Globalization and Accounting Test Preparation
Course Introduction
Globalization and Accounting explores the interplay between global economic integration and accounting practices across different countries. The course examines how international trade, investment, and capital flows impact accounting standards, financial reporting, and regulatory frameworks. Students will learn about the challenges and opportunities brought by the convergence of accounting systems, the role of international institutions such as the IASB and IFAC, and the adoption of International Financial Reporting Standards (IFRS). The course also considers ethical, cultural, and political factors that influence cross-border financial transparency and governance, preparing students to analyze and apply accounting principles in a globalized business environment.
Recommended Textbook
International Accounting and Multinational Enterprises 6th Edition by Lee H. Radebaugh
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693 Flashcards
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Chapter 1: International Accounting and International Business
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37 Verified Questions
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Sample Questions
Q1) The Crusades were important in the development of accounting, because A) the Arabs first developed double entry accounting, which was then adopted by the Italians.
B) the Christians needed double entry accounting to keep track of the relative profitability of the different Crusades.
C) the trade routes shifted the commercial center from Italy to Constantinople D) none of the above.
Answer: D
Q2) The first step into international business is usually the creation of a foreign subsidiary.
A)True
B)False
Answer: False
Q3) During the industrialization period,
A) trade restrictions were eliminated so that countries could trade freely with each other.
B) mass production and standardization of products increased dramatically.
C) the center of commerce shifted from southern Europe to northern Europe.
D) companies located in large domestic markets had to turn to exporting.
Answer: B
Page 3
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Chapter 2: International Accounting Patterns, Culture and Development
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Sample Questions
Q1) 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
Q2) In order to foster international economic and social development the OECD has issued
A) the General Agreement on Tariffs and Trade
B) the G7 accord
C) the Potsdam declaration
D) a Code of Conduct
Answer: D
Q3) Which of the following are cultural values developed by Hofstede?
A) professionalism.
B) statutory control.
C) power distance.
D) conservatism.
Answer: C
Page 4
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Chapter 3: Comparative International Financial Accounting
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Sample Questions
Q1) Which of the following accurately reflects German accounting?
A) There is a tradition of involvement of the accounting profession in the standard setting process.
B) There are no significant legal requirements due to the adherence to a flexible approach to accounting.
C) Due to the heavy social welfare influence in Sweden, taxes are collected aggressively and tax breaks are not allowed.
D) Tax rules tend to dominate decisions on accounting issues.
Answer: D
Q2) The Netherlands is famous for its business economics approach to accounting.
A)True
B)False
Answer: True
Q3) The securities markets are the dominant influence on accounting regulation in the United States.
A)True
B)False
Answer: True
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Chapter 4: Comparative International Financial Accounting
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Sample Questions
Q1) Chinese government controls the accounting regulation and auditing.
A)True
B)False
Q2) Which of the following accurately reflects Thai accounting?
A) Only transportation companies are required to file or publish annual accounts.
B) The government has final approval on accounting regulations.
C) Independent accounting measurement approaches do not consider IAS standards.
D) It was the only Asian country which did not make any reforms after the Asian "flu".
Q3) India
A) has a government controlled standards body
B) defers accounting standards to the IASC
C) has an independent Accounting Standards Board
D) has expressed a bias to secrecy
Q4) Mexico's current standard setting
A) ignores social accounting reporting.
B) was originally based upon the IFRS law system
C) follows tax law.
D) is influenced by US GAAP because of NAFTA.
Page 6
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Chapter 5: International Financial Statement Analysis
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Sample Questions
Q1) It is possible to determine the degree of conservatism of U.K versus U.S. GAAP, because
A) British firms must disclose the difference due to London Stock Exchange requirements.
B) British firms voluntarily disclose the difference in order to attract U.S. investors.
C) British firms who list an American Depositary Receipt (ADR) or an actual share in the United States must disclose the difference in earnings.
D) all of the above.
