International Accounting Final Exam 77

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1.  Under U.S. tax laws, how are taxes paid by U.S. corporations to foreign governments treated? 
A.
B.
C.
D.
E.
2.  Which of the following is a reason for a parent to use discretionary transfer prices?
A.
B.
C.
D.
3.  In following the international norm concerning tax jurisdiction, how would double taxation be eliminated?
A.
B.
C.
D.
4.  What is the term used for intercompany transactions from a parent to a subsidiary? 
A.
B.
C.
D.
5.  Under Securities and Exchange Commission regulations, who may be a member of an audit committee for a listed company? 
A.
B.
C.
D.
6.  In addition to regulating the transfer prices on tangible property, the Internal Revenue Service also provides guidance on: 
A.
B.
C.
D.
7.  The monetary amount used to record intercompany transactions is called: 
A.
B.
C.
D.
8.  Withholding taxes on dividends paid by a foreign subsidiary to a parent can be reduced by 
A.
B.
C.
D.
9.  Which of the following terms is NOT defined by statute in the companies laws of the United Kingdom? 
A.
B.
C.
D.
10.  Which of the following is NOT a factor influencing the probability that an auditor will detect an accounting error? 
A.
B.
C.
D.
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11.  What is the meaning of "tax system neutrality?" 
A.
B.
C.
D.
12.  An auditor may be subject to criminal liability under which of the following situations? 
A.
B.
C.
D.
13.  What is a major limitation to the apparent incentive of tax holidays? 
A.
B.
C.
D.
14.  What does ISA 700 say about the interpretation of an audit opinion? 
A.
B.
C.
D.
15.  In what area is external auditing consistent internationally? 
A.
B.
C.
D.
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16.  The OECD believes which group in a multinational corporation should oversee the financial reporting function to ensure that appropriate controls are in place to safeguard information integrity? 
A.
B.
C.
D.
17.  What group is responsible for developing international auditing standards? 
A.
B.
C.
D.
18.  What explains the reason for the historically very low (1/3% to ½%) limit on allowance for doubtful accounts in China? 
A.
B.
C.
D.
19.  What is the primary advantage of a negotiated transfer price? 
A.
B.
C.
D.
20.  Refer to item #15. How will subsidiary managers in the decentralized organization view this decision by parent company management? 
A.
B.
C.
D.
21.  Why is international harmonization of auditing standards important? 
A.
B.
C.
D.
22.  What is the difference between a profit center and an investment center? 
A.
B.
C.
D.
23.  An indirect foreign tax credit arises when: 
A.
B.
C.
D.
24.  IRS code Section 482 describes appropriate transfer prices as "the prices which would have been agreed upon between unrelated parties engaged in the same or similar transactions under the same or similar conditions in the open market." How does it refer to such prices? 
A.
B.
C.
D.
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25.  Which of the following is the responsibility of an audit committee? 
A.
B.
C.
D.
26.  The Institute of Chartered Accountants in New Zealand (ICANZ) proposed a policy of proportionate liability to replace the country's existing "joint and several liability" approach. Why was the proposal denied? 
A.
B.
C.
D.
27.  In the context of international taxation, the Bahamas, Lichtenstein, and Monaco are considered by the OEDC as: 
A.
B.
C.
D.
28.  Which cost will be minimized by setting a low transfer price? 
A.
B.
C.
D.
29.  What term is used to refer to the probability that an accounting error or irregularity is detected and reported? 
A.
B.
C.
D.
30.  Which of the following affect the effective corporate tax rate? 
A.
B.
C.
D.
31.  Controlled foreign corporations (CFC) will not be taxed on their foreign income currently if: 
A.
B.
C.
D.
32.  To calculate U.S. tax, what exchange rate must be used to translate foreign branch net income? 
A.
B.
C.
D.
33.  What is the international norm for determining tax jurisdiction? 
A.
B.
C.
D.
34.  What explains the "follow-the-leader" effect of countries changing their corporate tax rates in response to changes made by other countries? 
A.
B.
C.
D.
35.  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.
B.
C.
D.
36.  What is the position of the U.S. Securities and Exchange Commission (SEC) with respect to internal auditing? 
A.
B.
C.
D.
37.  According to the International Auditing Practices Committee, financial statements have conformed to International Financial Reporting Standards (IFRS) if: 
A.
B.
C.
D.
38.  What approach is taken by the United States of America relative to taxing income? 
A.
B.
C.
D.
39.  In general, why do countries wish to avoid double taxation on corporations? 
A.
B.
C.
D.
40.  Under the Sarbanes-Oxley Act of 2002, who is responsible for paying the independent auditor? 
A.
B.
C.
D.
41.  What is the U.S. policy concerning taxing income of a U.S. corporation's foreign subsidiary? 
A.
B.
C.
D.
42.  Correlative relief is a component of the U.S. Model Income Tax Treaty. What is correlative relief? 
A.
B.
C.
D.
43.  For what reason are the transfer prices of imports more closely monitored worldwide than are exports? 
A.
B.
C.
D.
44.  How does the U.S. government tax controlled foreign corporations (CFC) differently from other subsidiaries? 
A.
B.
C.
D.
Discuss this Question
45.  How can the conflict between cost minimization and performance evaluation be overcome in a decentralized organization? 
A.
B.
C.
D.
46.  What is the primary role of external auditing in multinational corporations? 
A.
B.
C.
D.
47.  Jane, a citizen of Country X, received a corporate dividend in the amount of £10,000 from a company in the U.K. Country X taxed Jane's dividend as ordinary income. Country X is using what kind of approach toward foreign source income? 
A.
B.
C.
D.
48.  Why might a developing country offer a tax holiday? 
A.
B.
C.
D.
49.  Who may bring civil litigation against an auditor? 
A.
B.
C.
D.
50.  Which of the following is true about advance pricing agreements? 
A.
B.
C.
D.
51.  In a 2003 survey by Ernst &Young, what issue did 90% percent of respondents identify as the most important international tax issue they face? 
A.
B.
C.
D.
52.  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 high-tax country. Why is this often not successful? 
A.
B.
C.
D.
53.  The comparable uncontrolled transaction (CUT) method is one alternative for determining an arm's-length transfer price for what kind of intercompany transaction? 
A.
B.
C.
D.
54.  What is the focus of Section 404 of the Sarbanes-Oxley Act? 
A.
B.
C.
D.
55.  Why was the issuance of International Standard on Auditing 13 (IAS 13) considered so important to harmonization of auditing standards? 
A.
B.
C.
D.
56.  What power is given to the Internal Revenue Service (IRS) under code section 482? 
A.
B.
C.
D.
57.  What is "Subpart F" income? 
A.
B.
C.
D.
Discuss this Question
58.  In 2003, what portion of total U.S. goods trade was made up of intercompany transactions? 
A.
B.
C.
D.
59.  What is a tax haven? 
A.
B.
C.
D.
60.  How might a parent company's home country eliminate double taxation on foreign source income? 
A.
B.
C.
D.
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