International Accounting Quiz Exam!

1. 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?

Arm's length prices

Market prices

International prices

Comparable prices

Doupnik - Chapter 11 #26
Learning Objective: 4
Level: Medium

Explanation

Doupnik - Chapter 11 #26
Learning Objective: 4
Level: Medium

2. The monetary amount used to record intercompany transactions is called:

Exchange rate

Transfer price

Conversion rate

Incremental cost

Doupnik - Chapter 11 #1
Learning Objective: 1
Level: Easy

Explanation

Doupnik - Chapter 11 #1
Learning Objective: 1
Level: Easy

3. In the context of international taxation, the Bahamas, Lichtenstein, and Monaco are considered by the OEDC as:

Tax holidays

Tax shelters

Tax havens

Tax centers

Doupnik - Chapter 10 #7
Learning Objective: 1
Level: Easy

Explanation

Doupnik - Chapter 10 #7
Learning Objective: 1
Level: Easy

4. What approach is taken by the United States of America relative to taxing income?

Citizenship

Residence

Both citizenship and residence

None of the above

Doupnik - Chapter 10 #19
Learning Objective: 2
Level: Medium

Explanation

Doupnik - Chapter 10 #19
Learning Objective: 2
Level: Medium

5. What is the term used for intercompany transactions from a parent to a subsidiary?

Upstream transfer

Downstream transfer

International transfer

None of the above

Doupnik - Chapter 11 #2 Learning Objective: 1 Level: Easy

Explanation

Doupnik - Chapter 11 #2 Learning Objective: 1 Level: Easy

6. Which of the following affect the effective corporate tax rate?

Tax-based incentives

Local corporate tax rate

Method of determining taxable income

All of the above.

Doupnik - Chapter 10 #3
Learning Objective: 2
Level: Easy

Explanation

Doupnik - Chapter 10 #3
Learning Objective: 2
Level: Easy

7. What is the position of the U.S. Securities and Exchange Commission (SEC) with respect to internal auditing?

It requires all companies, including foreign enterprises, listed on U.S. stock exchanges to have an internal audit function.

Since 2000, the SEC has been silent with respect to internal auditing.

Internal auditing is recommended by the SEC, but it is not required for listed companies.

Only multinational companies are required to have internal auditing systems.

Doupnik - Chapter 13 #49
Learning Objective: 7
Level: Hard

Explanation

Doupnik - Chapter 13 #49
Learning Objective: 7
Level: Hard

8. Refer to item #15. How will subsidiary managers in the decentralized organization view this decision by parent company management?

They will embrace it whole-heartedly because corporate profits will increase.

They won't mind because the intercompany transaction will still occur.

They won't notice because all decisions in the decentralized organization are made by the parent.

Doupnik - Chapter 11 #16
Learning Objective: 3
Level: Medium

Explanation

Doupnik - Chapter 11 #16
Learning Objective: 3
Level: Medium

9. In general, why do countries wish to avoid double taxation on corporations?

The calculations of the taxes are excessively complex.

It discourages foreign direct investment.

Enforcement of the tax law becomes excessively burdensome.

It contributes to accounting diversity.

