Multiple Choice: International Accounting and Analysis Select the correct answer for each of the followlling:
The current status of international accounting standards is that:

a. International standards only apply to those companies that list their securities on U.S. stock exchanges.

b. International standards require all companies to prepare their published financial statements in accordance with their national tax laws.

c. Companies in all countries must adopt international accounting standards before their securities can be traded.

d. The International Accounting Standards Committee has no legal authority to enforce the standards that it has adopted.

2. International accounting standards benefit decision makers by:

a. Assuring that the income reported by a company in its financial statements is the same as the income used for computing taxes payable.

b. Assuring that companies focus on long-term stability rather than on reporting high current income.

c. Assisting in investment decisions that require comparisons between companies operating in different countries.

d. Eliminating the risk of exchange gains or losses from fluctuations in currency exchange rates.
Standardization of international accounting has made progress, but each step is difficult because:

a. Accounting standards often reflect each individual country’s economic and cultural preferences.

b. There is a natural reluctance for a country to adopt “foreign standards.”

c. The formal organizations that are working toward standardization do not have legal status in many countries.

d. All of the above.
The Glenn Company makes 75 percent of its sales in the United States and 25 percent in Germany. The gross margin on sales in the United States is 20 percent, and it is 40 percent in Germany. If these gross margin rates remain unchanged, a $100,000 increase in sales in Germany would generate:

a. Three-fourths as much gross margin as an equivalent increase in sales in the United States.

b. Twice as much gross margin on sales as an equivalent increase in sales in the United States.

c. Three times as much gross margin as an equivalent increase in sales in the United States.

d. One-fourth as much gross margin as an equivalent increase in sales in the United States.
The Fantasy Company earned an 11 percent net income margin on all of its global operations in 2000. As an interested decision maker, you want to know whether Fantasy will increase this margin in 2001. You would be interested in:

a. Whether the sales revenue generated in each country is expected to change.

b. Whether the operating income margins in the individual countries are all equal.

c. Whether Fantasy expects changes in production and general and administrative costs in the individual countries.

d. All of the above.