Social Science Economics Finance
Chapter 8 International Accounting (TAX) exam with
question and answer 100% correct
Students also studied
C
Terms in this set (66)
What is the optimal tax objective for B
multinational corporations?
A. Minimize domestic taxes paid
on worldwide income
B.Minimize worldwide taxes paid, within
the limitations of applicable tax law
C. Minimize the credit for worldwide taxes
paid
D.Minimize foreign taxes
There are two major taxes imposed on C
profits earned by corporations in
international trade. One is the corporate
income tax. What is the other type of tax on
earnings of multinational corporations?
A. Excise tax
B. Payroll tax
C. Withholding tax
D.Value-added tax
What explains the "follow-the-leader" effect B
of countries changing their corporate tax
rates in response to changes made by other
countries?
A. Harmonization of accounting standards
B.Competition for foreign investment
C. Currencies pegged to another country's
currency
D. None of the above
,In the context of international taxation, the C
Bahamas, Lichtenstein, and Monaco are
considered by the OEDC as:
A. tax holidays.
B.tax shelters.
C. tax havens.
D.tax centers.
What is a tax haven? A
A. A jurisdiction where taxes are
abnormally low
B. A location where tax cheats live to
escape prosecution
C. A tax jurisdiction where world-wide tax is
eliminated
D.Locations that provide tax-based
incentives to corporations
In addition to having very low effective tax D
rates, which of the following is also a
characteristic of tax havens?
A. Lack of transparency in financial reporting
B.Lack of effective exchange of information
C. Absence of substantial
activities requirement
D.All of the above
The Organization for Economic C
Cooperation and Development (OECD)
has established
guidelines to eliminate tax havens. Why,
then, can the OECD (as of 2004) still
identify over 30 countries as tax havens?
A. The definition of tax haven
continuously changes.
B. The concept of tax haven is
supported by the United Nations.
C. The OECD has no enforcement powers.
D.The OECD lacks the willingness to
enforce the guidelines.
What is a withholding tax? B
A. Income tax paid on corporate earnings.
B. An amount subtracted from a
dividend payout and remitted to the
government.
C. This is an income tax corporations pay
to local governments in addition to the
national income tax.
D.Taxes that lower the effective tax rate in
a country.
, Because some countries have a lower A
withholding tax on interest than they do for
dividends, multinational corporations may
finance foreign operations with debt rather
than equity. What additional reason may an
MNC have for using this investment
strategy?
A. Interest is generally a deductible
expense, whereas dividends paid are not.
B. Dividends require a cash outflow but
interest does not.
C. Cash flows from dividends must be
discounted using the cost of capital, which
is not the case for interest.
D. All of the above
What is a value added tax (VAT)? B
A. It is the European version of a sales tax,
which is paid by the purchaser based on
sales price.
B. Taxes used in lieu of sales tax and
incorporated into the price of a product or
service.
C. The tax paid by a foreign corporation on
its fixed assets.
D. This is the name of the corporate
income tax in Canada, Australia, and the
United Kingdom.
Aco Ltd mined diamonds at a cost of FC C
1,000,000 and sold them to Beako for FC
2,500,000. Beako distributed the diamonds
to its customers and received FC 4,000,000.
If the national VAT is 20%, how much tax did
Beako pay?
A. FC 200,000
B. FC 500,000
C. FC 300,000
D. FC 800,000
How is a foreign subsidiary different from a B
foreign branch of a domestic corporation?
B. The subsidiary is a company incorporated
in the foreign country, whereas a branch
is not a separate corporation.
What is another name for the worldwide A
approach of tax jurisdiction?
A. Nationality approach
B. Global approach
C. International approach
D. Boundary approach
Chapter 8 International Accounting (TAX) exam with
question and answer 100% correct
Students also studied
C
Terms in this set (66)
What is the optimal tax objective for B
multinational corporations?
A. Minimize domestic taxes paid
on worldwide income
B.Minimize worldwide taxes paid, within
the limitations of applicable tax law
C. Minimize the credit for worldwide taxes
paid
D.Minimize foreign taxes
There are two major taxes imposed on C
profits earned by corporations in
international trade. One is the corporate
income tax. What is the other type of tax on
earnings of multinational corporations?
A. Excise tax
B. Payroll tax
C. Withholding tax
D.Value-added tax
What explains the "follow-the-leader" effect B
of countries changing their corporate tax
rates in response to changes made by other
countries?
A. Harmonization of accounting standards
B.Competition for foreign investment
C. Currencies pegged to another country's
currency
D. None of the above
,In the context of international taxation, the C
Bahamas, Lichtenstein, and Monaco are
considered by the OEDC as:
A. tax holidays.
B.tax shelters.
C. tax havens.
D.tax centers.
What is a tax haven? A
A. A jurisdiction where taxes are
abnormally low
B. A location where tax cheats live to
escape prosecution
C. A tax jurisdiction where world-wide tax is
eliminated
D.Locations that provide tax-based
incentives to corporations
In addition to having very low effective tax D
rates, which of the following is also a
characteristic of tax havens?
A. Lack of transparency in financial reporting
B.Lack of effective exchange of information
C. Absence of substantial
activities requirement
D.All of the above
The Organization for Economic C
Cooperation and Development (OECD)
has established
guidelines to eliminate tax havens. Why,
then, can the OECD (as of 2004) still
identify over 30 countries as tax havens?
A. The definition of tax haven
continuously changes.
B. The concept of tax haven is
supported by the United Nations.
C. The OECD has no enforcement powers.
D.The OECD lacks the willingness to
enforce the guidelines.
What is a withholding tax? B
A. Income tax paid on corporate earnings.
B. An amount subtracted from a
dividend payout and remitted to the
government.
C. This is an income tax corporations pay
to local governments in addition to the
national income tax.
D.Taxes that lower the effective tax rate in
a country.
, Because some countries have a lower A
withholding tax on interest than they do for
dividends, multinational corporations may
finance foreign operations with debt rather
than equity. What additional reason may an
MNC have for using this investment
strategy?
A. Interest is generally a deductible
expense, whereas dividends paid are not.
B. Dividends require a cash outflow but
interest does not.
C. Cash flows from dividends must be
discounted using the cost of capital, which
is not the case for interest.
D. All of the above
What is a value added tax (VAT)? B
A. It is the European version of a sales tax,
which is paid by the purchaser based on
sales price.
B. Taxes used in lieu of sales tax and
incorporated into the price of a product or
service.
C. The tax paid by a foreign corporation on
its fixed assets.
D. This is the name of the corporate
income tax in Canada, Australia, and the
United Kingdom.
Aco Ltd mined diamonds at a cost of FC C
1,000,000 and sold them to Beako for FC
2,500,000. Beako distributed the diamonds
to its customers and received FC 4,000,000.
If the national VAT is 20%, how much tax did
Beako pay?
A. FC 200,000
B. FC 500,000
C. FC 300,000
D. FC 800,000
How is a foreign subsidiary different from a B
foreign branch of a domestic corporation?
B. The subsidiary is a company incorporated
in the foreign country, whereas a branch
is not a separate corporation.
What is another name for the worldwide A
approach of tax jurisdiction?
A. Nationality approach
B. Global approach
C. International approach
D. Boundary approach
