International Accounting Midterm Exam
Questions and Answers 100% Solved
Foreign exchange risk arises when - ✔✔Business transactions are
denominated in foreign currencies
As used in international accounting, a "hedge" is - ✔✔A business
transaction made to reduce the exposure of foreign exchange risk
The ownership and control of foreign assets such as a manufacturing plant
is called - ✔✔Foreign Direct Investment
Define Greenfield Investment - ✔✔A form of foreign direct investment
where a parent company starts a new venture in a foreign company by
constructing new operational facilities from the ground up
ABCO Corporation has a parts division in country A. Its assembly division
is in country B, which has a higher tax rate than country A. To minimize the
corporation's overall income tax, how should ABCO set its transfer prices
between its parts and assembly divisions? - ✔✔The parts division should
sell parts to the assembly division at high prices
1
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, Foreign companies whose stocks are listed on the New York Stock
Exchange must report their income in terms of - ✔✔The generally accepted
accounting principles of the United States
When a foreign subsidiary pays dividends to its US parent, this process is
known as - ✔✔Repatriation
Why would a company want its stock cross-listed on the stock exchanges
of several countries? - ✔✔To gain access to more financial resources than
are available in its home country
What group is primarily responsible for the creation of International
Financial Reporting Standards (IFRS)? - ✔✔International Accounting
Standards Board (IASB)
Assume that ABCO is a US multinational corporation. Its foreign
subsidiaries must report income in their respective countries according to
GAAP in those countries. How must ABCO report its consolidated financial
statements? - ✔✔Since ABCO is a US corporation, US generally accepted
accounting principles must be used for the consolidated financial
statements
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
Questions and Answers 100% Solved
Foreign exchange risk arises when - ✔✔Business transactions are
denominated in foreign currencies
As used in international accounting, a "hedge" is - ✔✔A business
transaction made to reduce the exposure of foreign exchange risk
The ownership and control of foreign assets such as a manufacturing plant
is called - ✔✔Foreign Direct Investment
Define Greenfield Investment - ✔✔A form of foreign direct investment
where a parent company starts a new venture in a foreign company by
constructing new operational facilities from the ground up
ABCO Corporation has a parts division in country A. Its assembly division
is in country B, which has a higher tax rate than country A. To minimize the
corporation's overall income tax, how should ABCO set its transfer prices
between its parts and assembly divisions? - ✔✔The parts division should
sell parts to the assembly division at high prices
1
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, Foreign companies whose stocks are listed on the New York Stock
Exchange must report their income in terms of - ✔✔The generally accepted
accounting principles of the United States
When a foreign subsidiary pays dividends to its US parent, this process is
known as - ✔✔Repatriation
Why would a company want its stock cross-listed on the stock exchanges
of several countries? - ✔✔To gain access to more financial resources than
are available in its home country
What group is primarily responsible for the creation of International
Financial Reporting Standards (IFRS)? - ✔✔International Accounting
Standards Board (IASB)
Assume that ABCO is a US multinational corporation. Its foreign
subsidiaries must report income in their respective countries according to
GAAP in those countries. How must ABCO report its consolidated financial
statements? - ✔✔Since ABCO is a US corporation, US generally accepted
accounting principles must be used for the consolidated financial
statements
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