Doupnik - Chapter 10 #24
Learning Objective: 2
Level: Medium

Explanation

Doupnik - Chapter 10 #24
Learning Objective: 2
Level: Medium

10. For what reason are the transfer prices of imports more closely monitored worldwide than are exports?

Political implications

Effect on local job availability

Impact on a country's balance of trade

All of the above

Doupnik - Chapter 11 #41
Learning Objective: 7
Level: Medium

Explanation

Doupnik - Chapter 11 #41
Learning Objective: 7
Level: Medium

11. What is a tax haven?

A jurisdiction where taxes are abnormally low

A location where tax cheats live to escape prosecution

A tax jurisdiction where world-wide tax is eliminated

Locations that provide tax-based incentives to corporations

Doupnik - Chapter 10 #8
Learning Objective: 1
Level: Medium

Explanation

Doupnik - Chapter 10 #8
Learning Objective: 1
Level: Medium

12. Which of the following is a reason for a parent to use discretionary transfer prices?

Improve competitive position of foreign operation

Minimize import duties

Avoid restrictions on repatriation funds

All of the above

Doupnik - Chapter 11 #21
Learning Objective: 3
Level: Medium

Explanation

Doupnik - Chapter 11 #21
Learning Objective: 3
Level: Medium

13. Which of the following is the responsibility of an audit committee?

Oversee the internal control system

Oversee internal auditing and the independent public accounting function

Monitor the financial reporting process

All of the above

Doupnik - Chapter 13 #42
Learning Objective: 6
Level: Medium

Explanation

Doupnik - Chapter 13 #42
Learning Objective: 6
Level: Medium

14. How might a parent company's home country eliminate double taxation on foreign source income?

Tax credits for taxes paid to foreign countries

Tax deductions for taxes paid to foreign countries

Taking a territorial approach to taxing income

All of the above

Doupnik - Chapter 10 #28
Learning Objective: 3
Level: Medium

Explanation

Doupnik - Chapter 10 #28
Learning Objective: 3
Level: Medium

15. An auditor may be subject to criminal liability under which of the following situations?

She willingly participates in defrauding the company's stockholders.

She breaks a contract with the client.

She violates a rule on the manner of advertising allowed by the professional accounting and auditing association.

None of the above

Doupnik - Chapter 13 #41
Learning Objective: 5
Level: Medium

Explanation

Doupnik - Chapter 13 #41
Learning Objective: 5
Level: Medium

16. Why might a developing country offer a tax holiday?

To encourage job creation

To encourage foreign investment in the country

To stimulate foreign trade

All of the above

Doupnik - Chapter 10 #56
Learning Objective: 7
Level: Easy

Explanation

Doupnik - Chapter 10 #56
Learning Objective: 7
Level: Easy

17. In addition to regulating the transfer prices on tangible property, the Internal Revenue Service also provides guidance on:

Interest charged on intercompany loans

Transfer prices for intangible property

Charges for intercompany services

All of the above

Doupnik - Chapter 11 #32
Learning Objective: 5
Level: Medium

Explanation

Doupnik - Chapter 11 #32
Learning Objective: 5
Level: Medium

18. What is the primary role of external auditing in multinational corporations?

Preparing the annual report to corporate shareholders

Designing a working system of internal accounting controls

Assuring that financial statement information is high quality

Selecting independent members for the board of directors

Doupnik - Chapter 13 #8
Learning Objective: 2
Level: Medium

Explanation

Doupnik - Chapter 13 #8
Learning Objective: 2
Level: Medium

19. 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?

Territorial approach

World-wide approach

Legalistic approach

None of the above

Doupnik - Chapter 10 #17
Learning Objective: 2
Level: Medium

Explanation

Doupnik - Chapter 10 #17
Learning Objective: 2
Level: Medium

20. An indirect foreign tax credit arises when:

Taxes paid by a parent on foreign branch income is deducted from taxes owed to the parent's home country

Taxing jurisdictions agree to share the taxes paid by a foreign subsidiary

Doupnik - Chapter 10 #32
Learning Objective: 3
Level: Medium

Explanation

Doupnik - Chapter 10 #32
Learning Objective: 3
Level: Medium

21. What is a major limitation to the apparent incentive of tax holidays?

Income earned by multinational corporations must remain in the foreign country offering the tax holiday.

The tax holidays are only available to large multinational corporations.

Tax holidays are offered only by governments with the ten weakest economies.

Doupnik - Chapter 10 #57
Learning Objective: 7
Level: Medium

Explanation

Doupnik - Chapter 10 #57
Learning Objective: 7
Level: Medium

22. Under U.S. tax laws, how are taxes paid by U.S. corporations to foreign governments treated?

Total foreign taxes paid are deductions in calculating taxable income.

Foreign income taxes paid are credits against U.S. taxes owed.

