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International Acct Test 2

80 Questions  I  By Cirilale
International Acct Test 2
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1.  Under the temporal method of translating foreign currency financial statements, what exchange rate should be used for cost of goods sold? 
A.
B.
C.
D.
2.  What issue of reporting effects of changing prices is addressed by IAS 29, issued by the International Accounting Standards Board in 1989? 
A.
B.
C.
D.
3.  Under U.S. GAAP, what method is required to account for foreign currency transactions? 
A.
B.
C.
D.
4.  Which of the following method uses the current exchange rate to consolidate all accounts of a foreign subsidiary into the financial statements of its parent? 
A.
B.
C.
D.
5.  Which of the following methods for translating foreign currency financial statements attempts to produce consolidated financial statements as if a subsidiary had actually used the parent company's currency for all its transactions? 
A.
B.
C.
D.
6.  According to IAS 27, how can effective control be achieved without owning more than 50% of another companies' voting shares? 
A.
B.
C.
D.
7.  Under both the temporal method and the current rate method, what exchange rate should be used to translate a foreign subsidiary's dividends into parent company currency? 
A.
B.
C.
D.
8.  On May 1, 20x1, Usstar purchased a put option to sell £50,000 on April 30, 20x2 at a strike price equal to $2, which was the spot rate on May 1, 20x1. Usstar paid a premium of $0.01 per pound. How should the option be recorded on May 1, 20x1? 
A.
B.
C.
D.
9.  Footnote disclosures in foreign financial statements are particularly helpful in: 
A.
B.
C.
D.
10.  Which of the following statements is true about the Euro? 
A.
B.
C.
D.
11.  International accounting standards (IAS 14) requires publicly traded companies to report segmented financial information along: 
A.
B.
C.
D.
12.  Under the current rate method of translating foreign currency financial statements, what is the amount of the balance sheet exposure? 
A.
B.
C.
D.
13.  Which of the following statements is true about methods for translating foreign currency financial statements around the world? 
A.
B.
C.
D.
14.  How is accounting for a pooling of interests different from a purchase when business entities combine
A.
B.
C.
D.
15.  Which of the following is a likely to affect an analyst's ability to make meaningful comparisons of financial statement ratios for companies in different countries? 
A.
B.
C.
D.
16.  What term is used to describe the circumstances under which Amazing Corporation is entering the forward contract? 
A.
B.
C.
D.
17.  What is OIBD? 
A.
B.
C.
D.
18.  On December 1, 20x1 Pimlico made sales to a customer in India and recorded Accounts Receivable of 10,000,000 rupees. The customer has until March 1, 20x2 to pay. On December 1, 20x1, Pimlico paid $500 for a put option to sell rupees at a strike price of $2.30 per 100 rupees on March 1, 20x2, which was the spot rate on December 1, 20x1. On December 31, 20x1, the spot rate was $2.80 per 100 rupees and the option premium was $0.004 per 100 rupees. If the spot rate on March 1, 20x2 was $2.45 per 100 rupees, what is the foreign currency exchange gain or loss that should be recorded that day? 
A.
B.
C.
D.
19.  Placo Ltd., a Scottish subsidiary of Limko Inc, a U.S. company, showed cost of goods sold on its income statement for the year ended December 31, 2004.Inventory, 1/1/04                  100,000Purchases                             900,000COG Available for Sale     1,000,000Inventory, 12/31/04              200,000COGS                                 800,000                                       Exchange rates/$1December 31, 2004           $0.522December 31, 2003           $0.5602004 average                     $0.547 What amount should be used to consolidate Placo's cost of goods sold into Limko's income statement under the temporal method? 
A.
B.
C.
D.
20.  Amazing Corporation, a U.S. enterprise, sold product to a customer in Wales on October 1, 20x1 for £100,000 with payment required on April 1, 20x1. Relevant exchange rates are:                                                Spot Rate           Forward Rate (to 4/1/x2)October 1, 20x1                     $1.87                    $1.85December 31, 20x1                   $1.85                 $1.84April 1, 20x2                           $1.90The discount factor corresponding to the company's incremental borrowing rate for 6 months is 0.95.Assume that Amazing Corporation enters a forward contract on October 1, 20x1 to sell £100,000 six months hence, on April 1, 20x2. How should Amazing Corporation report the forward contract on its December 31, 20x1 financial statements? 
