Quiz Detail

Q1 . What is the official language of the IASB?

A English

B French

C Spanish

D German

Q2 . Which of the following inventory valuation methods commonly used in the U.S. is NOT allowed under IAS 2 (Inventories)?

A LIFO

B FIFO

C Weighted Average

D Retail inventory method

Q3 . Purchasing an option to buy foreign currency at a predetermined exchange rate in order to reduce exchange risk is called:

A Transfer pricing

B Hedging

C Translating

D Cross-listing

Q4 . OECD is an important supranational entity. What do the letters OECD stand for?

A Organization of Electrical Companies Directorate

B Oil Exporting Countries and Developers

C Organization for Economic Cooperation and Development

D Oil Exporting Corporations and Divisions

Q5 . According to the IASB, what is needed for international accounting standards to work effectively?

A Commitment from auditors to resist client pressures.

B Professional judgment in the public interest on the part of management.

C Financial statement preparers must produce reports that faithfully represent all transactions.

D All of the above are conditions for effective standards.

Q6 . What types of issues cause differences between International Financial Reporting Standards and U.S. GAAP?

A Measurement

B Alternatives available

C Disclosure

D All of the above may be different between IFRS and U.S. GAAP

Q7 . ABCO Corporation has a parts division in country A. Its assembly division is in country B, which has a higher tax rate than country A. To minimize the corporation's overall income tax, how should ABCO set its transfer prices between its parts and assembly divisions?

A The parts division should sell parts to the assembly division at low prices.

B The parts division should sell parts to the assembly division at high prices.

C It doesn't matter what transfer price is used because the divisions are part of the same company.

D Transfer pricing has nothing to do with the total tax paid by the corporation.

Q8 . Where is the headquarters of the International Accounting Standards Board?

A Washington, DC (United States)

B Brussels (Belgium)

C London (United Kingdom)

D New York (United States)

E Ottawa (Canada)

Q9 . Which of the following items should be included in the cost of property, plant, and equipment under IAS 16?

A All costs directly attributable to getting the asset to the proper location

B Import duties and taxes

C Estimated costs of removing the asset

D All of the above should be considered part of the cost of the asset.

Q10 . The term "provision" as it is used in IAS 37, is most closely related to what term in U.S. GAAP?

A Contingent liability, where the outflow of resources is "remote."

B Contingent liability, where the outflow of resources is "probable."

C Current liability, where the outflow is difficult to measure.

D Reserve for bad debt, where the amount recoverable is "uncertain"

Q11 . Which of the following is an example of a greenfield investment?

A Nike contracts with a footwear company in China to make athletic shoes

B A Chinese oil company buys a U.S. oil company.

C , a Japanese automaker, builds an assembly plant in Ohio

D Daimler, a German automaker, merges with Chrysler, a U.S. automaker

Q12 . What is the primary role of the Financial Reporting Council in the United Kingdom?

A Compliance oversight

B Setting standards for accounting practice

C Policy over the accounting standard setting process

D All of the above

Q13 . It has been said that the addition of 10 new members to the European Union in 2004 is likely to significantly change the dynamics within the EU. What was the explanation given for this statement?

A The EU is getting too large to manage effectively.

B The members added in 2004 have very different economic traditions than the 15 members that joined before 2004.

C The members added in 2004 have more economic power than the members that joined the EU between 1957 and 1995.

D The purchasing power of the EU was weakened by the addition of additional members.

Q14 . What is the Euro-zone?

A This is another term for the European Union.

B The countries of the European Union that use the Euro as its currency

C This is Europe's sphere of political and economic influence.

D The Euro-zone refers to the original 15 members of the European Union

Q15 . Which of the following is the purpose of China's "Accounting System for Business Enterprises" issued in 2001 to supercede its "Basic Standard of Accounting for Business Enterprises?"

A Increased harmonization of accounting standards

B Improve comparability of accounting statements

C Make financial reporting distinct from taxation

D All of the above

Q16 . Which of the following statements is believed to be true about accounting harmonization by proponents of harmonization?

A Harmonization would decrease feelings of nationalism.

