Transnational Corporations Accounting Final Exam
Course Introduction
Transnational Corporations Accounting explores the accounting principles, standards, and practices unique to corporations operating across multiple national jurisdictions. The course examines the complexities of financial reporting, consolidation, and performance measurement for multinational entities, with a focus on issues such as currency translation, international taxation, transfer pricing, and compliance with global accounting standards like IFRS and US GAAP. Students will gain insight into the regulatory environments of different countries, the challenges of managing financial information across borders, and the strategic role of accounting in decision-making for transnational operations.
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) Double entry bookkeeping quickly had world-wide acceptance, as the British accepted it in the 1400s.
A)True
B)False
Answer: False
Q2) The major early influence of Florin, Italy, on accounting was
A) the double entry books of the Massari (treasury officials), which date from 1340.
B) the spread of double entry accounting.
C) the development of large associations and partnerships that pooled capital.
D) accounting records with pretty pictures.
Answer: C
Q3) Napoleon found the Italian system of accounting to be inefficient.
A)True
B)False
Answer: False
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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Sample Questions
Q1) A major accounting value that relates to enforcement and authority of accounting systems is
A) statutory control.
B) secrecy.
C) optimism.
D) conservatism.
Answer: A
Q2) According to the deductive approach to accounting classification,
A) accounting practices are analyzed and used to develop accounting groups.
B) international accounting groups are developed by linking environmental factors to national practices.
C) it is impossible to compare countries due to cultural differences.
D) disclosure groups are not as significant as are measurement groups in classifying countries.
Answer: B
Q3) One of Hofstede's societal values is "uncertainty avoidance."
A)True
B)False
Answer: True
Page 4
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Chapter 3: Comparative International Financial Accounting
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35 Verified Questions
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Sample Questions
Q1) Italy has quickly adopted EU directives in order to support major family or state-owned enterprises.
A)True
B)False
Answer: False
Q2) Which of the following countries prepares statements according to US GAAP?
A) France
B) Japan
C) Netherlands
D) Italy
Answer: B
Q3) Which of the following accurately reflects Swiss accounting?
A) Only railways are required to file or publish annual accounts.
B) Legal requirements are fairly extensive in comparison with the Germans.
C) The true and fair view has been adopted as the primary factor to consider in accounting measurement.
D) Swiss accounting is among the most conservative in Europe.
Answer: D
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Chapter 4: Comparative International Financial Accounting
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Sample Questions
Q1) Which of the following pair of countries has similar accounting systems?
A) United States and Switzerland
B) Czech Republic and Poland
C) Brazil and Italy
D) Indonesia and Germany
Q2) 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.
Q3) Malaysia's accounting system is not of a British origin.
A)True
B)False
Q4) Many of Russia's soviet-style production units continue to exist with losses.
A)True
B)False
Q5) Thai accounting standards must be approved by the government.
A)True
B)False
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Chapter 5: International Financial Statement Analysis
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Sample Questions
Q1) Intangibles, such as brands, publishing rights, and patents are generally capitalized except in
A) the United States.
B) the Asian countries.
C) Switzerland
D) Sweden.
Q2) An earnings adjustment index based on US GAAP showing the comparative impact of international accounting differences on earnings
A) has Germany at the top B) has Japan on the bottom
C) has the U.S. at the top D) has the U.K. at the bottom
Q3) A key international financial analysis question is the extent of the impact of accounting differences on earnings assessments.
A)True
B)False
Q4) Sweden companies have a tendency to be more conservative than the United States.
A)True
B)False
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Chapter 6: International Transparency and Disclosure
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Sample Questions
Q1) 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
Q2) Which country provides segment disclosure on a basis of managerial organization
A) UK
B) Japan
C) Italy
D) US
Q3) In terms of Research and Development (R&D) and capital investments,
A) few firms disclose R&D information.
B) Germany, Japan, the Netherlands, Switzerland, and U.K. all exhibit higher levels of disclosure in both R&D and investment programs than most other countries.
C) all firms are required by the U.N. to disclose their capital investment program, and compliance is quite high.
D) it is very common for companies to disclose their investment program by geographical area.
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8
Chapter 7: International Accounting Standards and Global Convergence
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Sample Questions
Q1) Trade unions want accounting information
A) for cost-volume profit analyses
B) to make sure MNEs pay proper taxes
C) for contract bargaining purposes
D) to facilitate outsourcing
Q2) The Vredeling proposals called for the regular provision of information about MNE subsidiaries.
A)True
B)False
Q3) 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.
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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) Parent company balance sheets
A) are not permitted for U.K. companies.
B) usually accompany consolidated statements in the United States.
C) are always provided by U.K. companies in addition to a consolidated balance sheet and income statement.
D) are not common in continental Europe.
Q3) The countries with immediate write-off of goodwill take the advantage that future earnings will be higher.
A)True
B)False
Q4) The trend of IASB accounting for combinations is becoming
A) less restrictive
B) no trend is present
C) dependent on business cycles
D) more restrictive
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Chapter 9: International Segment Reporting
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Sample Questions
Q1) A problem with segment disclosure is that
A) IAS 14 has been rejected by MNEs
B) there are too many segments
C) segment reporting is only within the UK scope of the audit
D) management will be disclosing its own view of segments with significant differences in risk and return
Q2) Excessive costs of segmental disclosure has doubtful validity.
