Advanced Financial Accounting
Chapter Exam Questions
Course Introduction
Advanced Financial Accounting delves into complex financial reporting issues faced by business entities, including multinational companies and consolidated groups. The course emphasizes the preparation and interpretation of financial statements in accordance with advanced accounting standards, focusing on topics such as consolidations, foreign currency transactions, partnership accounting, and accounting for nonprofit organizations. Students will also explore emerging issues in financial reporting, ethical considerations, and the impact of regulatory frameworks on financial disclosures, preparing them for high-level decision-making and analysis in professional accounting settings.
Recommended Textbook
International Accounting 4th Edition by Timothy Doupnik
Available Study Resources on Quizplus
15 Chapters
899 Verified Questions
899 Flashcards
Source URL: https://quizplus.com/study-set/2675
Page 2
Chapter 1: Introduction to International Accounting
Available Study Resources on Quizplus for this Chatper
59 Verified Questions
59 Flashcards
Source URL: https://quizplus.com/quiz/53389
Sample Questions
Q1) What is the term used to describe the possibility that a foreign currency will decrease in U.S.dollar value over the life of an asset such as Accounts Receivable?
A)Foreign exchange translation
B)Foreign exchange risk
C)Hedging
D)Foreign currency options
Answer: B
Q2) Why would a company want its stock cross-listed on the stock exchanges of several countries?
A)To make financial reporting less burdensome for its accounting firm
B)In order to use International Financial Reporting Standards
C)To gain access to more financial resources than are available in its home country
D)All of the above
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Worldwide Accounting Diversity
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/53388
Sample Questions
Q1) What term is used to describe accounting standards that encourage risk-taking in financial reporting?
A)Optimism
B)Conservatism
C)Professionalism
D)Transparency
Answer: A
Q2) According to Gray's framework for accounting system development, which of the following is directly affected by ecological influences, such as geography, demography, and technology?
A)Accounting values
B)Accounting systems
C)Institutional consequences
D)Cultural dimensions
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: International Convergence of Financial Reporting
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/53387
Sample Questions
Q1) Which of the following qualitative characteristics make financial statement information useful?
A)Relevance
B)Understandability
C)Reliability
D)All of the above.
Answer: D
Q2) Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia joined the European Union in 2004.Besides membership in the EU, what do these countries have in common?
A)They share a common language.
B)They were members of the former Soviet bloc.
C)All were under the political control of Germany until the early 1960's.
D)They were former British colonies until after World War II.
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: International Financial Reporting Standards:
Part I
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/53386
Sample Questions
Q1) Under IAS 38, which of the following items might qualify for capitalization as internally generated intangible assets?
A)Brands
B)Publishing titles
C)Market share
D)Customer lists
Q2) Under IAS 10 (Events after the Reporting Period), adjusting events that occur after the balance sheet date are:
A)recognized through adjustment of the financial statements.
B)disclosed in a footnote only.
C)treated as a prior period adjustment.
D)not disclosed, since they occurred after the fact.
Q3) Under IAS 38, which of the following items is specifically EXCLUDED from being recognized as an internally generated intangible asset?
A)Computer software costs
B)Copyrights
C)Customer lists
D)Motion picture films
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: International Financial Reporting Standards:
Part II
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/53385
Sample Questions
Q1) Under IAS 19, Employee Benefits, which of the following benefits are covered?
A)Compensated absences and bonuses
B)Post-employment benefits
C)Deferred compensation and disability benefits
D)All of the above
Q2) Under IAS 39, Financial Instruments: Recognition and Measurement, which of the following is NOT a category into which a financial asset must be classified?
A)Property, plant, and equipment
B)Held-to-maturity investments
C)Loans and receivables
D)Available-for-sale financial assets
Q3) How does U.S.GAAP require the prior service cost related to retirees to be recognized?
A)Amortize over the average remaining working lives of active employees
B)Recognize immediately
C)Don't recognize at all
D)Amortize over remaining expected life of the retirees
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Comparative Accounting
Available Study Resources on Quizplus for this Chatper
80 Verified Questions
80 Flashcards
Source URL: https://quizplus.com/quiz/53384
Sample Questions
Q1) What must large Japanese corporations report for years ending after 2004 due to recent amendments to the Japanese commercial code?
