16) Why is auditing a multinational corporation potentially more difficult than auditing an entity
that has only domestic operations?
A) Language differences
B) Cultural differences
C) Multiple sets of accounting standards
D) All of these answers are correct.
TE
17) What is the entry point for most companies into the world of international business?
A) Transfer pricing
B) Exporting
C) Foreign direct investment
ST
D) Cross-listing on international stock exchanges
18) For a U.S. multinational corporation, consolidating the financial statements of foreign
subsidiaries requires two steps. First, the foreign subsidiary's statements must be restated
according to the U.S. GAAP. The next step is to:
SO
A) convert the account balances into U.S. dollars.
B) determine the exchange rate gain or loss.
C) calculate the translation adjustment.
D) restate the income using international accounting standards.
LU
19) When setting transfer prices among international subsidiaries, the corporation must:
A) make sure that the total tax is minimized.
B) ensure that the transfer prices are acceptable to the taxing authorities in the countries
involved.
C) do whatever it takes to make taxes paid in the United States as low as possible.
TI
D) follow the transfer pricing policy used for domestic transfers.
20) What is the primary provision of the Foreign Corrupt Practices Act?
O
A) To specify which corrupt practices are acceptable under U.S. law
B) To specify how to account for bribes paid by U.S. corporations to obtain business
from foreign governments
N
C) To inform internal auditors how to detect fraud in multinational corporations
D) To prohibit U.S. companies from paying bribes to foreign government officials to
obtain business
4
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