Taxpayers may choose between (A) and (B) stated above.

None of the above.

Doupnik - Chapter 10 #30Learning Objective: 3Level: Medium

not-available-via-ai

Explanation

not-available-via-ai

23. What does ISA 700 say about the interpretation of an audit opinion?

It enhances the credibility of the financial statements of corporation.

It guarantees the future viability of the corporation.

It assures readers that no errors have been made in the financial statements.

It tells shareholders that management has operated the corporation efficiently.

Doupnik - Chapter 13 #31
Learning Objective: 4
Level: Medium

Explanation

Doupnik - Chapter 13 #31
Learning Objective: 4
Level: Medium

24. Under Securities and Exchange Commission regulations, who may be a member of an audit committee for a listed company?

Any member of the corporate board of directors

Any member of the corporate board of directors who is not a Certified Public Accountant (CPA)

Only members of the corporate board of directors who do not have a material interest in the company

Any manager or director of the corporation

Doupnik - Chapter 13 #46 Learning Objective: 6 Level: Medium

Explanation

Doupnik - Chapter 13 #46 Learning Objective: 6 Level: Medium

25. What is the U.S. policy concerning taxing income of a U.S. corporation's foreign subsidiary?

Tax is imposed on the foreign subsidiary income in the year it is earned.

Tax is paid on the foreign subsidiary's income when the profits are returned to the U.S. parent as dividends.

The government of the U.S. does not tax foreign source income.

Doupnik - Chapter 10 #20
Learning Objective: 2
Level: Medium

Explanation

Doupnik - Chapter 10 #20
Learning Objective: 2
Level: Medium

26. In 2003, what portion of total U.S. goods trade was made up of intercompany transactions?

20%

82%

42%

11%

Doupnik - Chapter 11 #4
Learning Objective: 1
Level: Medium

Explanation

Doupnik - Chapter 11 #4
Learning Objective: 1
Level: Medium

27. What explains the reason for the historically very low (1/3% to ½%) limit on allowance for doubtful accounts in China?

The primary customer in China was the government, which was presumed to have very good credit.

This is the international accounting standard for companies operating in eastern Asia.

Prior to being admitted to the World Trade Organization (WTO), China was required to reduce its bad debt level.

All of the above

Doupnik - Chapter 13 #16
Learning Objective: 3
Level: Medium

Explanation

Doupnik - Chapter 13 #16
Learning Objective: 3
Level: Medium

28. Why is international harmonization of auditing standards important?

To be consistent with harmonized international accounting standards

To ensure the independence of external auditors of multinational corporations

To assure international capital markets that auditing has been consistent across companies

To reduce the authority of individual governments to enact accounting laws

Doupnik - Chapter 13 #26
Learning Objective: 4
Level: Medium

Explanation

Doupnik - Chapter 13 #26
Learning Objective: 4
Level: Medium

29. What group is responsible for developing international auditing standards?

International Accounting Standards Board (IASB)

International Auditing and Assurances Standards Board (IAASB)

International Organization of Securities Commissions (IOSCO)

Organization for Economic Cooperation and Development (OECD)

Doupnik - Chapter 13 #28
Learning Objective: 4
Level: Medium

Explanation

Doupnik - Chapter 13 #28
Learning Objective: 4
Level: Medium

30. 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?

Laws in the foreign country may prohibit such a scheme.

The high transfer price would actually increase taxes.

Foreign exchange losses will eliminate any tax savings.

None of the above.

Doupnik - Chapter 11 #10
Learning Objective: 1
Level: Medium

Explanation

Doupnik - Chapter 11 #10
Learning Objective: 1
Level: Medium

31. To calculate U.S. tax, what exchange rate must be used to translate foreign branch net income?

Current rate

Rate at the beginning of the year

Average rate for the year

Rate at the end of the year

Doupnik - Chapter 10 #54
Learning Objective: 6
Level: Medium

Explanation

Doupnik - Chapter 10 #54
Learning Objective: 6
Level: Medium

32. 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:

Cost-plus method

Comparable profits method

Comparable uncontrolled price method

Resale price method

Doupnik - Chapter 11 #27
Learning Objective: 5
Level: Medium

Explanation

Doupnik - Chapter 11 #27
Learning Objective: 5
Level: Medium

33. How can the conflict between cost minimization and performance evaluation be overcome in a decentralized organization?