A)Statement of changes in financial position
B)Consolidated financial statements
C)Retained earnings statement
D)Cash flow statement
Q2) Privatization of Mexican businesses has been encouraged by:
A)North American Free Trade Agreement (NAFTA).
B)governmental attempts to improve long-term economic growth.
C)loosening restrictions on foreign investment.
D)All of the above
Q3) What links the components of a Japanese keiretsu?
A)A governmental agency
B)A common industry affiliation
C)A common market
D)A bank
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Foreign Currency Transactions and Hedging
Foreign Exchange Risk
Available Study Resources on Quizplus for this Chatper
60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/53383
Sample Questions
Q1) What term is used to describe the circumstances under which Amazing Corporation is entering the forward contract?
A)Hedge of an unrecognized foreign currency firm commitment
B)Hedge of a recognized foreign-currency-denominated asset
C)Hedge of a forecast foreign-currency-denominated transaction
D)Hedge of net investment in foreign operations
Q2) Under U.S.GAAP, what is the proper treatment of unrealized foreign exchange gains?
A)They should be deferred on the Balance Sheet until cash is received.
B)The principle of conservatism requires that they should never be recognized.
C)They should not be recorded until cash is received and the exchange transaction is completed.
D)They should be recognized in income on the date the exchange rate changes.
Q3) What is a foreign currency transaction?
A)It is another name for an international transaction.
B)It is a transaction that involves payment at a date sometime in the future.
C)It is a business deal denominated in a currency other than a company's domestic currency.
D)It is an economic event measured in a currency other than U.S.dollars.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Translation of Foreign Currency Financial Statements
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/53382
Sample Questions
Q1) Which of the following methods for translating foreign currency financial statements is required under IAS 21?
A)Current rate method.
B)Temporal method.
C)Current rate method or temporal method, depending on the functional currency of the subsidiary.
D)Current rate method or temporal method must be chosen by management of the parent.
Q2) Which of the following is a limitation of using the temporal method for translating foreign currency financial statements?
A)The translated asset and liability amounts have no meaningful interpretation.
B)The translation adjustment will usually have a negative impact on income.
C)Financial ratios after translation will be distorted.
D)All of the above are limitations of the temporal method.
Q3) What is another term for "balance sheet exposure?"
A)Transaction exposure
B)Exchange exposure
C)Translation exposure
D)Negative exposure
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Additional Financial Reporting Issues
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/53381
Sample Questions
Q1) What term does IAS 11 use for "a contractual arrangement whereby two or more parties having joint control have right to the net assets of the arrangement"?
A)Merger
B)Consolidation
C)Joint venture
D)Business combination
Q2) Under IFRS 3, which concept must be used to report the assets and liabilities of an acquired company on the parent company financial statements?
A)Parent company concept
B)Equity concept
C)Entity concept
D)Historical cost concept
Q3) According to IAS 27, how can effective control be achieved without owning more than 50% of another company's voting shares?
A)Representation on the company's board of directors
B)Being the primary entity exercising voting rights
C)Through a contract between the entities
D)All of the above may result in control by one corporation over another.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Analysis of Foreign Financial Statements
Available Study Resources on Quizplus for this Chatper
60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/53380
Sample Questions
Q1) What steps can be taken by an analyst to alleviate the timeliness problem encountered in comparing financial statements between countries that have different time frames for reporting?
A)Use interim financial statements instead of annual reports.
B)Convert all financial statement items to a common year using current exchange rates.
C)Request financial statements from foreign corporations as soon as they are available.
D)Nothing can be done by the analyst do deal with this challenge.
Q2) Which of the following is a reason for analyzing the financial statements of foreign corporations?
A)Making credit decisions about foreign customers
B)Evaluating international business combinations
C)Diversifying an investment portfolio
D)All of the above are reasons for analyzing foreign financial statements.
Q3) Translating foreign financial statements into a convenience language:
A)eliminates all readability problems for a financial analyst.
B)does not always clarify accounting terminology unique to a particular country.
C)is easily and inexpensively done when the convenience language is English.
D)is required for all multinational corporations.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: International Taxation
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/53379
Sample Questions
Q1) What is a tax holiday?
A)A trip made to tax havens to buy goods free of sales tax.
