, WERTYUI
What is the term used to describe the possibility that a foreign currency will decrease in U.S.
dollar value over the life of an asset such as Accounts Receivable?
Foreign exchange translation
Foreign exchange risk
Hedging
Foreign currency options
Foreign exchange risk arises when:
business transactions are denominated in foreign currencies.
sales are made to customers in a domestic country.
goods or services purchased from suppliers in a foreign country are denominated in
domestic currency.
auditing reports are prepared in a foreign currency.
In international accounting, a "hedge" is:
a business transaction made to reduce the exposure of foreign exchange risk.
the legal barriers in various divisions of a multinational company.
the loss in US dollar resulting from a decline in the value of the US dollar relative to
foreign currencies.
a form of foreign direct investment.
Purchasing an option to buy foreign currency at a predetermined exchange rate in order to
reduce exchange risk is called:
transfer pricing.
hedging.
translating.
cross-listing.
What term is used to describe the process of reducing foreign exchange risk?
International accounting
Exposure
Hedging
Globalization
2
, WERTYUI
What is the advantage of foreign direct investment?
Helps in retaining advantage over competition
Reduces transportation costs
Creates a company tailored to a foreign market's unique characteristics
All of these answers are correct.
How should we recognize the difference in the value of a receivable in a foreign currency at
the time it was recorded and the time the cash was received?
As an adjustment to stockholders' equity
As an adjustment to purchases
As an extraordinary capital expenditure
As a prior period adjustment
What currency is used in the United Kingdom?
Crown
Euro
British pound
UK dollar
Which of these European countries does NOT use the Euro as its domestic currency?
France
United Kingdom
Ireland
The Netherlands
Which of the following terms is used to describe the combining of the financial statements of
all subsidiaries, both foreign and domestic, into the financial statements of the parent?
Convergence
Hedging
Consolidation
Incorporation
3
, WERTYUI
Why is auditing a multinational corporation potentially more difficult than auditing an entity
that has only domestic operations?
Language differences
Cultural differences
Multiple sets of accounting standards
All of these answers are correct.
What is the entry point for most companies into the world of international business?
Transfer pricing
Exporting
Foreign direct investment
Cross-listing on international stock exchanges
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:
convert the account balances into U.S. dollars.
determine the exchange rate gain or loss.
calculate the translation adjustment.
restate the income using international accounting standards.
When setting transfer prices among international subsidiaries, the corporation must:
make sure that the total tax is minimized.
ensure that the transfer prices are acceptable to the taxing authorities in the countries
involved.
do whatever it takes to make taxes paid in the United States as low as possible.
follow the transfer pricing policy used for domestic transfers.
What is the primary provision of the Foreign Corrupt Practices Act?
To specify which corrupt practices are acceptable under U.S. law
To specify how to account for bribes paid by U.S. corporations to obtain business
from foreign governments
To inform internal auditors how to detect fraud in multinational corporations
To prohibit U.S. companies from paying bribes to foreign government officials to
obtain business
4
What is the term used to describe the possibility that a foreign currency will decrease in U.S.
dollar value over the life of an asset such as Accounts Receivable?
Foreign exchange translation
Foreign exchange risk
Hedging
Foreign currency options
Foreign exchange risk arises when:
business transactions are denominated in foreign currencies.
sales are made to customers in a domestic country.
goods or services purchased from suppliers in a foreign country are denominated in
domestic currency.
auditing reports are prepared in a foreign currency.
In international accounting, a "hedge" is:
a business transaction made to reduce the exposure of foreign exchange risk.
the legal barriers in various divisions of a multinational company.
the loss in US dollar resulting from a decline in the value of the US dollar relative to
foreign currencies.
a form of foreign direct investment.
Purchasing an option to buy foreign currency at a predetermined exchange rate in order to
reduce exchange risk is called:
transfer pricing.
hedging.
translating.
cross-listing.
What term is used to describe the process of reducing foreign exchange risk?
International accounting
Exposure
Hedging
Globalization
2
, WERTYUI
What is the advantage of foreign direct investment?
Helps in retaining advantage over competition
Reduces transportation costs
Creates a company tailored to a foreign market's unique characteristics
All of these answers are correct.
How should we recognize the difference in the value of a receivable in a foreign currency at
the time it was recorded and the time the cash was received?
As an adjustment to stockholders' equity
As an adjustment to purchases
As an extraordinary capital expenditure
As a prior period adjustment
What currency is used in the United Kingdom?
Crown
Euro
British pound
UK dollar
Which of these European countries does NOT use the Euro as its domestic currency?
France
United Kingdom
Ireland
The Netherlands
Which of the following terms is used to describe the combining of the financial statements of
all subsidiaries, both foreign and domestic, into the financial statements of the parent?
Convergence
Hedging
Consolidation
Incorporation
3
, WERTYUI
Why is auditing a multinational corporation potentially more difficult than auditing an entity
that has only domestic operations?
Language differences
Cultural differences
Multiple sets of accounting standards
All of these answers are correct.
What is the entry point for most companies into the world of international business?
Transfer pricing
Exporting
Foreign direct investment
Cross-listing on international stock exchanges
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:
convert the account balances into U.S. dollars.
determine the exchange rate gain or loss.
calculate the translation adjustment.
restate the income using international accounting standards.
When setting transfer prices among international subsidiaries, the corporation must:
make sure that the total tax is minimized.
ensure that the transfer prices are acceptable to the taxing authorities in the countries
involved.
do whatever it takes to make taxes paid in the United States as low as possible.
follow the transfer pricing policy used for domestic transfers.
What is the primary provision of the Foreign Corrupt Practices Act?
To specify which corrupt practices are acceptable under U.S. law
To specify how to account for bribes paid by U.S. corporations to obtain business
from foreign governments
To inform internal auditors how to detect fraud in multinational corporations
To prohibit U.S. companies from paying bribes to foreign government officials to
obtain business
4
