Comparative Accounting Systems
Pre-Test Questions
Course Introduction
Comparative Accounting Systems explores the roles and structures of accounting practices across different countries and regions, focusing on the underlying social, economic, and legal environments that shape financial reporting and regulatory frameworks globally. The course examines variations in financial accounting, auditing standards, and managerial accounting systems, analyzing how such differences impact multinational business operations, financial statement interpretation, and global harmonization efforts such as International Financial Reporting Standards (IFRS). Case studies and practical examples are used to highlight the challenges and opportunities faced by organizations operating in diverse accounting environments.
Recommended Textbook
International Accounting and Multinational Enterprises 6th Edition by Lee H. Radebaugh
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16 Chapters
693 Verified Questions
693 Flashcards
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Page 2
Chapter 1: International Accounting and International Business
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37 Verified Questions
37 Flashcards
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Sample Questions
Q1) The emergence of corporations has influenced financial accounting by A) removing limited liability as a way of hiding corporate responsibility.
B) combining ownership and control.
C) making transparency less important.
D) emphasizing disclosure as part of the necessary means of regulating corporate behavior.
Answer: D
Q2) As a result of the industrial revolution in the 19th and early 20th centuries, A) governments got together and decided to require firms to draw up balance sheets every two years.
B) it was finally necessary to develop double entry accounting.
C) the basic form of business organization shifted to limited liability and joint stock companies.
D) fixed assets diminished in importance.
Answer: C
Q3) When hyperinflation exists, alternative systems to historical cost become necessary. A)True
B)False
Answer: True
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Chapter 2: International Accounting Patterns, Culture and Development
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Sample Questions
Q1) Individualism is more compatible with which accounting value?
A) statutory control.
B) uniformity.
C) flexibility.
D) collectivism.
Answer: C
Q2) International forces for change:
A) directly affect accounting values
B) do not directly affect accounting values
C) directly affect accounting systems
D) do not directly affect physical environment factors
Answer: B
Q3) The EU has embarked on a major program of harmonization that will coordinate all of the following except
A) accounting
B) company law
C) monetary systems
D) urbanization
Answer: D
Page 4
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Chapter 3: Comparative International Financial Accounting
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35 Flashcards
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Sample Questions
Q1) The basis for French accounting has had a underlying objective of more effective national economic planning.
A)True
B)False
Answer: True
Q2) Which of the following countries prepares statements according to US GAAP?
A) France
B) Japan
C) Netherlands
D) Italy
Answer: B
Q3) In Japanese accounting,
A) all companies are required to follow the reporting requirements of the Securities and Exchange Law.
B) corporate tax rules are a major source of influence on income measurement practices.
C) the Securities and Exchange Law was developed by the British.
D) reserves are not permitted.
Answer: B
Page 5
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Chapter 4: Comparative International Financial Accounting
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Sample Questions
Q1) Thai accounting standards must be approved by the government.
A)True
B)False
Q2) Which of the following pair of countries has similar accounting systems?
A) Japan and Australia
B) India and Malaysia
C) Sweden and Czech Republic
D) Russia and Germany
Q3) In Russia, accounting regulations are generally created by?
A) Private sector accountants.
B) Security Exchange (SET)
C) Ministry of Finance.
D) IASC.
Q4) Information disclosure is constrained in developing countries where:
A) shareholders are the most important user group.
B) taxation rules influence amounts.
C) companies are financed mainly by banks, family members and government agencies.
D) the accounting profession is not well developed.
Page 6
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Chapter 5: International Financial Statement Analysis
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Sample Questions
Q1) Sweden companies have a tendency to be more conservative than the United States.
A)True
B)False
Q2) Research on the stock market
A) is certain about the international accounting differences and the US stock market
B) shows value relevance for Form 20-F reconciliations
C) of Pope and Rees indicates that the UK GAAP earnings adjustment information has incremental information for dual listed firms in the US and UK
D) greater power distance for non US firms
Q3) In attempting to value a foreign corporation, there is a tendency
A) not to restate the financial statements
B) to use the London exchange market values
C) to be conservative
D) to look at earnings from a home country perspective
Q4) R&D costs are usually capitalized in Germanic countries.
