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AIT707 Mid-term Exam with Solutions

AIT707 Mid-term Exam with Solutions - INSTRUCTIONS Answer...

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INSTRUCTIONS Answer the multiple choice and problems (narrative questions, etc.) in you examination booklet using the instructions for each question. Address all the issues required in each of the following questions. Each question is worth the stated value. Be sure that all the key points are covered. Be brief and concise. PART 1 - MULTIPLE CHOICE 10 MARKS Select the best answer for each of the following unrelated items. Answer each of these questions by giving the letter of your choice. For example, if (A) is the best answer for question 1, write “1 (A)”. If more than one answer is given for an item then that item will not be marked. Incorrect answers will be marked as zero. No account will be taken for any explanations you offer. Each question is worth one mark. 1. Which of the following would not be a reason to obtain a greater understanding of accounting practices in other nations? a. Financial Results are disclosed in different currencies. b. One needs to be aware of differing disclosure requirements from nation to nation, as this impacts the preparation of Financial Statements. c. Income-smoothing may have affected a Foreign Subsidiary’s results; such smoothing practices are not permitted in North America. d. Departures from the Historical Cost Principle may be possible in other nations. Ans: A 2. Which of the following is/are LEAST likely to influence a country’s accounting standards? 3. Which of the following bodies is responsible for the harmonization of international accounting standards? 4. Which of the following does NOT constitute a Business Combination?
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5. Which of the following statements is TRUE? a. All unrealized gains and losses on equity investments are flow through Other Comprehensive Income. b. Unrealized gains and losses on held-for-trading securities are included in Other Comprehensive Income. c. Unrealized gains and losses on available-for-sale investments are included in Other Comprehensive Income. d.Other Comprehensive Income is included in Retained Earnings. Ans: C
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