Q2) When comparing the relative conservatism of U.S. versus foreign companies,
A) U.S. firms tend to be less conservative than Japanese firms, because Japanese firms are more heavily influenced by tax law.
B) U.S. firms are more conservative than Continental European firms due to the dominance of capital market disclosures in the United States.
C) European firms are less focused on tax law than are the U.S. firms.
D) British firms are more conservative than U.S. firms, because they tend to take goodwill to income rather than to equity as is the case in the United States.
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Chapter 6: International Transparency and Disclosure
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Sample Questions
Q1) Subsequent to the Asian "flu" financial crisis, voluntary disclosure increased in Indonesia.
A)True
B)False
Q2) Competitive disadvantage
A) of increased disclosure will likely increase business incentives in the long term
B) affects the cost of data collection and processing.
C) is the most important cost factor in voluntary disclosures
D) increases direct disclosure costs
Q3) Which of the following are considered by managers to generate the greatest cost of competitive disadvantage?
A) line of business profits, narrowly defined.
B) inflation adjusted profits.
C) a description of organizational structure.
D) quarterly interim financial statements.
Q4) There is a positive correlation between corruption and accounting standards.
A)True
B)False
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Page 8
Chapter 7: International Accounting Standards and Global Convergence
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Q1) 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.
Q2) A main information concern of trade unions is
A) transfer pricing
B) inflation data
C) production quotas
D) stock prices
Q3) The SEC does not now require the reconciliation of IFRS financial statements to US GAAP.
A)True
B)False
Q4) Pressures for harmonization of international accounting as means to achieve comparability are growing.
A)True
B)False
Page 9
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Chapter 8: International Business Combinations, Goodwill and Intangibles
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Sample Questions
Q1) Proportional consolidation involves
A) including a proportion of the firm's income and equity.
B) using the cost but not the equity method.
C) consolidating the ownership share of assets and liabilities on a pro-rata basis.
D) having a proportion of companies in a country (usually the internationally-traded companies) consolidate their financial statements.
Q2) According to the efficient market hypothesis as it relates to goodwill,
A) share prices do not accurately reflect all publicly available information.
B) accounting treatment of intangibles is not as important as the disclosure of information on how they are accounted for.
C) goodwill should be set up as an asset and amortized.
D) goodwill should be written off to reserves.
Q3) The advantage of setting up brands as an asset without amortization is that
A) brand names have value and are being maintained through advertising.
B) it is relatively easy to assess the future value of well-known brands.
C) it is consistent with accrual accounting.
D) it is the most conservative approach to accounting for brands.
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Page 10
Chapter 9: International Segment Reporting
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Sample Questions
Q1) Current international accounting standards look to the company's organizational structure and internal reporting system as the basis for identifying segments.
A)True
B)False
Q2) According to predictive ability tests of segment reports,
A) it has clearly been proven that users use disaggregated information to make forecasts.
B) forecasts based on line of business data are not as accurate as those based on geographic segments.
C) forecasts based on segment earnings are more accurate than those based on segment sales.
D) segment information is not useful for small firms.
Q3) Segment-based forecasts
A) underperform consolidated-based forecasts
B) out perform consolidated-based forecasts
C) do not depend on firm size
D) do not apply to OECD MNEs
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Chapter 10: Foreign Currency Transactions and Translation
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Sample Questions
Q1) The exchange rate which is a contract rate between the company and the foreign exchange trader at the bank for delivery in the future is the
A) spot rate
B) forward rate.
C) future spot rate.
D) current rate.
Q2) If a U.S.-based company has a subsidiary in Germany, and the German subsidiary imports components from Britain, the British pound would most likely be considered (from the standpoint of the German subsidiary)
A) the local currency.
B) a foreign currency.
C) the functional currency.
D) the reporting currency.
Q3) The currency of the country where the foreign company is operating is the A) base currency.
B) parent currency.
C) local currency.
D) third country currency.
