Test Bank for International Accounting, 6th Edition by Timothy Doupnik

Test Bank for International Accounting, 6th Edition by Timothy Doupnik


Answers31Included
Chapter3101316e
1) Which31of31the31following31groups31is31a31supranational31organ
ization?
A) International31Accounting31Standards31Board
B) Organization31for31Economic31Cooperation31and31Development
C) International31Federation31of31Accountants
D) All31of31these31answers31are31correct.



2) Determination31of31net31present31value31involves:
A) forecasting31future31profits31and31cash31flows.
B) discounting31future31cash31flows31back31to31their31present31value.
C) analysis31on31an31after-tax31basis.
D) All31of31these31answers31are31correct.



3) In31which31of31the31following31levels31can31international31accounting31be31defined?
A) Supranational31organizations
B) Company
C) Country
D) All31of31these31answers31are31correct.



4) Which31of31the31following31functional31areas31is31included31in31the31study31of31international31acc
ounting?
A) Financial31accounting
B) Managerial
C) Taxation
D) All31of31these31answers31are31correct.



5) The31factor31used31to31convert31from31one31country's31currency31to31another31country's31curre
ncy31is31called31the:
A) interest31rate.
B) cost31of31capital.
C) exchange31rate.
D) strike31price.




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,6) What31is31the31term31used31to31describe31the31possibility31that31a31foreign31currency31will31de
crease31in31U.S.31dollar31value31over31the31life31of31an31asset31such31as31Accounts31Receivab
le?
A) Foreign31exchange31translation
B) Foreign31exchange31risk
C) Hedging
D) Foreign31currency31options



7) Foreign31exchange31risk31arises31when:
A) business31transactions31are31denominated31in31foreign31currencies.
B) sales31are31made31to31customers31in31a31domestic31country.
C) goods31or31services31purchased31from31suppliers31in31a31foreign31country31are31den
ominated31in31domestic31currency.
D) auditing31reports31are31prepared31in31a31foreign31currency.



8) In31international31accounting,31a31"hedge"31is:
A) a31business31transaction31made31to31reduce31the31exposure31of31foreign31exchange31risk.
B) the31legal31barriers31in31various31divisions31of31a31multinational31company.
C) the31loss31in31US31dollar31resulting31from31a31decline31in31the31value31of31the31US31d
ollar31relative31to31foreign31currencies.
D) a31form31of31foreign31direct31investment.



9) Purchasing31an31option31to31buy31foreign31currency31at31a31predetermined31exchange31rate
31in31order31to31reduce31exchange31risk31is31called:
A) transfer31pricing.
B) hedging.
C) translating.
D) cross-listing.


10) What31term31is31used31to31describe31the31process31of31reducing31foreign31exchange31risk?
A) International31accounting
B) Exposure
C) Hedging
D) Globalization




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,11) What31is31the31advantage31of31foreign31direct31investment?
A) Helps31in31retaining31advantage31over31competition
B) Reduces31transportation31costs
C) Creates31a31company31tailored31to31a31foreign31market's31unique31characteristics
D) All31of31these31answers31are31correct.



12) How31should31we31recognize31the31difference31in31the31value31of31a31receivable31in31a31forei
gn31currency31at31the31time31it31was31recorded31and31the31time31the31cash31was31received?
A) As31an31adjustment31to31stockholders'31equity
B) As31an31adjustment31to31purchases
C) As31an31extraordinary31capital31expenditure
D) As31a31prior31period31adjustment



13) What31currency31is31used31in31the31United31Kingdom?
A) Crown
B) Euro
C) British31pound
D) UK31dollar



14) Which31of31these31European31countries31does31NOT31use31the31Euro31as31its31domestic31currency
?
A) France
B) United31Kingdom
C) Ireland
D) The31Netherlands


15) Which31of31the31following31terms31is31used31to31describe31the31combining31of31the31financial3
1statements31of31all31subsidiaries,31both31foreign31and31domestic,31into31the31financial31state
ments31of31the31parent?
A) Convergence
B) Hedging
C) Consolidation
D) Incorporation




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, 16) Why31is31auditing31a31multinational31corporation31potentially31more31difficult31than31auditin
g31an31entity31that31has31only31domestic31operations?
A) Language31differences
B) Cultural31differences
C) Multiple31sets31of31accounting31standards
D) All31of31these31answers31are31correct.



17) What31is31the31entry31point31for31most31companies31into31the31world31of31international31business?
A) Transfer31pricing
B) Exporting
C) Foreign31direct31investment
D) Cross-listing31on31international31stock31exchanges



18) For31a31U.S.31multinational31corporation,31consolidating31the31financial31statements31of3
1foreign31subsidiaries31requires31two31steps.31First,31the31foreign31subsidiary's31statement
s31must31be31restated31according31to31the31U.S.31GAAP.31The31next31step31is31to:
A) convert31the31account31balances31into31U.S.31dollars.
B) determine31the31exchange31rate31gain31or31loss.
C) calculate31the31translation31adjustment.
D) restate31the31income31using31international31accounting31standards.



19) When31setting31transfer31prices31among31international31subsidiaries,31the31corporation31must:
A) make31sure31that31the31total31tax31is31minimized.
B) ensure31that31the31transfer31prices31are31acceptable31to31the31taxing31authorities31in31t
he31countries31involved.
C) do31whatever31it31takes31to31make31taxes31paid31in31the31United31States31as31low31as31poss
ible.
D) follow31the31transfer31pricing31policy31used31for31domestic31transfers.



20) What31is31the31primary31provision31of31the31Foreign31Corrupt31Practices31Act?
A) To31specify31which31corrupt31practices31are31acceptable31under31U.S.31law
B) To31specify31how31to31account31for31bribes31paid31by31U.S.31corporations31to31obt
ain31business31from31foreign31governments
C) To31inform31internal31auditors31how31to31detect31fraud31in31multinational31corporations
D) To31prohibit31U.S.31companies31from31paying31bribes31to31foreign31government31
officials31to31obtain31business




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