A)True
B)False
Q3) The IASB's segment reporting standard IAS 14
A) gives management more discretion to identify geographic segments.
B) bases its requirements on the company's organization structure and internal reporting system.
C) contradicts proposals for reform issued by the FASB.
D) restricts the criteria for identifying segments to assessing "risks and returns".
Q4) External yardsticks are available for most diversified MNEs.
A)True
B)False
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11
Chapter 10: Foreign Currency Transactions and Translation
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Sample Questions
Q1) According to the current rate method of translation,
A) Transaction gains and losses are taken to income, but translation gains and losses are taken to the owners' equity section of the balance sheet.
B) Transaction and translation gains and losses are taken to the income statement.
C) Transaction and translation gains and losses are taken to the owners' equity section of the balance sheet.
D) Transaction gains and losses are taken to the owners' equity section of the balance sheet, but translation gains and losses are taken to the income statement.
Q2) The translation method which uses as the basis for its logic that financial assets and liabilities have similar attributes and should be translated at the same exchange rate is the
A) current-noncurrent method.
B) monetary-nonmonetary method.
C) temporal method.
D) current rate method.
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Chapter 11: International Accounting for Price Changes
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Sample Questions
Q1) Professor Limperg believed
A) in general purchasing power accounting
B) that income is a function of revenues and replacement values
C) in a weak relation between economics and accounting
D) in the gold standard
Q2) Which of the following countries have not experienced hyperinflation
A) Russia
B) Brazil
C) Mexico
D) United Kingdom
Q3) Netherlands is well known for the development of replacement value accounting.
A)True
B)False
Q4) General purchasing power accounting
A) has continued use in the United States
B) has continued use in Britain
C) has switched to replacement value accounting
D) has been in use in South America
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Page 13
Chapter 12: Corporate Governance and Control of Global Operations
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Sample Questions
Q1) Internal governance mechanisms include
I..ownership structure
II..legal system
A) only I
B) only II
C) either I or II
D) neither I or II
Q2) A strategy where corporate assets are dispersed, interdependent and specialized 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
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Chapter 13: Foreign Exchange Risk Management
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Sample Questions
Q1) An option where the holder has the right to sell foreign currency to the writer of the option is a
A) forward option.
B) put option.
C) call option.
D) swap option.
Q2) In the case of a forward contract used to hedge a foreign currency commitment,
A) the gain or loss on the contract should be deferred and included in the measurement of the related foreign currency transaction.
B) the gain or loss on the contract should be recognized in the period in which the exchange rate changes.
C) the premium or discount must be written off over the life on the contract.
D) the related foreign currency transaction will be recorded on the books at the rate in effect when title passes.
Q3) How much cash will RadCo International have to pay?
A) $297,050
B) $296,950
C) $297,250
D) $297,400
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Page 15
Chapter 14: International Budgeting and Performance Evaluation
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Sample Questions
Q1) There have been few good studies on the use of local currency versus parent currency in establishing budgets. However, the Appleyard study of a small sample of British firms found that
A) most firms set their budgets in local currency.
B) most firms set their budgets in sterling.
C) most firms set their budgets in both sterling and the local currency.
D) most firms set their budgets in the local currency, although all of them saw the final results in sterling.
Q2) Which of the following does not accurately describe economic value added.
A) It is after-tax operating profit minus the total annual cost of capital.
B) It includes the cost of debt and the cost of equity.
C) It is a measure of the value added or depleted from shareholder value in one period.
D) It requires that different costs of capital be used in different country settings.
Q3) For U.S. MNEs, ROI is one of the most often used measures of performance.
A)True
B)False
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Page 16
Chapter 15: International Auditing Issues
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Sample Questions
Q1) The IFAC is active in all of the following areas except
A) education
B) ethics
C) metric standards
D) information technology
Q2) The IFAD was formed
A) in order to improve Internet E-commerce
B) so as to reduce the dependence on the SEC
C) after the late 90's Asian financial crisis
D) to control dumping
Q3) IFAC's 2000 initiative is
A) supposed to raise audit fees
B) designed to raise global audit standards
C) ease the tax collection problems on MNEs
D) likely to increase Internet E-commerce
Q4) Auditors are generally appointed by
A) shareholders at the annual meeting
B) local country government
C) management
D) UN
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Chapter 16: International Taxation Issues
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Sample Questions
Q1) All of the following foreign corporations derive more than 50 percent of their income from subpart F income. Which of them must recognize the subpart F income in the year in which it is earned? The percentage ownership of each shareholder is provided in parenthesis.
A) U.S. shareholder A (10), Foreign shareholder B (20), U.S. shareholder C (35), U.S. shareholder D (5), Foreign shareholder E (15), U.S. shareholder F (15)
B) U.S. shareholder A (5), Foreign shareholder B (40), U.S. shareholder C (15), U.S. shareholder D (15), Foreign shareholder E (10), U.S. shareholder F (15)
C) U.S. shareholder A (50), Foreign shareholder B (20), U.S. shareholder C (5), U.S. shareholder D (5), Foreign shareholder E (15), U.S. shareholder F (5)
D) all of the above since subpart F income exceeds 50 percent of total.
Q2) The taxation of both domestic and foreign source income is known as
A) double taxation.
B) the worldwide approach.
C) effective vs. statutory.
D) a tax incentive.
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