19. Timeliness of financial statements varies across nations. Which of the following countries has financial statements issued closest to year-end (on average)? A. Japan B. Germany C. Canada D. Italy What is an advantage of using ratio analysis in comparing financial statements from different countries? 20. A. Ratios are expressed as percentages, making currency differences irrelevant to the analysis. B. Ratios highlight the holding gains or losses related to curreney translation. C. Purchasing power gains and losses from currency translation show up elearly in ratio analysis. ring business ratios across countries removes the effect of economic conditions and business culture. IS. Which of the foflowing is likely to affect as analyst's ability to make meaning financial statement ratios for companies in different countries A. Accounting diversity B. Varying business"adition C. Varying cultural/societal backgrounds D. All of the above 16. Which of the fellowing groups is responsible for developing international suditing standards? A. International Accounting Standards Board (IASB) B. International Auditing and Assurance Standards Board (AASB) C International Organization of Securities Commissions (IOSco) D. Organization for Economie Cooperation and Development (OECD) 17. Why is international harmonization of auditing standards important? A. To be consistent with UK accounting standards. B. To ensure the independence of external auditors of multinational corporations. C. To assure international capital markets that auditing has been consistent across companies D. To reduce the authority of individual governments to enact accounting laws. 18. Which is NOT a common risk associated with local authorities' scrutiny of a company's transfer prices? A. All the followings are common risk related to scrutiny of transfer prices. B. Uncertainty as to the group's worldwide tax burden C. Problems in relationships with local tax authorities D. Discovery of a tax treaty violation 2L2 II IITIIIIunI 12. Whar act of the U.S. Congress advocated creating the Public Company Accounting Oversight Board required financial statement certification by the CEO and CFO, and requiees external auditors o report directly to an audit committee? A. Securities Act of 1933 t. Securities and Exchange Act of 1934 C. Sherman Anti-Trust Aet of 1890 D. Sarbanes-Oxley Act of 2002 13. In multinational corporations, to whom are the extenal auditors respotsible acconding to OECD A. Corporate management B. Shareholders C. Government of the host country D. Creditors What explains the reason for the historically very low (13% to 12%) limit on allowance for doubtful accounts in China? 14, A. The customers in China was presumed to have very good credit. B. This is the international accounting standard for companies operating in eastern Asia required C. Prior to being admitted to the World Trade Organization (WTO), Chinese companies was to reduce its bad debt level, so that they'"1l report higher net income, and pay more salaries to workers D. Just a fair allowance level in China. 9. What is the term used for intercompany transactions from a parent to a subsidary A. Horinontal transfer B. Downstream transfer C. International transfer D. None of the above 10. A multinational corporation may attempt to minimize the taxes it pays in a country with a high effective tax rate by setting a very high transfer price on goods transferred to a subsidiary in a high- tax country. Why is this often not successful? A. Laws in the foreign country may prohibit such a scheme. B. The high transfer price would actually increase taxes C. Foreign exchange losses will eliminate any tax savings D. None of the above 11. What is the primary difficulty of using market-based transfer prices for intercompany transactions? A. Markets that are too complex B. Lack of a well-developed market forfor C. Lack of objectivity D. Operating inefficiencies are transferred from one subsidiary to another III TLITI 5. Which of the following is true about advance peicing agreements? A. They are only granted foe intercompany transactions between a U.S parent and a foreign B. They are only granted for intercompany transactions between a foreign parent and a US C. In 2003, the IRS approved several thousand advance pricing agreements Sor U.S. taxpayers D. None of the above is true. 6. Which of the following is a potential problem in analyzing foreign financial statements? A. accounting standards B. data accessibility C different terminology D. All of the above pose potential peoblems. 7. which is required under both U.S. GAAP and IFRS? a. 20F b. quarterly financial statements c. annual financial statements d. extensive disclosure The debt ratio of Dynasty Industries, a Japanese corporation, is 62%. Why might this be difficult to compare to the debt ratio of a U.S. manufacturing corporation? A. US, companies generally have debt ratios greater than 62%. B. U.S. companies generally have debt ratios less than 62%. C. Japanese financing preferences may be different from American preferences D. Japanese companies report assets and liabilities in yen, whereas U.S. companies report in dollars 1 Maltliple Choice (S point each) . Which of the following is a reason for analyzing the financial statements of foreign corporations A. Making credit decisions about foreign customers B. Evaluating international business combinations C Diversifying an investmees pontfolio D. All of the above are reasons for analyzing foreign financial statements 2. Which is NOT one of the common sources of distortions in financial statements? A. Accounting standards that are inconsistent with economic reality B. Estimation errors made by managers in applying accounting standards C. Miscalculation of foreign currency translation D. Management of earnings 3. On what SEC form must foreign corporations with shares listed on U.S. stock exchanges present a reconciliation of net income and stockholders' equity to U.S. GAAP? A. Form 10-0 B. Form 10-K C. Form 20-F D. Form 8-Q 4. According to the Internal Revenue Service, the most reliable measure of an arm's-length prices for sales of tangible property in intercompany transactions is: A. cost-plus method. B. comparable profits method. C. comparable uncontrolled price method. D. resale price method. 