Dual transfer pricing systems

Market-based transfer pricing systems

Cost-based transfer pricing systems

Negotiated transfer pricing systems

Doupnik - Chapter 11 #18
Learning Objective: 3
Level: Easy

Explanation

Doupnik - Chapter 11 #18
Learning Objective: 3
Level: Easy

34. In following the international norm concerning tax jurisdiction, how would double taxation be eliminated?

The subsidiary's home country would allow tax credits for taxes paid to the parent's home country.

The parent company's home country would allow tax credits for taxes paid to the subsidiary's home country.

The home countries of both the parent and the subsidiary would forego taxation on the income earned by the subsidiary.

None of the above

Doupnik - Chapter 10 #29
Learning Objective: 3
Level: Hard

Explanation

Doupnik - Chapter 10 #29
Learning Objective: 3
Level: Hard

35. Withholding taxes on dividends paid by a foreign subsidiary to a parent can be reduced by

Raising prices paid by the parent for goods it acquires from the subsidiary

Raising prices paid by the subsidiary for goods it acquires from the parent

Negotiated transfer pricing

Reducing prices charged by the parent for good transferred to the subsidiary

Doupnik - Chapter 11 #19
Learning Objective: 3
Level: Hard

Explanation

Doupnik - Chapter 11 #19
Learning Objective: 3
Level: Hard

36. Under the Sarbanes-Oxley Act of 2002, who is responsible for paying the independent auditor?

Management

Audit committee

Government who has jurisdiction over the corporation

American Institute of Certified Public Accountants (AICPA)

Doupnik - Chapter 13 #45
Learning Objective: 6
Learning Objective: 8
Level: Medium

Explanation

Doupnik - Chapter 13 #45
Learning Objective: 6
Learning Objective: 8
Level: Medium

37. Who may bring civil litigation against an auditor?

Only the client company

Only shareholders

The client company and shareholders

It depends on a country's laws governing auditor liability.

Doupnik - Chapter 13 #35
Learning Objective: 5
Level: Medium

Explanation

Doupnik - Chapter 13 #35
Learning Objective: 5
Level: Medium

38. What is the international norm for determining tax jurisdiction?

Residence takes precedence over source

Citizenship takes precedence over residence

Source takes precedence over residence

Domestic takes precedence over foreign

Doupnik - Chapter 10 #27
Learning Objective: 3
Level: Medium

Explanation

Doupnik - Chapter 10 #27
Learning Objective: 3
Level: Medium

39. What explains the "follow-the-leader" effect of countries changing their corporate tax rates in response to changes made by other countries?

Harmonization of accounting standards

Competition for foreign investment

Currencies pegged to another country's currency

None of the above

Doupnik - Chapter 10 #6
Learning Objective: 1
Level: Medium

Explanation

Doupnik - Chapter 10 #6
Learning Objective: 1
Level: Medium

40. Controlled foreign corporations (CFC) will not be taxed on their foreign income currently if:

The foreign tax rate is less than 90% of the U.S. corporate income tax rate

Subpart F income is less than 70% of the CFC's total income

Subpart F income is less than 5% of the CFC's total income

None of the above

Doupnik - Chapter 10 #52
Learning Objective: 5
Level: Hard

Explanation

Doupnik - Chapter 10 #52
Learning Objective: 5
Level: Hard

41. According to the International Auditing Practices Committee, financial statements have conformed to International Financial Reporting Standards (IFRS) if:

They have complied with at least 75% of the IFRS

They have complied with at least one-half of the provisions of the IFRS

They have complied with all requirements and interpretations of the IFRS

They have complied with most of the IFRS, or with U.S. GAAP

Doupnik - Chapter 13 #32
Learning Objective: 4
Level: Medium

Explanation

Doupnik - Chapter 13 #32
Learning Objective: 4
Level: Medium

42. Which of the following terms is NOT defined by statute in the companies laws of the United Kingdom?

Accountant

Auditor

Independence

None of these terms is defined in the laws of the UK.