B Harmonization is desirable because there is little difference among capital markets in different countries.

C Harmonization would help to raise the quality of accounting practice internationally.

D None of the above statements is true.

Q17 . . Which of the following is true about foreign direct investment? .

A According to the United Nations, it is increasing on several dimensions

B Since the 1980's foreign direct investment has been relatively stable worldwide

C Only very large corporations are undertaking foreign direct investment

D Foreign direct investment refers only to the amount of money U.S. corporations put into non-U.S. businesses.

Q18 . What was the difference between the CICPA and CACPA in the People's Republic of China (PRC)?

A These are two translations of a single Chinese professional association from Mandarin to English.

B The CICPA was the professional association for accountants and the CACPA is the professional association for auditors.

C The CICPA was the professional association for CPAs in private practice and the CACPA is the professional association for accountants in public practice in the PRC.

D None of the statements above is true.

Q19 . De jure harmonization refers to:

A The process of making accounting practice consistent across countries.

B The process of making accounting regulations consistent internationally.

C Forcing accounting differences to be resolved through jury trials.

D Eliminating the need to have different accounting methods.

Q20 . The People's Republic of China made economic reforms in the 1980s to encourage international trade. What impact have these reforms made on accounting?

A Increased the demand for accounting information from investors.

B Increased the supply of publicly available accounting information from Chinese companies.

C Changed the nature of auditing in the PRC.

D All of the above are true.

Q21 . What is the entry point for most companies into the world of international business?

A Shanghai

B Exporting

C Foreign direct investment

D Cross-listing on international stock exchanges

Q22 . Foreign currency exchange risk arises when:

A Business transactions are denominated in foreign currencies.

B Sales are made to customers in a foreign country.

C Goods or services are purchased from suppliers in a foreign country

D Accounting reports are prepared in a foreign currency

Q23 . Until recently, regulation of accounting practice in the United Kingdom had traditionally been left to:

A Parliament.

B The accounting profession.

C The securities exchange commission.

D None of the above.

Q24 . Who was the first chairman of the International Accounting Standards Board?

A Sir Walter Raleigh

B Sir David Tweedie

C Sir Paul McCartney

D Sir Bryan Carsberg

Q25 . What body regulates trading of corporate securities in the People's Republic of China?

A National People's Congress

B State Council

C Securities and Exchange Commission

D Chinese Security Regulatory Commission

Q26 . What reason is given for the stagnation of accounting development during the "Cultural Revolution" in China (1966-1976)?

A Over-simplification of accounting was pursued to make it accessible to a broad populace.

B There was very little business being transacted in China during the Cultural Revolution.

C Businesses in China were converting to international accounting standards during this period of time so they stopped developing new standards.

D Auditors took over the development of accounting practice.

Q27 . According to IAS 16, a decrease in the carrying amount of a fixed asset that is identified on an asset's first revaluation should be recorded as:

A Expense on the Income Statement.

B Prior period adjustment to Retained Earnings.

C Credit to Revaluation Surplus.

D Debit to Revaluation Surplus.

Q28 . Accounting and financial reporting in Japan is regulated by its Commercial Code, which is patterned after the commercial code of what country?

A United States

B United Kingdom

C Germany

D France

Q29 . Under what circumstance should a German company prepare its financial statements under German GAAP rather than international financial reporting standards?

A Reporting to banks

B Reporting consolidated financial statements

C Calculating tax

D German GAAP should always be used instead of IRFS.

Q30 . Which of the following is NOT part of the due process followed by the IASB in formulating International Financial Reporting Standards?

A A period of public comment is provided after discussion papers are prepared.

B Standards are approved by a unanimous vote of the 14 member board.

C Exposure drafts are published prior to taking a vote of the board.

D National accounting standards and practices are studied before preparing exposure drafts.

Q31 . The following information was taken from the fixed asset records of Bosco Ltd as of December 31, 2006: Carrying value $100,000 Selling price $ 85,000 Cost of disposal $ 3,000 Expected future cash flows $ 75,000 Present value of expected future cash flows $ 63,000 Using IAS 36, what is the amount of Impairment Loss?

