Global Financial Statement Analysis
Mock Exam
Course Introduction
Global Financial Statement Analysis provides students with an in-depth understanding of how to analyze and interpret financial statements of companies operating in diverse international environments. The course explores the impact of varying accounting standards, currency fluctuations, and economic conditions on financial reporting. Students learn to assess the financial health, profitability, and risks of global firms, and to make informed business and investment decisions based on comparative financial data. Emphasis is placed on analytical tools, ratio analysis, and real-world case studies to build practical skills for evaluating financial performance across geographic boundaries.
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 first exposure a firm has to international accounting is usually
A) the purchase of a subsidiary
B) establishment of license of a foreign company
C) unsolicited purchase order from a foreign buyer.
D) joint venture with another MNE.
Answer: C
Q2) The continental accounting system is closely linked to the tax collection system.
A)True
B)False
Answer: True
Q3) When hyperinflation exists, alternative systems to historical cost become necessary.
A)True
B)False
Answer: True
Q4) Venice's commerce was driven by sea traffic.
A)True
B)False
Answer: True
Page 3
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Chapter 2: International Accounting Patterns, Culture and Development
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42 Verified Questions
42 Flashcards
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Sample Questions
Q1) Large power distance is more compatible with which accounting value?
A) professionalism.
B) uniformity.
C) transparency.
D) none of the above.
Answer: B
Q2) Individualism is more compatible with which accounting value?
A) statutory control.
B) uniformity.
C) flexibility.
D) collectivism.
Answer: C
Q3) Preference for secrecy is consistent with strong uncertainty avoidance.
A)True
B)False
Answer: True
Q4) One of Gray's accounting values is "uniformity versus flexibility."
A)True
B)False
Answer: True
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Chapter 3: Comparative International Financial Accounting
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35 Verified Questions
35 Flashcards
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Sample Questions
Q1) Swiss accounting is among the most transparent in the world today.
A)True
B)False
Answer: False
Q2) 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
Q3) The SEC acts in a supervisory capacity over FASB
A) never
B) rarely
C) frequently
D) always
Answer: B
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Chapter 4: Comparative International Financial Accounting
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28 Flashcards
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Sample Questions
Q1) The Malaysian accounting system
A) has similar tax and book accounts
B) aims to provide for the information needs of investors
C) is based on a macro-economic justification
D) takes a flexible approach
Q2) Which of the following accurately reflects Chinese accounting?
A) The accounting equation has replaced the communist fund accounting approach in the standard setting process.
B) There are no significant legal requirements due to the adherence to a flexible approach to accounting.
C) The only purpose of accounting is national macroeconomic control.
D) Due to previous state control, there is an abundance of accountants.
Q3) Which of the following accurately reflects Chinese accounting?
A) There is a strong Soviet-style accounting influence.
B) The accounting system has been changed to conform with U.S. principles.
C) A more micro-oriented decision-making approach is being encouraged.
D) The Japanese system of accounting has been adopted.
Q4) One of the cures for the "Asian flu" problem was to decrease transparency.
A)True
B)False
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Chapter 5: International Financial Statement Analysis
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35 Verified Questions
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Sample Questions
Q1) The stock market is a dominant influence on earnings in A) the UK and US
B) Japan
C) continental europe
D) countries with extensive infrastructure
Q2) Continental Europe has relatively less conservative accounting because of a strong influence of taxes.
A)True
B)False
Q3) Income statement information is more informative in A) Britain.
B) Japan.
C) the United States
D) Germany
Q4) Japanese PE ratios have been reported as relatively high because their earnings have been understated.
A)True
B)False
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Page 7
Chapter 6: International Transparency and Disclosure
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Sample Questions
Q1) The mutuality of interests concept related to information disclosure implies that A) disclosure may help users be more aware of common interests, improving cooperation.
B) increased disclosure increases uncertainty about financial performance.
C) user benefits always exceed costs.
D) it is difficult to measure the costs and benefits of disclosure.
Q2) The value added statement
A) provides information about the contribution of all corporate stakeholders to the success of the business.
B) is used to determine how much value-added tax corporations pay.
C) is generated primarily for potential investors and shareholders.
D) is provided by the majority of European companies, although it is rarely provided by U.S. firms.
Q3) Which country provides segment disclosure on a basis of managerial organization
A) UK
B) Japan
C) Italy
D) US
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8
Chapter 7: International Accounting Standards and Global Convergence
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Sample Questions
Q1) According to the 4th Directive of the EC,
A) the "true and fair view" must be used by countries that do not have an adequate companies law.
B) accounting directives must be adopted by the accounting profession rather than included in national law.
C) all companies, regardless of size, will have to use the same financial statement formats.
D) EU companies must now adopt more similar approaches to information disclosure, classification and presentation of information, and methods of valuation.
Q2) A main information concern of trade unions is
A) transfer pricing
B) inflation data
C) production quotas
D) stock prices
Q3) All of the following are trade unions except
A) ETUC
B) ICFTU
C) WCL
D) IASC
Page 9
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Chapter 8: International Business Combinations, Goodwill and Intangibles
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60 Flashcards
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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) Which of the following is not a type of joint controlled venture
A) operations
B) accounting practice
C) assets
D) entities
Q3) Because of international accounting standards, R&D is always expensed.
A)True
B)False
Q4) International and US accounting standards recommend the indirect method of cash flow statements.
A)True B)False
Q5) Current international accounting standards permits the amortization of goodwill. A)True
B)False
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Chapter 9: International Segment Reporting
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Sample Questions
Q1) Segment identification is very easy in practice.
A)True
B)False
Q2) The dual-yardstick proposal for segment disclosures
A) suggests that segments be established consistent with the company's organizational structure.