Doupnik - Chapter 13 #23
Learning Objective: 3
Level: Medium

Explanation

Doupnik - Chapter 13 #23
Learning Objective: 3
Level: Medium

43. What is the meaning of "tax system neutrality?"

Taxes should be minimized.

Tax systems should not be a major factor in business decisions.

Tax policies should be unbiased.

Taxes in one jurisdiction are offset by tax credits in another jurisdiction.

Doupnik - Chapter 10 #25
Learning Objective: 2
Level: Medium

Explanation

Doupnik - Chapter 10 #25
Learning Objective: 2
Level: Medium

44. 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?

Corporate management

Internal auditors

Board of directors

Information systems department

Doupnik - Chapter 13 #4
Learning Objective: 1
Level: Medium

Explanation

Doupnik - Chapter 13 #4
Learning Objective: 1
Level: Medium

45. Correlative relief is a component of the U.S. Model Income Tax Treaty. What is correlative relief?

When the IRS adjusts an international transfer price, the tax authority in the foreign country makes a corresponding adjustment.

The burden of revising transfer pricing schemes is offset by reduction of the corporate tax rate on foreign source income.

IRS and foreign taxing authorities will collaborate in determining the appropriate international transfer price.

Doupnik - Chapter 11 #33
Learning Objective: 5
Level: Hard

Explanation

Doupnik - Chapter 11 #33
Learning Objective: 5
Level: Hard

46. In a 2003 survey by Ernst &Young, what issue did 90% percent of respondents identify as the most important international tax issue they face?

Foreign currency translation of taxable income

Double taxation

Transfer pricing

Withholding taxes

Doupnik - Chapter 11 #11
Learning Objective: 1
Level: Medium

Explanation

Doupnik - Chapter 11 #11
Learning Objective: 1
Level: Medium

47. The comparable uncontrolled transaction (CUT) method is one alternative for determining an arm's-length transfer price for what kind of intercompany transaction?

Interest on intercompany loans

Sale of tangible property

Intangible property

Intercompany services

Doupnik - Chapter 11 #45
Learning Objective: 5
Level: Medium

Explanation

Doupnik - Chapter 11 #45
Learning Objective: 5
Level: Medium

48. 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?

Proportionate responsibility for damages cannot be determined objectively.

Fairness to the defendants was not relevant to ensuring fairness to the injured party.

Large auditing firms would be paying proportionately higher damage awards than small firms.

Such a policy is inconsistent with harmonization of international auditing standards.

Doupnik - Chapter 13 #38
Learning Objective: 5
Level: Hard

Explanation

Doupnik - Chapter 13 #38
Learning Objective: 5
Level: Hard

49. How does the U.S. government tax controlled foreign corporations (CFC) differently from other subsidiaries?

None of the income generated by the CFC is subject to U.S. tax.

Only interest income from CFC is taxed in the year received by the U.S. government.

