Chapter 13

12 Questions | Total Attempts: 19

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Accounting Quizzes & Trivia

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Questions and Answers
  • 1. 
    Factors affecting accounting systems:
    • A. 

      Diverse economic systems

    • B. 

      Legal systems

    • C. 

      Political systems

    • D. 

      Sociocultural environments

    • E. 

      All of the choices (except for None)

    • F. 

      None of the choices

  • 2. 
    The most common differences to emerge with regard to accounting are:  differences in valuation, matching concept, off-the-balance-sheet items?
    • A. 

      True

    • B. 

      False

  • 3. 
    Select the option(s) that impact accounting differences:
    • A. 

      The availability and the reliability of financial information varies from country to country

    • B. 

      Financial statements and reports differ in language and terminology

    • C. 

      Financial statements from different countries may include the same information but present it in different formats

    • D. 

      Currencies used in the statements will generally differ

    • E. 

      The amounts and types of information disclosed on financial statements are different from coun­try to country

  • 4. 
    Select the option(s) that are typically used to determine accounting policy:
    • A. 

      National law and codification of practices

    • B. 

      Members of the account profession itself

    • C. 

      Selected by most firms in the industry

    • D. 

      Competitive advantage

  • 5. 
    France, Germany, Egypt, and Brazil rely more on legislation than on practice are those with strong governmental intervention in economic activity
    • A. 

      True

    • B. 

      False

  • 6. 
    England  has minimal influence from legislative efforts?
    • A. 

      True

    • B. 

      False

  • 7. 
    Assume, for example, that Bob of Bob's Lawn and Garden Store wants to acquire lawn ornaments from a German supplier to round out his inventory in anticipation of heavy summer sales. Thus, on January 1, Bob buys 10,000 gross of pink flamingos for 60,000 euros payable by February 1. On the first of January the Deutsche Mark is trading for $0.50 (that is, each dollar is worth 2 euros)Bob's ledger entries would be as follows:Purchases: Pink Flamingos $30,000Accounts Payable $30,000 (€ @ $0.50)If, however, exchange rates change between the time Bob places his order, records it in his books, and pays his account with the German flamingo maker, he will need to change his records to record the facts and the rate of exchange when the transaction is completed or actually settled. For example, if the value of the dollar falls and it takes $0.75 to buy a euro, Bob's costs for his pink flamingos will rise and must be accounted for as an adjustment to the original cost of the flamingos. The entries he must make will be:Purchases $30,000Accounts Payable $15,000Cash $45,000 (€ @ $0.75)
    • A. 

      This is an example of the two-step method

    • B. 

      This is an example of the one-step method

  • 8. 
    Accounting for gains or losses in transactions separates the activities of business activity and currency exchanges. Gains or losses from the transaction do not affect the value of the asset acquired but are treated separately, as a result of assuming risk in engaging in the activity and opening the firm to fluctuations in exchange rates. Consequently, under this method our transaction above would be noted as follows:Accounts Payable $30,000Exchange Adjustment: Loss $15,000Cash $45,000 (€ @ $0.75)In this method, the pink flamingos retain their value of $30,000 on Bob's books, and the difference between the agreed-upon price or costs and the actual amount paid is noted in an exchange adjustment account that is eventually netted and applied as an adjustment to shareholder equity.
    • A. 

      This is an example of the two-step method

    • B. 

      This is an example of the one-step method

  • 9. 
    Refer to the figure.  This is a demonstration of:
    • A. 

      Consolidation Problems

    • B. 

      Accounting Adaptation Problems

    • C. 

      FASB Problems

    • D. 

      IAB Problems

  • 10. 
    One potential problem for any firm conducting business in a foreign environment is the political risk that its assets will he taken over by the government through ____________.