B) suggests that industry and country groupings be related to each other rather than an external standard.
C) requires geographic segmentation along country lines.
D) requires that geographic and industry data be combined together in a matrix reporting format.
Q3) The demand for segment information has been
A) prompted by a continuing diversification trend
B) forced by competitors
C) accelerated by class action suits
D) reduced by investors
Q4) The revised IAS 14 expands the scope of managerial discretion in segment identification.
A)True
B)False
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Chapter 10: Foreign Currency Transactions and Translation
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Sample Questions
Q1) If a parent company has a subsidiary in a country where the cumulative rate of inflation for the past three years is around 100 percent, which translation methodology would they use according to the IASC?
A) the temporal method.
B) the temporal method after adjusting for inflation.
C) the current rate method.
D) the current rate method after adjusting for inflation.
Q2) The functional currency is the currency of the primary economic environment in which the company operates.
A)True
B)False
Q3) What is the amount of the foreign exchange gain or loss that it will recognize on July 15?
A) $1875 loss
B) $ 750 loss
C) $1125 loss
D) $ 750 gain
E) gain or loss is deferred
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12
Chapter 11: International Accounting for Price Changes
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Sample Questions
Q1) Current value accounting results in holding gains and losses when nonmonetary assets are revalued.
A)True
B)False
Q2) In Britain,
A) companies use general purchasing power accounting
B) many companies have periodic revaluations of their land and buildings to market values
C) has a weak relation between economics and accounting
D) inflation rules are kept because of the fear of renewed higher prices relative to the remainder of Europe.
Q3) What is the trend in inflation accounting in South American countries of Argentina and Brazil
A) change to current cost accounting
B) dropping of inflation accounting
C) change to general purchasing power adjustments
D) continued use of an index in general purchasing power statements
Q4) Cash does not lose purchasing power during an inflationary period.
A)True
B)False
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Chapter 12: Corporate Governance and Control of Global Operations
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Sample Questions
Q1) The knowledge-flows framework for an integrated player results in A) reciprocal flows.
B) sequential flows from the subsidiary to the parent but not vice-versa.
C) routine but not non-routine flows.
D) lateral relations.
Q2) The problem with defining international business structures with centralization versus decentralization is that the very terms connote a mutually exclusive situation.
A)True
B)False
Q3) Which of the following is not consistent with establishing a product line focus in the MNEs organizational structure?
A) The product line is wide.
B) Products are subject to rapid technological change.
C) Production and logistics need to be coordinated.
D) Country and regional expertise is of prime importance.
Q4) The German Scoreboard has become a useful measurement tool internationally for corporate governance.
A)True
B)False
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Chapter 13: Foreign Exchange Risk Management
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Sample Questions
Q1) A transaction exposure risk can be eliminated with a
A) call option
B) put option
C) forward
D) bank deposit in the foreign country
Q2) The choice of exposures to be hedged depends on
A) the desired return on equity
B) the use of options and futures
C) the risk aversion of the company
D) the international Fisher effect
Q3) Assuming the tax treatment for foreign currency transactions, what is the foreign exchange gain or loss on October 31?
A) $300 loss
B) $450 loss
C) $450 gain
D) $150 loss
E) gain or loss is deferred
Q4) Over the long run, exchange rates are determined by purchasing power parity.
A)True
B)False
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Chapter 14: International Budgeting and Performance Evaluation
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Sample Questions
Q1) The concept of the value of participation in budgeting may be uniquely Anglo-American.
A)True
B)False
Q2) For Japanese MNEs, sales is the most often used measure of performance.
A)True
B)False
Q3) The benefits of a strategic control process in a MNE include
A) more stretching of performance standards
B) greater realism in planning
C) more motivation for business unit managers
D) all of the above.
Q4) Based on most surveys of U.S.-based MNE performance evaluation systems, A) completely separate performance evaluation systems are used for foreign operations.
B) return on investment is the most widely utilized performance evaluation measure.
C) capital and operating budgets are not very useful due to currency differences.
D) very few companies use local currency information for performance evaluation.
Page 16
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Chapter 15: International Auditing Issues
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Sample Questions
Q1) A major development in the global accounting firms in recent years has been the A) decision on the part of the largest firms to concentrate in specific geographic areas rather than attempt to service all markets.
B) merger of some of the largest accounting firms.
C) slowdown in merger activity.
D) all of the above.
Q2) With respect to auditors in the European Union,
A) the 4th Directive states that accountants need to demonstrate education, examination and experience qualifications in order to be able to practice.
B) auditors in one country may be allowed to practice in another country under certain conditions.
C) reciprocity is not extended.
D) auditors are not allowed to engage in consulting due to concerns over independence.
Q3) In Germany, the government certifies the auditor. True A)True B)False
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Page 17
Chapter 16: International Taxation Issues
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Sample Questions
Q1) Assume that a wholesaler purchased goods from a manufacturer was £34.50 (gross price), the VAT is 15%, and the VAT paid by the manufacturer was £4.50. The markup on the merchandise is £10. What is the net amount of VAT paid to Customs and Excise under the British system of computing VAT?
A) £1.5
B) £5.0
C) £46
D) none of the above.
Q2) If the French subsidiary of a U.S. company ships components to its U.S. parent at an arbitrarily low transfer price,
A) the French subsidiary will show relatively high profits.
B) the French government will collect relatively low corporate income tax.
C) U.S. Customs will collect relatively high tariffs.
D) the U.S. parent will show lower pre-tax profits.
Q3) Gains and losses from foreign currency transactions are treated as capital gains in the U.S.
A)True
B)False
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