Doupnik - Chapter 10 #49
Learning Objective: 5
Level: Medium

Explanation

Doupnik - Chapter 10 #49
Learning Objective: 5
Level: Medium

50. What power is given to the Internal Revenue Service (IRS) under code section 482?

Power to eliminate intercompany transactions

Authority to audit international transfer prices

Authority to impose tariffs on foreign imports

All of the above

Doupnik - Chapter 11 #23
Learning Objective: 4
Level: Medium

Explanation

Doupnik - Chapter 11 #23
Learning Objective: 4
Level: Medium

51. What is "Subpart F" income?

All foreign source income

Foreign income that is not taxable by foreign jurisdictions

Income that is easily moved to tax havens

Foreign source income that is exempt from U.S. taxation

Doupnik - Chapter 10 #50
Learning Objective: 5
Level: Medium

Explanation

Doupnik - Chapter 10 #50
Learning Objective: 5
Level: Medium

52. Which cost will be minimized by setting a low transfer price?

Withholding taxes on a downstream transfer

Import duties

Currency devaluation of foreign cash flows

All of the above

Doupnik - Chapter 11 #47
Learning Objective: 2
Level: Hard

Explanation

Doupnik - Chapter 11 #47
Learning Objective: 2
Level: Hard

53. What is the difference between a profit center and an investment center?

Profit centers include the selling function, whereas investment centers are not responsible for sales.

Investment centers may be decentralized, but profit centers are not typically part of a decentralized organization.

Investment centers are responsible for assets, but profit centers are not.

Managers of investment centers have been delegated authority to make decisions autonomously, but managers of profit centers lack this power.

Doupnik - Chapter 11 #50
Learning Objective: 1
Level: Medium

Explanation

Doupnik - Chapter 11 #50
Learning Objective: 1
Level: Medium

54. What term is used to refer to the probability that an accounting error or irregularity is detected and reported?

Accounting risk

Audit risk

Audit quality

Transaction risk

Doupnik - Chapter 13 #19
Learning Objective: 3
Level: Medium

Explanation

Doupnik - Chapter 13 #19
Learning Objective: 3
Level: Medium

55. Which of the following is NOT a factor influencing the probability that an auditor will detect an accounting error?

Competence of the auditor

Quality review and monitoring

Financial reporting requirements

Independence of the auditor

Doupnik - Chapter 13 #20
Learning Objective: 3
Level: Medium

Explanation

Doupnik - Chapter 13 #20
Learning Objective: 3
Level: Medium

56. In what area is external auditing consistent internationally?

Audit report

Auditing standards

Regulation of the profession

None of the above

Doupnik - Chapter 13 #27
Learning Objective: 3
Level: Easy

Explanation

Doupnik - Chapter 13 #27
Learning Objective: 3
Level: Easy

57. What is the focus of Section 404 of the Sarbanes-Oxley Act?

Requirement that all members of the board of directors be independent of the corporation

It addresses the need for a consistent set of international auditing standards.

Attesting to the reliability of internal controls in the annual report

This defines the membership in the Public Company Accounting Oversight Board (PCAOB).

Doupnik - Chapter 13 #22
Learning Objective: 3
Level: Medium

Explanation

Doupnik - Chapter 13 #22
Learning Objective: 3
Level: Medium

58. What is the primary advantage of a negotiated transfer price?

It is objectively determined.

It reflects managers' ability to control cost.

It is based on arms-length transactions with unrelated parties.

It preserves managerial autonomy to make decisions.

Doupnik - Chapter 11 #13
Learning Objective: 1
Level: Medium

Explanation

Doupnik - Chapter 11 #13
Learning Objective: 1
Level: Medium

59. Which of the following is true about advance pricing agreements?

They are only granted for intercompany transactions between a U.S. parent and a foreign subsidiary.

They are only granted for intercompany transactions between a foreign parent and a U.S. corporation.

In 2003, the IRS approved several thousand advance pricing agreements for U.S. taxpayers.

None of the above is true.

Doupnik - Chapter 11 #36
Learning Objective: 6
Level: Medium

Explanation

Doupnik - Chapter 11 #36
Learning Objective: 6
Level: Medium

60. Why was the issuance of International Standard on Auditing 13 (IAS 13) considered so important to harmonization of auditing standards?

It required all multinational corporations to adopt international auditing standards by 2008.

International Accounting Quiz Exam!

1. 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?

2.

What first name or nickname would you like us to use?

