Rakap Accounting Test 1

According to the United Nations, it is increasing on several dimensions

Since the 1980's foreign direct investment has been relatively stable worldwide

Only very large corporations are undertaking foreign direct investment

Foreign direct investment refers only to the amount of money U.S. corporations put into non-U.S. businesses.

Shanghai

Exporting

Foreign direct investment

Cross-listing on international stock exchanges

Transfer pricing

Hedging

Translating

Cross-listing

United States

China

Japan

Germany

Organization of Electrical Companies Directorate

Oil Exporting Countries and Developers

Organization for Economic Cooperation and Development

Oil Exporting Corporations and Divisions

Nike contracts with a footwear company in China to make athletic shoes

A Chinese oil company buys a U.S. oil company.

, a Japanese automaker, builds an assembly plant in Ohio

Daimler, a German automaker, merges with Chrysler, a U.S. automaker

29%

62%

75%

89%

This is another term for the European Union.

The countries of the European Union that use the Euro as its currency

This is Europe's sphere of political and economic influence.

The Euro-zone refers to the original 15 members of the European Union

Business transactions are denominated in foreign currencies.

Sales are made to customers in a foreign country.

Goods or services are purchased from suppliers in a foreign country

Accounting reports are prepared in a foreign currency

The parts division should sell parts to the assembly division at low prices.

The parts division should sell parts to the assembly division at high prices.

It doesn't matter what transfer price is used because the divisions are part of the same company.

Transfer pricing has nothing to do with the total tax paid by the corporation.

English

French

Spanish

German

To establish worldwide uniformity of accounting practice.

To develop a single set of enforceable global accounting standards.

To promote the use and application of global accounting standards.

To encourage convergence of national accounting standards and international accounting standards.

Washington, DC (United States)

Brussels (Belgium)

London (United Kingdom)

New York (United States)

Ottawa (Canada)

Commitment from auditors to resist client pressures.

Professional judgment in the public interest on the part of management.

Financial statement preparers must produce reports that faithfully represent all transactions.

All of the above are conditions for effective standards.

Sir Walter Raleigh

Sir David Tweedie

Sir Paul McCartney

Sir Bryan Carsberg

A period of public comment is provided after discussion papers are prepared.

Standards are approved by a unanimous vote of the 14 member board.

Exposure drafts are published prior to taking a vote of the board.

National accounting standards and practices are studied before preparing exposure drafts.

The process of making accounting practice consistent across countries.

The process of making accounting regulations consistent internationally.

Forcing accounting differences to be resolved through jury trials.

Eliminating the need to have different accounting methods.

The EU is getting too large to manage effectively.

The members added in 2004 have very different economic traditions than the 15 members that joined before 2004.

The members added in 2004 have more economic power than the members that joined the EU between 1957 and 1995.

The purchasing power of the EU was weakened by the addition of additional members.

Harmonization would decrease feelings of nationalism.

Harmonization is desirable because there is little difference among capital markets in different countries.

Harmonization would help to raise the quality of accounting practice internationally.

None of the above statements is true.

Europe

Africa

The Americas

Asia-Pacific

Inventory should be increased (debited) by $3,500.

Inventory should be increased (debited) by $4,000.

No adjustment should be made to inventory once it is written down.

Inventory should be increased (debited) by $1,000.

All costs directly attributable to getting the asset to the proper location

Import duties and taxes

Estimated costs of removing the asset

All of the above should be considered part of the cost of the asset.

Contingent liability, where the outflow of resources is "remote."

Contingent liability, where the outflow of resources is "probable."

Current liability, where the outflow is difficult to measure.

Reserve for bad debt, where the amount recoverable is "uncertain"

Measurement

Alternatives available

Disclosure

All of the above may be different between IFRS and U.S. GAAP

IAS 37 does not address contingent liabilities.

They are recorded as current liabilities if the amount is reasonably measured.

They are disclosed in the notes to the financial statements when there is more than a remote possibility of an outflow of resources.

They are not disclosed.

U.S. GAAP does not allow capitalization of development costs, whereas IAS 38 allows capitalization of these costs.

U.S. GAAP requires capitalization of development costs, whereas IAS 38 makes capitalization of these costs optional.

U.S. GAAP treats development costs as part of "Goodwill" whereas IAS 38 treats these costs as an intangible asset.

U.S. GAAP requires expensing of all development costs and IAS 38 requires capitalizing all development costs.

If they had not been previously recorded as separate assets by the acquired company, they should always be recorded as "Goodwill" on the balance sheet of the company acquiring them.

The cost of the intangibles should be expensed by the acquiring company on the merger date.

They should be recorded as separate intangible assets only if their useful life is indefinite.

They should be recorded as separate intangible assets if their fair value can be reliably measured.

LIFO

FIFO

Weighted Average

Retail inventory method

Expense on the Income Statement.

Prior period adjustment to Retained Earnings.

Credit to Revaluation Surplus.

Debit to Revaluation Surplus.

$37,000

$18,000

$22,000

$0

Compliance oversight

Setting standards for accounting practice

Policy over the accounting standard setting process

All of the above

Increased harmonization of accounting standards

Improve comparability of accounting statements

Make financial reporting distinct from taxation

All of the above

Japanese Institute of Certified Public Accountants (JICPA)

Japanese Accounting Association (JAA)

Japan's Ministry of Finance (MoF)

International Accounting Standards Board (IASB)

51%

49%

25%

10%

A governmental agency

A common industry affiliation

A common market

A bank

United States

United Kingdom

Germany

France

Accounting principles used by the Soviet Union

Conformity with the IASB pronouncements

Anglo-American accounting principles

Japanese code law

Increased the demand for accounting information from investors.

Increased the supply of publicly available accounting information from Chinese companies.

Changed the nature of auditing in the PRC.

All of the above are true.

MIPA Bulletins

MIPA Interpretations

International Financial Reporting Standards

NBSC Statements on Accounting Practice

It plans to fully adopt IFRS as soon as feasible.

Hong Kong GAAP will dominate standard setting in the People's Republic of China.

Regulators in the PRC believe that accounting harmonization is not important for the Chinese economy.

The PRC will have its own GAAP based on the IFRS.

National People's Congress

State Council

Securities and Exchange Commission

Chinese Security Regulatory Commission

These are two translations of a single Chinese professional association from Mandarin to English.

The CICPA was the professional association for accountants and the CACPA is the professional association for auditors.

The CICPA was the professional association for CPAs in private practice and the CACPA is the professional association for accountants in public practice in the PRC.

None of the statements above is true.

Reporting to banks

Reporting consolidated financial statements

Calculating tax

German GAAP should always be used instead of IRFS.

Parliament.

The accounting profession.

The securities exchange commission.

None of the above.

Over-simplification of accounting was pursued to make it accessible to a broad populace.

There was very little business being transacted in China during the Cultural Revolution.

Businesses in China were converting to international accounting standards during this period of time so they stopped developing new standards.

Auditors took over the development of accounting practice.