19. Timeliness of financial statements varies across nations. Which of the following countries has financial statements issued closest to year-end (on average)? A. Japan B. Germany C. Canada D. Italy What is an advantage of using ratio analysis in comparing financial statements from different countries? 20. A. Ratios are expressed as percentages, making currency differences irrelevant to the analysis. B. Ratios highlight the holding gains or losses related to curreney translation. C. Purchasing power gains and losses from currency translation show up elearly in ratio analysis. ring business ratios across countries removes the effect of economic conditions and business culture. IS. Which of the foflowing is likely to affect as analyst's ability to make meaning financial statement ratios for companies in different countries A. Accounting diversity B. Varying business"adition C. Varying cultural/societal backgrounds D. All of the above 16. Which of the fellowing groups is responsible for developing international suditing standards? A. International Accounting Standards Board (IASB) B. International Auditing and Assurance Standards Board (AASB) C International Organization of Securities Commissions (IOSco) D. Organization for Economie Cooperation and Development (OECD) 17. Why is international harmonization of auditing standards important? A. To be consistent with UK accounting standards. B. To ensure the independence of external auditors of multinational corporations. C. To assure international capital markets that auditing has been consistent across companies D. To reduce the authority of individual governments to enact accounting laws. 18. Which is NOT a common risk associated with local authorities' scrutiny of a company's transfer prices? A. All the followings are common risk related to scrutiny of transfer prices. B. Uncertainty as to the group's worldwide tax burden C. Problems in relationships with local tax authorities D. Discovery of a tax treaty violation 2L2 II IITIIIIunI 12. Whar act of the U.S. Congress advocated creating the Public Company Accounting Oversight Board required financial statement certification by the CEO and CFO, and requiees external auditors o report directly to an audit committee? A. Securities Act of 1933 t. Securities and Exchange Act of 1934 C. Sherman Anti-Trust Aet of 1890 D. Sarbanes-Oxley Act of 2002 13. In multinational corporations, to whom are the extenal auditors respotsible acconding to OECD A. Corporate management B. Shareholders C. Government of the host country D. Creditors What explains the reason for the historically very low (13% to 12%) limit on allowance for doubtful accounts in China? 14, A. The customers in China was presumed to have very good credit. B. This is the international accounting standard for companies operating in eastern Asia required C. Prior to being admitted to the World Trade Organization (WTO), Chinese companies was to reduce its bad debt level, so that they'"1l report higher net income, and pay more salaries to workers D. Just a fair allowance level in China. 9. What is the term used for intercompany transactions from a parent to a subsidary A. Horinontal transfer B. Downstream transfer C. International transfer D. None of the above 10. A multinational corporation may attempt to minimize the taxes it pays in a country with a high effective tax rate by setting a very high transfer price on goods transferred to a subsidiary in a high- tax country. Why is this often not successful? A. Laws in the foreign country may prohibit such a scheme. B. The high transfer price would actually increase taxes C. Foreign exchange losses will eliminate any tax savings D. None of the above 11. What is the primary difficulty of using market-based transfer prices for intercompany transactions? A. Markets that are too complex B. Lack of a well-developed market forfor C. Lack of objectivity D. Operating inefficiencies are transferred from one subsidiary to another III TLITI 5. Which of the following is true about advance peicing agreements? A. They are only granted foe intercompany transactions between a U.S parent and a foreign B. They are only granted for intercompany transactions between a foreign parent and a US C. In 2003, the IRS approved several thousand advance pricing agreements Sor U.S. taxpayers D. None of the above is true. 6. Which of the following is a potential problem in analyzing foreign financial statements? A. accounting standards B. data accessibility C different terminology D. All of the above pose potential peoblems. 7. which is required under both U.S. GAAP and IFRS? a. 20F b. quarterly financial statements c. annual financial statements d. extensive disclosure The debt ratio of Dynasty Industries, a Japanese corporation, is 62%. Why might this be difficult to compare to the debt ratio of a U.S. manufacturing corporation? A. US, companies generally have debt ratios greater than 62%. B. U.S. companies generally have debt ratios less than 62%. C. Japanese financing preferences may be different from American preferences D. Japanese companies report assets and liabilities in yen, whereas U.S. companies report in dollars 1 Maltliple Choice (S point each) . Which of the following is a reason for analyzing the financial statements of foreign corporations A. Making credit decisions about foreign customers B. Evaluating international business combinations C Diversifying an investmees pontfolio D. All of the above are reasons for analyzing foreign financial statements 2. Which is NOT one of the common sources of distortions in financial statements? A. Accounting standards that are inconsistent with economic reality B. Estimation errors made by managers in applying accounting standards C. Miscalculation of foreign currency translation D. Management of earnings 3. On what SEC form must foreign corporations with shares listed on U.S. stock exchanges present a reconciliation of net income and stockholders' equity to U.S. GAAP? A. Form 10-0 B. Form 10-K C. Form 20-F D. Form 8-Q 4. According to the Internal Revenue Service, the most reliable measure of an arm's-length prices for sales of tangible property in intercompany transactions is: A. cost-plus method. B. comparable profits method. C. comparable uncontrolled price method. D. resale price method