A)True
B)False
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Chapter 6: International Transparency and Disclosure
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Sample Questions
Q1) There is growing evidence that corporate reports are neither read or understood by a considerable percentage of the target audience.
A)True
B)False
Q2) In terms of interim reports,
A) the EU 4th Directive requires that companies disclose quarterly reports.
B) a major difference between the U.S. and Canada is that the U.S. requires quarterly reports, but the Canadians follow the European tradition of not requiring quarterly reports.
C) EU companies are required to provide semiannual reports of abridged information.
D) the SEC requires all foreign firms that list in the United States to provide quarterly earnings information.
Q3) Transparency
A) is consistent with confidentiality
B) is not an issue if the corporate report has reliable information
C) helps investors distinguish between good and bad quality firms
D) associates directly with the level of corruption
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8
Chapter 7: International Accounting Standards and Global Convergence
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Q1) The OECD Guidelines for Multinational Enterprises has the aim of strengthening confidence between MNEs and governments.
A)True
B)False
Q2) Following the issuance of several directives in the EU, including the 4th, 7th and 8th, it appears that
A) the EU is ready to issue a series of new accounting regulations.
B) Europeans prefer to have a set of standards that all countries would follow rather than the current level of flexibility.
C) stock exchanges are losing their influence.
D) mutual recognition of each other's accounting standards and practices is becoming the norm.
Q3) Major user groups
A) agree on what information disclosures should be mandatory
B) can enforce compliance with standards
C) do not all agree on what information disclosures should be mandatory
D) none of the above.
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Page 9
Chapter 8: International Business Combinations, Goodwill and Intangibles
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Sample Questions
Q1) The fundamental problem with intangibles
A) is not the separability issue
B) is the trade-off between relevance and reliability
C) is resolved in the IASB's conceptual framework
D) can be resolved by writing them off immediately upon acquisition
Q2) International and US accounting standards recommend the indirect method of cash flow statements.
A)True
B)False
Q3) According to IFRS 3,
A) the cost method must be used instead of the equity method.
B) amortization of goodwill is allowed
C) companies may choose between issuing parent company or consolidated financial statements.
D) the pooling of interests method may not be used.
Q4) The revaluation of the assets acquired to fair value or updated purchase price
A) is usually base on current values.
B) is required by Swiss and Japanese companies.
C) is not allowed in the United Kingdom or United States.
D) has no future affect on earnings.
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Chapter 9: International Segment Reporting
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Sample Questions
Q1) Which of the following is not a major problem for segment reporting?
A) There are problems with verification of information.
B) There are problems with segment identification.
C) The greater the disaggregation, the more likely the need to allocate common costs, which could distort profits.
D) U.S. firms do not provide much information about their segments.
Q2) MNEs argue against disseminating more information because a competitive disadvantage.
A)True
B)False
Q3) Excessive costs of segmental disclosure has doubtful validity.
A)True
B)False
Q4) Segment information is
A) very easy for MNEs to compute
B) useful because some users only want part of the MNE data
C) does not require cost allocations
D) does not concern transfer pricing
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11
Chapter 10: Foreign Currency Transactions and Translation
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Sample Questions
Q1) In general, if the Japanese subsidiary of a U.S. company firm translates its financial statements according to the current rate method during a period when the value of the Japanese yen is rising against the reporting currency (the U.S. dollar) , the subsidiary will recognize a
A) translation gain in the income statement.
B) translation loss in the income statement.
C) translation gain in the accumulated translation adjustment account in owners' equity.
D) translation loss in the accumulated translation adjustment account in owners' equity.
Q2) The spot rate is
A) the rate quoted for delivery within two business days.
B) usually higher than the forward rate.
C) a contract rate between the corporation and the foreign exchange trader at the bank for future delivery.
D) usually at a premium for sales and a discount for purchases.
Q3) The local currency and the reporting currency are always the same.
A)True
B)False
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12
Chapter 11: International Accounting for Price Changes
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Sample Questions
Q1) A major difference between the British and U.S. approach to inflation accounting (before the standards were withdrawn) was that
A) the British were allowed to use current cost accounting in primary or supplementary financial statements.
B) the British did not permit a gearing adjustment.
C) the U.S. allowed general purchasing power adjustments but not current cost adjustments.
D) U.S. firms took their inflation adjustments to a reserve account.