A.
B.
C.
D.
21.  Dynasty Industries reported total liabilities of ¥9,000,000 and total assets of ¥12,000,000. The current exchange rate is ¥120 = $1. What is Dynasty Industries' debt ratio? 
A.
B.
C.
D.
22.  Under SFAS 52, when the current rate method is used, how are translation adjustments treated in the consolidated financial statements? 
A.
B.
C.
D.
23.  Under the temporal method of consolidating foreign currency financial statements, what exchange rate should be used for translating the depreciation expense recorded by a subsidiary? 
A.
B.
C.
D.
24.  What is "asset exposure" to foreign exchange risk? 
A.
B.
C.
D.
25.  For U.S. companies whose shares are publicly traded on U.S. stock exchanges, how long after year-end must annual reports be filed with the Securities and Exchange Commission (SEC)? 
A.
B.
C.
D.
26.  If an analyst read in an annual report that a company in England experienced "a 12% increase in turnover," how should it be interpreted? 
A.
B.
C.
D.
27.  What is the first step that should be taken to restate foreign financial statements to conform to U.S. GAAP
A.
B.
C.
D.
28.  In January 2003, the FASB released Interpretation 46, "Consolidation of Variable Interest Entities," which: 
A.
B.
C.
D.
29.  What is a "strike price?" 
A.
B.
C.
D.
30.  A representative market basket of products cost $250 at the beginning of the year, and the same collection of products costs $280 at the end of the year. What is the annual rate of inflation? 
A.
B.
C.
D.
31.  Which of the following is a limitation of using commercial databases to access foreign company financial statements? 
A.
B.
C.
D.
32.  Which of the following statements is true about hedge accounting under U.S. GAAP? 
A.
B.
C.
D.
33.  Which of the following countries requires companies to use current replacement cost accounting to prepare primary financial statements? 
A.
B.
C.
D.
34.  What is the "disappearing plant" problem that is addressed by SFAS 52? 
A.
B.
C.
D.
35.  Holding monetary assets during a period of inflation results in: 
A.
B.
C.
D.
36.  What is an advantage of using ratio analysis in comparing financial statements from different countries?
A.
B.
C.
D.
37.  How would a company decide which foreign languages will be used to present its financial statements? 
A.
B.
C.
D.
38.  Why is investing in foreign companies an effective way to diversity an individual's investment portfolio? 
A.
B.
C.
D.
39.  What information is needed to determine the fair value of a foreign currency forward contract? 
A.
B.
C.
D.
40.  What is a "foreign exchange rate?" 
A.
B.
C.
D.
41.  When the current rate method is used, the sign (+ or -) of the translation adjustment is the result of: 
A.
B.
C.
D.
42.  According to SFAS 52, which of the following conditions would indicate that a foreign subsidiary's functional currency is the foreign currency? 
A.
B.
C.
D.
43.  What is meant by the "translation" of foreign currency financial statements? 
A.
B.
C.
D.
44.  Since 2001, which method of accounting for a business combination is required under U.S. GAAP? 
A.
B.
C.
D.
45.  Which method of dealing with inflation in financial reporting reflects current replacement cost of specific assets? 
A.
B.
C.
D.
46.  A Danish subsidiary of a U.S. corporation recorded a building it purchased in 2002 for 100,000,000 krone, when the exchange rate was $0.132/krone. The current exchange rate is $0.163/krone. Under the temporal method, how should the translated amount of the restated asset be interpreted? 
A.
B.
C.
D.
47.  What is the requirement for reporting derivatives under international accounting standards and U.S. GAAP? 
A.
B.
C.
D.
48.  Why is the accrual method of accounting for unrealized foreign exchange gains sometimes criticized? 
A.
B.
C.
D.
49.  Which of the following methods for translating foreign currency financial statements is required under IAS 21? 
A.
B.
C.
D.
50.  What is a foreign currency transaction? 
A.
B.
C.
D.
51.  According to the World Trade Organization, what was the size of international trade in 2003? 
A.
B.