A $37,000

B $18,000

C $22,000

D $0

Q32 . The following inventory information was taken from the records of Kleinfeld Inc.: Historical cost $12,000 Replacement cost $ 7,000 Expected selling price $ 9,000 Expected selling cost $ 500 Normal profit margin 10% of price Assume that subsequent to your adjustment the expected selling price increases to $13,000. (All the rest of the facts are the same.) What adjustment to inventory should be made under IAS 2 after this event?

A Inventory should be increased (debited) by $3,500.

B Inventory should be increased (debited) by $4,000.

C No adjustment should be made to inventory once it is written down.

D Inventory should be increased (debited) by $1,000.

Q33 . Mexican corporations may issue three types of stock. Series A stock can only be owned by Mexican nationals. These shares must constitute at least what percentage of corporate voting rights?

A 51%

B 49%

C 25%

D 10%

Q34 . Which region of the world has been least receptive to adopting the IASB standards?

A Europe

B Africa

C The Americas

D Asia-Pacific

Q35 . What percent of the 100 largest multinational companies are located in the United States, Japan, or the European Union?

A 29%

B 62%

C 75%

D 89%

Q36 . Under IAS 37, how are contingent liabilities treated in the financial statements?

A IAS 37 does not address contingent liabilities.

B They are recorded as current liabilities if the amount is reasonably measured.

C They are disclosed in the notes to the financial statements when there is more than a remote possibility of an outflow of resources.

D They are not disclosed.

Q37 . How does IAS 38 (Intangible Assets) differ from U.S. GAAP with respect to development costs?

A U.S. GAAP does not allow capitalization of development costs, whereas IAS 38 allows capitalization of these costs.

B U.S. GAAP requires capitalization of development costs, whereas IAS 38 makes capitalization of these costs optional.

C U.S. GAAP treats development costs as part of "Goodwill" whereas IAS 38 treats these costs as an intangible asset.

D U.S. GAAP requires expensing of all development costs and IAS 38 requires capitalizing all development costs.

Q38 . Which of the following is NOT an objective of the International Accounting Standards Board?

A To establish worldwide uniformity of accounting practice.

B To develop a single set of enforceable global accounting standards.

C To promote the use and application of global accounting standards.

D To encourage convergence of national accounting standards and international accounting standards.

Q39 . Which body has the primary responsibility for establishing accounting standards in Japan?

A Japanese Institute of Certified Public Accountants (JICPA)

B Japanese Accounting Association (JAA)

C Japan's Ministry of Finance (MoF)

D International Accounting Standards Board (IASB)

Q40 . Which of the following is NOT considered GAAP in Mexico?

A MIPA Bulletins

B MIPA Interpretations

C International Financial Reporting Standards

D NBSC Statements on Accounting Practice

Q41 . When a patent or trademark is acquired in a business combination, what does IAS 38 say about recording these intangibles?

A If they had not been previously recorded as separate assets by the acquired company, they should always be recorded as "Goodwill" on the balance sheet of the company acquiring them.

B The cost of the intangibles should be expensed by the acquiring company on the merger date.

C They should be recorded as separate intangible assets only if their useful life is indefinite.

D They should be recorded as separate intangible assets if their fair value can be reliably measured.

Q42 . In 2003 the country with the largest amount of exports was:

A United States

B China

C Japan

D Germany

Q43 . What is the foundation for the "Basic Standard of Accounting for Business Enterprises" issued by the Chinese Ministry of Finance in 1992?

A Accounting principles used by the Soviet Union

B Conformity with the IASB pronouncements

C Anglo-American accounting principles

D Japanese code law

Q44 . What position on accounting standards harmonization has been taken by the People's Republic of China?

A It plans to fully adopt IFRS as soon as feasible.

B Hong Kong GAAP will dominate standard setting in the People's Republic of China.

C Regulators in the PRC believe that accounting harmonization is not important for the Chinese economy.

D The PRC will have its own GAAP based on the IFRS.

Q45 . What links the components of a Japanese keiretsu?

A A governmental agency

B A common industry affiliation

C A common market

D A bank

Rakap Accounting Test 1