FAC Finance and Accounting Taxation & Regulatory Compliance 3

Question 1

Under the Foreign Corrupt Practices Act (FCPA), which of the following payments to a foreign official is generally permissible?

Accepted Answer

Facilitating payments to expedite routine governmental actions

Answer

Facilitating payments (also called grease payments) to expedite routine governmental actions such as processing permits are technically exempt under the FCPA, though this exemption is narrow.

Question 2

Which transfer pricing method compares the price charged in a controlled transaction to the price charged in a comparable uncontrolled transaction?

Accepted Answer

Comparable uncontrolled price method (CUP)

Answer

The Comparable Uncontrolled Price (CUP) method directly compares the price in a controlled transaction to prices in comparable uncontrolled transactions and is generally preferred by tax authorities.

Question 3

For U.S. tax purposes, a foreign tax credit (FTC) is primarily designed to prevent:

Accepted Answer

Double taxation of foreign-source income

Answer

The foreign tax credit allows U.S. taxpayers to offset taxes paid to foreign governments against their U.S. tax liability, preventing the same income from being taxed twice.

Question 4

The Bank Secrecy Act (BSA) requires financial institutions to file a Currency Transaction Report (CTR) for cash transactions exceeding:

Accepted Answer

$10,000

Answer

The BSA requires financial institutions to file a CTR for any cash transaction exceeding $10,000 in a single business day, including multiple transactions that together exceed this threshold.

Question 5

Under ASC 842, a lessee must recognize a right-of-use asset and lease liability for:

Accepted Answer

Both finance and operating leases

Answer

ASC 842 requires lessees to recognize both a right-of-use asset and a lease liability on the balance sheet for both finance and operating leases, with an exemption for short-term leases.

(FAC) Finance and Accounting Certification Practice Test

(FAC) Finance and Accounting Certification Practice Test

FAC Finance and Accounting Taxation & Regulatory Compliance 3