Q2) Which of the following is true concerning inflation disclosures?
A) The gearing adjustment was developed primarily for the auto industry.
B) The Dutch prefer to use historical cost accounting due to its objectivity.
C) Current cost adjustments are based on the fact that the value of money has fallen.
D) The IASB does not recommend one specific approach to account for inflation.
Q3) General purchasing power accounting includes constant dollar accounting.
A)True
B)False
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Chapter 12: Corporate Governance and Control of Global Operations
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Sample Questions
Q1) A centralized, globally scaled strategy is symbolic of a A) multidomestic strategy.
B) global strategy.
C) transnational strategy.
D) geocentric strategy.
Q2) Which of the following reflects information flows of a global innovator?
A) High outflow of knowledge from the local subsidiary to the rest of the corporation and high inflow of knowledge from the rest of the corporation to the local subsidiary.
B) High outflows and low inflows.
C) Low outflows and high inflows.
D) High outflows and high inflows.
Q3) As a domestic firm evolves into an MNE,
A) reporting and communication flows change.
B) the organizational structure becomes more simplified.
C) it changes from a product emphasis to an international division structure.
D) the existing organizational structure cannot be changed because of the ensuing confusion.
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Page 14
Chapter 13: Foreign Exchange Risk Management
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Sample Questions
Q1) According to IAS 21, the preferred treatment for recognizing gains and losses on foreign currency transactions
A) is similar to the way U.S. tax accounting treats gains and losses.
B) is to recognize differences as income or expense in the period in which they arise.
C) follows the German approach of conservatism.
D) is to recognize losses but not gains in the period in which they arise.
Q2) The most widely traded currency in the world is the
A) Japanese yen.
B) German mark.
C) British pound.
D) U.S. dollar.
Q3) Using the data for the problem, assume that you entered into an option with Goldman Sachs for one contract worth £75,000 at a premium of $.0325, a strike price of 162 and a brokerage fee of $25 to get into the option and also to exercise the option. Would you exercise the option?
A) yes
B) no
C) It depends on the June 1 spot rate.
D) This is not an appropriate situation for an option.
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Page 15
Chapter 14: International Budgeting and Performance Evaluation
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Sample Questions
Q1) If the Brazilian subsidiary of a U.S. company ships components to its U.S. parent at an arbitrarily high transfer price,
A) the U.S. parent will show a higher pre-tax profit.
B) the Brazilian government will collect relatively lower income taxes.
C) U.S. Customs will collect higher tariffs.
D) the Brazilian subsidiary will show relatively lower profits.
Q2) Benchmarking performance based on global competitors is sound practice, because since it is easy to get good data on them.
A)True
B)False
Q3) Return on investment is a popular performance evaluation technique of MNEs, because
A) it takes into consideration transfer pricing policies.
B) it allows the parent company to compare operations more easily.
C) it is an accurate indicator of currency differences.
D) it allows the MNEs to focus on market share.
Q4) For Japanese MNEs, sales is the most often used measure of performance. A)True
B)False
Page 16
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Chapter 15: International Auditing Issues
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Sample Questions
Q1) Auditors are generally appointed by
A) shareholders at the annual meeting
B) local country government
C) management
D) UN
Q2) The IFAC is active in all of the following areas except
A) education
B) ethics
C) metric standards
D) information technology
Q3) The IFAC is
A) an organization of national professional accountancy organizations
B) part of the OECD
C) under control of FASB
D) part of the UN
Q4) International audits have a challenge because local business practices pay expenses with cash.
True
A)True
B)False
Page 17
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Chapter 16: International Taxation Issues
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Sample Questions
Q1) Which of the following is true concerning taxable earnings of foreign corporations according to the U.S. IRS?
A) The temporal method must be used to translate financial statements into dollars.
B) Active income of a CFC is not recognized until distributed as a dividend.
C) Passive income does not need to be recognized.
D) Passive income of a CFC is taxed after being translated into dollars at the average exchange rate.
Q2) A tax that is applied at each stage of the production process is known as a
A) corporate income tax.
B) withholding tax.
C) value-added tax.
D) sales tax.
Q3) Except for certain CFC cases, U.S. parent does not declare income from a foreign corporation for tax purposes until it actually receives a dividend.
A)True
B)False
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