Test Bank For International Accounting 3rd Edition By Doupnik

Chapter 06

Comparative Accounting

Multiple Choice Questions

1. What term should be used to describe the current economic system in the People’s Republic of China?

A) Communist

B) Socialist market

C) Totalitarian

D) Free enterprise

Answer: B Level: Easy LO: 1

2. What is the basis for the People’s Republic of China’s current economic system?

A) Government ownership of all businesses and economic resources

B) Private ownership of all business enterprises

C) Competition between state-owned enterprises and private business

D) Congressional planning of industrial output and consumption

Answer: C Level: Medium LO: 1

3. Among the world’s nations, where does the People’s Republic of China rank in terms of receiving foreign direct investment?

A) First

B) Fourth

C) Tenth

D) Fifth

Answer: A Level: Easy LO: 1

4. What is China’s policy regarding revaluation of intangible assets?

A) It is encouraged.

B) It is prohibited.

C) It is permitted only if the asset trades in an active market.

D) It has offered no guidance on the issue.

Answer: B Level: Medium LO: 4

5. Which term refers to an affiliate relationship between an accounting/auditing firm and its sponsoring organization?

A) parent/subsidiary

B) hooked up

C) guanxi

D) brother/sister

Answer: B Level: Medium LO: 2

6. What body regulates trading of corporate securities in the People’s Republic of China?

A) National People’s Congress

B) State Council

C) Securities and Exchange Commission

D) Chinese Security Regulatory Commission

Answer: D Level: Easy LO: 3

7. Why is the validity and reliability of financial disclosures of limited importance in the People’s Republic of China (PRC)?

A) China has no corporations with publicly traded stock.

B) The government owns all of the corporate stock traded in the PRC.

C) Most of the stock purchased in the PRC is held for only a short period of time.

D) Most of the stock is rated by the government of the PRC in terms of its quality.

Answer: C Level: Medium LO: 2

8. Which of the following statements is true about accounting in China?

A) Accounting has a long history, dating back thousands of years.

B) The first professional accounting body in the People’s Republic of China was established in 1988.

C) The philosopher Confucius taught about accounting.

D) All of the statements above are true.

Answer: D Level: Medium LO: 2

9. What was the difference between the CICPA and CACPA in the People’s Republic of China (PRC)?

A) These are two translations of a single Chinese professional association from Mandarin to English.

B) The CICPA was the professional association for accountants and the CACPA is the professional association for auditors.

C) The CICPA was the professional association for CPAs in private practice and the CACPA is the professional association for accountants in public practice in the PRC.

D) None of the statements above is true.

Answer: B Level: Medium LO: 2

10. What reason is given for the stagnation of accounting development during the “Cultural Revolution” in China (1966-1976)?

A) Over-simplification of accounting was pursued to make it accessible to a broad populace.

B) There was very little business being transacted in China during the Cultural Revolution.

C) Businesses in China were converting to international accounting standards during this period of time so they stopped developing new standards.

D) Auditors took over the development of accounting practice.

Answer: A Level: Medium LO: 2