2. The monetary amount used to record intercompany transactions is called:

3. In the context of international taxation, the Bahamas, Lichtenstein, and Monaco are considered by the OEDC as:

4. What approach is taken by the United States of America relative to taxing income?

5. What is the term used for intercompany transactions from a parent to a subsidiary?

6. Which of the following affect the effective corporate tax rate?

7. What is the position of the U.S. Securities and Exchange Commission (SEC) with respect to internal auditing?

8. Refer to item #15. How will subsidiary managers in the decentralized organization view this decision by parent company management?

9. In general, why do countries wish to avoid double taxation on corporations?

10. For what reason are the transfer prices of imports more closely monitored worldwide than are exports?

11. What is a tax haven?

12. Which of the following is a reason for a parent to use discretionary transfer prices?

13. Which of the following is the responsibility of an audit committee?

14. How might a parent company's home country eliminate double taxation on foreign source income?

15. An auditor may be subject to criminal liability under which of the following situations?

16. Why might a developing country offer a tax holiday?

17. In addition to regulating the transfer prices on tangible property, the Internal Revenue Service also provides guidance on:

18. What is the primary role of external auditing in multinational corporations?

19. 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?

20. An indirect foreign tax credit arises when:

21. What is a major limitation to the apparent incentive of tax holidays?

22. Under U.S. tax laws, how are taxes paid by U.S. corporations to foreign governments treated?

23. What does ISA 700 say about the interpretation of an audit opinion?

24. Under Securities and Exchange Commission regulations, who may be a member of an audit committee for a listed company?

25. What is the U.S. policy concerning taxing income of a U.S. corporation's foreign subsidiary?

26. In 2003, what portion of total U.S. goods trade was made up of intercompany transactions?

27. What explains the reason for the historically very low (1/3% to ½%) limit on allowance for doubtful accounts in China?

28. Why is international harmonization of auditing standards important?

29. What group is responsible for developing international auditing standards?

30. 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?

31. To calculate U.S. tax, what exchange rate must be used to translate foreign branch net income?

32. 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:

33. How can the conflict between cost minimization and performance evaluation be overcome in a decentralized organization?

34. In following the international norm concerning tax jurisdiction, how would double taxation be eliminated?

35. Withholding taxes on dividends paid by a foreign subsidiary to a parent can be reduced by

36. Under the Sarbanes-Oxley Act of 2002, who is responsible for paying the independent auditor?

37. Who may bring civil litigation against an auditor?

38. What is the international norm for determining tax jurisdiction?

39. What explains the "follow-the-leader" effect of countries changing their corporate tax rates in response to changes made by other countries?

40. Controlled foreign corporations (CFC) will not be taxed on their foreign income currently if:

41. According to the International Auditing Practices Committee, financial statements have conformed to International Financial Reporting Standards (IFRS) if:

42. Which of the following terms is NOT defined by statute in the companies laws of the United Kingdom?

43. What is the meaning of "tax system neutrality?"

44. 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?

45. Correlative relief is a component of the U.S. Model Income Tax Treaty. What is correlative relief?

46. In a 2003 survey by Ernst &Young, what issue did 90% percent of respondents identify as the most important international tax issue they face?

47. The comparable uncontrolled transaction (CUT) method is one alternative for determining an arm's-length transfer price for what kind of intercompany transaction?

48. 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?

49. How does the U.S. government tax controlled foreign corporations (CFC) differently from other subsidiaries?

50. What power is given to the Internal Revenue Service (IRS) under code section 482?

51. What is "Subpart F" income?

52. Which cost will be minimized by setting a low transfer price?

53. What is the difference between a profit center and an investment center?

54. What term is used to refer to the probability that an accounting error or irregularity is detected and reported?

55. Which of the following is NOT a factor influencing the probability that an auditor will detect an accounting error?

56. In what area is external auditing consistent internationally?

57. What is the focus of Section 404 of the Sarbanes-Oxley Act?

58. What is the primary advantage of a negotiated transfer price?

59. Which of the following is true about advance pricing agreements?

60. Why was the issuance of International Standard on Auditing 13 (IAS 13) considered so important to harmonization of auditing standards?