Mid IA

Which of the following is NOT true about Luca Pacioli?

• A. He started the first accounting program in Italy.

• B. He was not the person who first developed double entry accounting.

• C. He was a Franciscan monk.

• D. He was not a merchant or bookkeeper.

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.

• E. All of the above

ABCO Corporation has its two wholly owned subsidiaries, Delta and Parry, in Country A and Country B, respectively. Parry purchases a part for its production from Delta. Country B has a higher tax rate than Country A. To minimize the corporation's overall income tax, how should ABCO set its transfer prices between its subsidiaries?

• A. Delta should sell parts to Party at low prices.

• B. Delta should sell parts to Parry at high prices.

• C. It doesn't matter what transfer price is used because the subsidiaries are part of the same company.

• D. Transfer pricing does not affect the total tax paid by the corporation.

• E. All of the above

Which of the following is an advantage of having a single set of accounting standards used worldwide?

• A. Reduced number of multinational corporations on the NYSE

• B. Increased power of the FASB

• C. Reduced accounting costs for multinational corporations

• D. Increased diversity of accounting methods used by multinational corporations

• E. All of the above

5. Which of the following is an example of a greenfield investment?

• A. Toyota, a Japanese automaker, builds an assembly plant in Ohio

• B. Nike contracts with a footwear company in China to make athletic shoes.

• C. A Chinese oil company buys a U.S. oil company.

• D. Daimler, a German automaker, merges with Chrysler, a U.S. automaker

• E. All of the above

6. Assume that ABCO is a U.S. multinational corporation. Its foreign subsidiaries must report income in their respective countries according to GAAP in those countries. How must ABCO report its consolidated financial statements?

• A. ABCO must choose any one country's accounting standards and combine the subsidiary reports into the parent company's statements using that one country's GAAP.

• B. Since ABCO is a U.S. corporation, U.S. generally accepted accounting principles (US GAAP) must be used for the consolidated financial statements.

• C. Since the company is operating in several different countries, International Financial Reporting Standards (IFRS) must be used for the consolidated financial statements.

• D. On the consolidated financial statements, each subsidiary's financial results must be shown in the currency of the country where the subsidiary is located.

• E. All of the above

30. Under a joint exposure draft issued by the IASB and FASB, what is one of the most significant proposals?

• A. IFRS and U.S. GAAP would have identical quantifiable criteria for lease classification.

• B. Leases would no longer be classified as finance or operating.

• C. Lessors would recognize income immediately at the inception of the lease.

• D. There would be no lease disclosure required in the notes to the financial statements.

• E. None of the above

7. As per US corporate tax laws, which of the following statements is true of a company that is

• A. The credit for the amount of taxes already paid is given to arrange for double taxation.

• B. The credit for the amount of taxes already paid is given to charge for the taxes not paid in the home country.

• C. The credit for the amount of taxes already paid is given to refund the taxes already paid in the home country.

• D. The credit for the amount of taxes already paid is given to give relief for the taxes paid in foreign country.
  

• E. All of the above

8. What is the advantage of foreign direct investment?

• A. Helps in retaining advantage over competition

• B. Reduces transportation costs

• C. Creates a company tailored to a foreign market's unique characteristics

• D. All of the above

• E. None of the above

9. Which of the following accurately reflects environmental influences on accounting?

• A. the social (employee) climate has had a strong impact on accounting in the United States, in contrast to Europe where the social climate is almost irrelevant.

• B. economic factors have proven to be very influential on accounting, but political factors are not.

• C. taxation is an important factor in situations where accounting systems are strongly influenced by state objectives.

• D. where there is a more developed accounting profession, there is likely to be centralized and uniform accounting systems, as opposed to judgemental-based systems.

• E. All of the above