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12
Chapter 11: International Accounting for Price Changes
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Sample Questions
Q1) Assume that Costa Plc buys a machine in 2003 for $200,000 when the general price index is 150. At the end of 2006, the index has risen to 210 and the current cost of the machine is $300,000. What is the unrealized holding gain in current cost terms?
A) $100,000
B) $220,000
C) $120,000
D) $ 80,000
E) $ 20,000
F) $280,000
Q2) Shared values and attitudes
A) affect business and managerial behavior, which is similar from country to country due to inflation.
B) are so deeply ingrained that they are usually not influenced by world wide inflation forces.
C) are also known as culture.
D) all of the above.
Q3) Netherlands is well known for the development of replacement value accounting.
A)True
B)False
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Page 13
Chapter 12: Corporate Governance and Control of Global Operations
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Q1) A multidomestic strategy
A) allows each subsidiary abroad to operate relatively independently of other subsidiaries.
B) occurs when an MNE pits itself against competitors on a global basis.
C) results in highly centralized decision-making.
D) does not allow products to vary from one market to another.
Q2) A centralized, globally scaled strategy is symbolic of a
A) multidomestic strategy.
B) global strategy.
C) transnational strategy.
D) geocentric strategy.
Q3) Shareholders
A) directly control MNE operations
B) vote to hire and fire management
C) receive dividends and management appoints the board of directors
D) vote for board of directors who hire and fire management
Q4) In practice, control is shifting form the formal to the more informal ways of coordinating activities.
A)True
B)False
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Chapter 13: Foreign Exchange Risk Management
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Sample Questions
Q1) The forward exchange rate is
A) the rate quoted for delivery within two business days.
B) usually higher than the spot rate.
C) a contract rate between the corporation and the foreign exchange trader at the bank.
D) usually at a premium for sales and a discount for purchases.
Q2) If a U.S exporter were to receive payment in U.S. dollars from a British importer
A) there is a transaction exposure
B) there is an economic exposure
C) there is no exposure
D) there is a translation exposure
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 155 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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Chapter 14: International Budgeting and Performance Evaluation
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Sample Questions
Q1) In transferring the domestic performance evaluation system into the international environment, MNEs
A) are creating a more expensive performance evaluation system.
B) miss significant foreign events that could affect performance.
C) are taking into consideration that there are strategic differences in subsidiaries.
D) are sacrificing comparability for understandability.
Q2) A performance evaluation tool that measures after-tax operating profit minus the total annual cost of capital is
A) return on investment.
B) return on assets.
C) economic value added.
D) residual income.
Q3) A challenge for the strategic control process is A) clarity in planning
B) the process gets big and bureacratized C) nonfinancial measures
D) annual operating plans
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Page 16
Chapter 15: International Auditing Issues
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Sample Questions
Q1) Sarbanes-Oxley prohibits all of the following services to audit clients except A) tax
B) bookkeeping
C) financial information systems design
D) internal audit outsourcing
Q2) In terms of educational experience to become a certified accountant,
A) the French rely on the apprenticeship approach.
B) the United States use university training as a prerequisite for certification.
C) the Dutch do not rely very much on university training of accountants.
D) the British have a dual approach that uses different styles of universities to train accountants.
Q3) The quality of the auditing profession in each country is a function of
A) the reputation of the accounting and auditing profession
B) the quality of the educational system
C) the certification process
D) all of the above
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Chapter 16: International Taxation Issues
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Sample Questions
Q1) The value added tax is a (an)
A) corporate income tax.
B) withholding tax.
C) indirect tax.
D) tax credit.
Q2) In the US, for foreign corporations that are not CFC
A) the deferral of income applies when it is foreign-based company shipping income
B) income is not taxable to the U.S parent corporation until a dividend is declared
C) the deferral of income includes bribes paid in foreign countries
D) requires that income be earned from the sale or purchase of goods produced inside the country where a tax haven corporation is located.
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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