C.
D.
52.  Which of the following are reasons to report segmented accounting information for multinational enterprises? 
A.
B.
C.
D.
53.  What is the primary difference between a cash flow hedge and a fair value hedge? 
A.
B.
C.
D.
54.  Under IAS 14, which criteria must be met by all segments that are considered reportable business segments? 
A.
B.
C.
D.
55.  Why should financial analysts endorse the adoption of IFRS worldwide? 
A.
B.
C.
D.
56.  Which of the following is a reason for analyzing the financial statements of foreign corporations? 
A.
B.
C.
D.
57.  The number of Japanese yen (¥) required today to buy one U.S. dollar ($) today is called: 
A.
B.
C.
D.
58.  Which of the following has the least frequent reporting requirements for publicly traded corporations? 
A.
B.
C.
D.
59.  What term is used to refer to presenting the financial statements for a group of enterprises as if it was a single entity? 
A.
B.
C.
D.
60.  Under SFAS 52, what group is responsible for determining the functional currency of a foreign subsidiary? 
A.
B.
C.
D.
61.  How do multinational corporations combine operations? 
A.
B.
C.
D.
62.  Why do financial analysts and other readers of financial statements want segmented information
A.
B.
C.
D.
63.  According to IAS 14, how should a company distinguish between its primary and secondary formats for reporting segment information? 
A.
B.
C.
D.
64.   On November 1, 20x1 Zamfir Company, a U.S. corporation, purchased minerals from a Russian company for 2,000,000 rubles, payable in 3 months. The relevant exchange rates between the U.S. and Russian currencies are given:                                         SPOT RATE          FORWARD RATE November 1, 20x1               $0.348                       $0.348 December 31, 20x1              $0.359                      $0.352February 1, 20x2                   $0.344The company's incremental borrowing rate provides a discount rate of 0.975 for three months. If Zamfir does not attempt to hedge this transaction, what is the gain or loss that should be shown on the company's December 31, 20x1 financial statements? 
A.
B.
C.
D.
65.  Companies must choose between which exchange rates for consolidating foreign subsidiaries? 
A.
B.
C.
D.
66.  What is the basis for Morgan Stanley Dean Witter's "Apples to Apples" system for financial statement analysis? 
A.
B.
C.
D.
67.  Which of the following statements is true about the translation of foreign currency financial statements globally? 
A.
B.
C.
D.
68.  IFRS 3, issued in 2004, eliminated the use of which concept for reporting assets and liabilities of an acquired company on the parent company's consolidated financial statements? 
A.
B.
C.
D.
69.  Imperial Chemical Industries, a U.K. corporation, recorded interest incurred in constructing fixed assets as an expense of £128,000,000. When reconciling ICI's financial statements to U.S. GAAP, what should be done with this interest? 
A.
B.
C.
D.
70.  Which of the following is potentially a problem associated with historical cost-based financial statements in periods of inflation? 
A.
B.
C.
D.
71.  Under U.S. GAAP, what is the proper treatment of unrealized foreign exchange losses? 
A.
B.
C.
D.
72.  Timeliness of financial statements varies across nations. Which of the following countries has financial statements issued closest to year end (on average)?
A.
B.
C.
D.
73.  What was the effect of introducing the Euro with respect to hedging? 
A.
B.
C.
D.
74.  In order to appropriately analyze the trends in foreign financial statement data, which exchange rates should be used? 
A.
B.
C.
D.
75.  Under U.S. GAAP, what is the segment reporting requirement under SFAS 131?
A.
B.
C.
D.
76.  How does SFAS 52 define a "highly inflationary economy?" 
A.
B.
C.
D.
77.  In addition to requiring separate reporting for operating segments, SFAS 131 requires companies to report: 
A.
B.
C.
D.
78.  Dynasty Industries reported total liabilities of ¥9,000,000 and total assets of ¥12,000,000. If the exchange rate changes to ¥110 = $1, what will be the change in the debt ratio assuming the account balances remain constant
A.
B.
C.
D.
79.  Which items in the balance sheet are subject to accounting exposure? 
A.
B.
C.
D.
80.  Which of the following statements is true about convenience translations? 
A.
B.
C.
D.
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