payback period 
B) net present value 
C) internal rate of return 
D) non-discount method

Question 13

Three major areas of concern when providing financial information to the larger investing community are language, currency, and the ________ on which financial statements are based.

Accepted Answer

A) shareholders' equity 
B) exchange rates 
C) underlying GAAP 
D) corporate strategy

Question 14

When analyzing a project's capital budget, if the ________ is positive, then the project is considered positive.

Accepted Answer

A) payback period 
B) internal rate of return 
C) net present value (NPV) 
D) cash flow

Question 15

Both the form and content of financial statements are currently the same in most countries due to the convergence of accounting implemented by the International Accounting Standards Board.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is most likely true about secrecy and transparency in accounting?

Accepted Answer

A) Japanese firms are usually as transparent as U.S. firms. 
B) German companies tend to be less transparent than British companies. 
C) Secrecy and transparency refer to the degree of caution companies display in valuing assets. 
D) Companies that list on stock exchanges are highly transparent because of stockholder audits.

Question 17

According to the translation process in the United States, ________.

Accepted Answer

A) companies first translate their statements into dollars, and then recast their financial statements consistent with U.S. GAAP 
B) companies recast their financial statements consistent with U.S. GAAP, and then translate them into U.S. dollars 
C) companies only need to worry about the translation process because local operations take place in a local GAAP environment 
D) companies translate foreign currency financial statements only if the dollar is weakening against the local currency

Question 18

The internal financial reports provided by controllers are primarily used by all of the following EXCEPT ________.

Accepted Answer

A) customers 
B) investors 
C) creditors 
D) lenders

Question 19

Ericsson, the Swedish MNE, was required as of 2005 to adopt both Swedish and U.S.GAAP since it lists it securities in both the United States and Sweden.

Accepted Answer

A) True 
 B)False

Question 20

Hoffman Electronics is a U.S.company.Which balance sheet format is most likely used by Hoffman?

Accepted Answer

A) assets + liabilities = reserves 
B) assets = liabilities + shareholders' equity 
C) noncurrent assets + current assets - current liabilities - noncurrent liabilities = shareholders' equity 
D) current assets - current liabilities = fixed assets - noncurrent liabilities = capital and reserves

Exam 19: International Accounting and Finance Issues

At Cooper Industries, Jake is responsible for evaluating potential acquisitions abroad, managing cash flow, tax planning, and internal auditing.Which of the following is most likely Jake's position at Cooper?

Budget versus actual comparisons, followed by some form of ROI, are most likely used by ________ MNEs.

A company can hedge their foreign-currency risk by using ________ financial contracts such as forward contracts and options.

Larson Shoes is a British company.Which balance sheet format is most likely used by Larson?

In which quadrant of a disclosure/assessment matrix for accounting systems would you most likely find less-developed Latin countries?

Which of the following is true concerning the International Accounting Standards Board?

How do U.S.companies recognize transaction gains and losses in the financial statements?

All of the following forces are leading to convergence of accounting standards around the world EXCEPT ________.

Germanic countries tend to be more transparent than the United States and the United Kingdom in terms of financial reporting due to their reliance on bank financing.

Which legislation triggered many foreign MNEs to exit the New York Stock Exchange?

One problem for companies that borrow locally in weak-currency countries is that interest rates tend to be higher.

Which of the following is NOT a method of capital budgeting in a global context?

Three major areas of concern when providing financial information to the larger investing community are language, currency, and the ________ on which financial statements are based.

When analyzing a project's capital budget, if the ________ is positive, then the project is considered positive.

Both the form and content of financial statements are currently the same in most countries due to the convergence of accounting implemented by the International Accounting Standards Board.

Which of the following statements is most likely true about secrecy and transparency in accounting?

According to the translation process in the United States, ________.

The internal financial reports provided by controllers are primarily used by all of the following EXCEPT ________.

Ericsson, the Swedish MNE, was required as of 2005 to adopt both Swedish and U.S.GAAP since it lists it securities in both the United States and Sweden.

Hoffman Electronics is a U.S.company.Which balance sheet format is most likely used by Hoffman?