B)The time between the date of filing the corporate income tax return and the date when taxes are due to be paid.
C)This is a period of time when corporations are relieved of paying various taxes.
D)This is the deadline for filing federal tax returns.
Q2) What is meant by the term "thin capitalization?"
A)Undervaluing foreign investments
B)Using as little debt financing as a country will allow
C)Minimizing the amount of equity capital used to fund foreign operations
D)Creating transparency in the methods used to fund foreign operations
Q3) What causes double taxation?
A)A taxpayer being subject to tax laws in multiple jurisdictions
B)Profits increasing excessively from year to year
C)Penalties imposed by a taxing authority for non-payment of taxes
D)None of the above
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: International Transfer Pricing
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/53378
Sample Questions
Q1) What is an ad valorem import duty?
A)A requirement that a parent buys the output of a foreign subsidiary
B)A tariff charged by a government on the invoice price of goods coming into its country
C)A requirement that a subsidiary acquires its material inputs from a foreign parent
D)A tax charged on intercompany transactions
Q2) In keeping with Internal Revenue Code, Clarence Company transfers goods to Marguerite Corporation, its foreign subsidiary, at the price Marguerite will sell the product to its customers, less the industry's average gross profit margin of 30%.What method of transfer pricing is Clarence using?
A)Cost-plus method
B)Comparable uncontrolled price method
C)Comparable profits method
D)Resale price method
Q3) What is the primary advantage of a negotiated transfer price?
A)It is objectively determined.
B)It reflects managers' ability to control cost.
C)It is based on arms-length transactions with unrelated parties.
D)It preserves managerial autonomy to make decisions.
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Strategic Accounting Issues in Multinational Corporations
Available Study Resources on Quizplus for this Chatper
71 Verified Questions
71 Flashcards
Source URL: https://quizplus.com/quiz/53377
Sample Questions
Q1) Which of the following factors is generally considered in performing the environmental analysis phase of strategy formulation?
A)Competitors
B)Government regulations
C)Customer demand
D)All of the above
Q2) Why is it believed that Japanese companies prefer the payback period over the discounted cash flow methods for evaluating capital investment alternatives?
A)It is consistent with their corporate strategy of investing in new technology.
B)Japanese companies compete using very short product life cycles.
C)Cash flows over a long period of time are difficult to predict with much accuracy.
D)All of the above
Q3) Holding managers accountable only for the factors over which they have control is called:
A)management control systems.
B)responsibility accounting.
C)decentralization.
D)centralization.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Comparative International Auditing and Corporate Governance
Available Study Resources on Quizplus for this Chatper
62 Verified Questions
62 Flashcards
Source URL: https://quizplus.com/quiz/53376
Sample Questions
Q1) Why has corporate financial reporting in China not resembled reporting in Anglo-Saxon countries?
A)There was a lack of distinction between business functions and social service functions in Chinese reporting entities.
B)China has only recently become involved in international trade.
C)The concept of accounting was only introduced to China recently and therefore it has not had time to develop properly.
D)The 1960's Cultural Revolution eliminated the requirements that Chinese corporations provide information on business operations.
Q2) The OECD believes which group in a multinational corporation should oversee the financial reporting function to ensure that appropriate controls are in place to safeguard information integrity?
A)Mid-level management
B)External auditors
C)Board of directors
D)Information systems department
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: International Corporate Social Reporting
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/53375
Sample Questions
Q1) What was a key finding of the 2007 Stern Report in the United Kingdom on the Economics of Climate Change?
A)The costs of extreme weather over the next few decades could reach 0.5% to 1% of world GDP per annum.
B)Climate change should promote forced savings over the next few decades.
C)Climate change bears little, if any correlation to economic disruption.
D)The costs of extreme weather over the next few decades could reach 10% to 15% of world GDP per annum.
Q2) The discovery of toxic waste dumps across the United States in the 1980s led to passage of what legislation?
A)Offshore drilling
B)Superfund
C)Sarbanes-Oxley
D)Gramm-Rudman
Q3) Carbon trading is underpinned by what product?
A)Carbon neutrality
B)Carbon credits
C)Carbon taxes
D)Carbon offsets
To view all questions and flashcards with answers, click on the resource link above.
Page 17