International Accounting, 5e Timothy Doupnik,Hector Perera
(Test Bank)
International Accounting, 5e (Doupnik)
Chapter 1 Introduction to International Accounting
1) Which of the following groups is a supranational organization?
A) International Accounting Standards Board
B) Organization for Economic Cooperation and Development
C) International Federation of Accountants
D) All of the above
Answer: D
Difficulty: 1 Easy
Topic: Global Accounting Standards
Learning Objective: 01-01 Discuss the nature and scope of international accounting.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2) Determination of net present value involves:
A) forecasting future profits and cash flows.
B) discounting future cash flows back to their present value.
C) analysis on an after-tax basis.
D) All of the above
Answer: D
Difficulty: 2 Medium
Topic: Foreign Direct Investment
Learning Objective: 01-01 Discuss the nature and scope of international accounting.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
3) In which of the following levels can international accounting be defined?
A) Supranational organizations
B) Company
C) Country
D) All of the above
Answer: D
Difficulty: 1 Easy
Topic: Global Accounting Standards
Learning Objective: 01-01 Discuss the nature and scope of international accounting.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
1
,4) Which of the following functional areas is included in the study of international accounting?
A) Financial accounting
B) Managerial
C) Taxation
D) All of the above
Answer: D
Difficulty: 1 Easy
Topic: Global Accounting Standards
Learning Objective: 01-01 Discuss the nature and scope of international accounting.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
5) The factor used to convert from one country's currency to another country's currency is called
the:
A) interest rate.
B) cost of capital.
C) exchange rate.
D) strike price.
Answer: C
Difficulty: 1 Easy
Topic: Financial Reporting for Foreign Operations
Learning Objective: 01-02 Describe accounting issues confronted by companies involved in
international trade (import and export transactions).
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
6) 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?
A) Foreign exchange translation
B) Foreign exchange risk
C) Hedging
D) Foreign currency options
Answer: B
Difficulty: 2 Medium
Topic: Sales to Customers
Learning Objective: 01-02 Describe accounting issues confronted by companies involved in
international trade (import and export transactions).
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
2
,7) Foreign exchange risk arises when:
A) business transactions are denominated in foreign currencies.
B) sales are made to customers in a domestic country.
C) goods or services purchased from suppliers in a foreign country are denominated in domestic
currency.
D) auditing reports are prepared in a foreign currency.
Answer: A
Difficulty: 2 Medium
Topic: Sales to Customers
Learning Objective: 01-02 Describe accounting issues confronted by companies involved in
international trade (import and export transactions).
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
8) In international accounting, a "hedge" is:
A) a business transaction made to reduce the exposure of foreign exchange risk.
B) the legal barriers in various divisions of a multinational company.
C) the loss in US dollar resulting from a decline in the value of the US dollar relative to foreign
currencies.
D) a form of foreign direct investment.
Answer: A
Difficulty: 2 Medium
Topic: Sales to Customers
Learning Objective: 01-02 Describe accounting issues confronted by companies involved in
international trade (import and export transactions).
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
3
, 9) Purchasing an option to buy foreign currency at a predetermined exchange rate in order to
reduce exchange risk is called:
A) transfer pricing.
B) hedging.
C) translating.
D) cross-listing.
Answer: B
Difficulty: 1 Easy
Topic: Hedges of Foreign Exchange Risk
Learning Objective: 01-02 Describe accounting issues confronted by companies involved in
international trade (import and export transactions).
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
10) What term is used to describe the process of reducing foreign exchange risk?
A) International accounting
B) Exposure
C) Hedging
D) Globalization
Answer: C
Difficulty: 1 Easy
Topic: Hedges of Foreign Exchange Risk
Learning Objective: 01-02 Describe accounting issues confronted by companies involved in
international trade (import and export transactions).
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
11) What is the advantage of foreign direct investment?
A) Helps in retaining advantage over competition
B) Reduces transportation costs
C) Creates a company tailored to a foreign market's unique characteristics
D) All of the above
Answer: D
Difficulty: 1 Easy
Topic: Foreign Direct Investment
Learning Objective: 01-03 Explain the reasons for; and the accounting issues associated with;
foreign direct investment.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
4
(Test Bank)
International Accounting, 5e (Doupnik)
Chapter 1 Introduction to International Accounting
1) Which of the following groups is a supranational organization?
A) International Accounting Standards Board
B) Organization for Economic Cooperation and Development
C) International Federation of Accountants
D) All of the above
Answer: D
Difficulty: 1 Easy
Topic: Global Accounting Standards
Learning Objective: 01-01 Discuss the nature and scope of international accounting.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2) Determination of net present value involves:
A) forecasting future profits and cash flows.
B) discounting future cash flows back to their present value.
C) analysis on an after-tax basis.
D) All of the above
Answer: D
Difficulty: 2 Medium
Topic: Foreign Direct Investment
Learning Objective: 01-01 Discuss the nature and scope of international accounting.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
3) In which of the following levels can international accounting be defined?
A) Supranational organizations
B) Company
C) Country
D) All of the above
Answer: D
Difficulty: 1 Easy
Topic: Global Accounting Standards
Learning Objective: 01-01 Discuss the nature and scope of international accounting.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
1
,4) Which of the following functional areas is included in the study of international accounting?
A) Financial accounting
B) Managerial
C) Taxation
D) All of the above
Answer: D
Difficulty: 1 Easy
Topic: Global Accounting Standards
Learning Objective: 01-01 Discuss the nature and scope of international accounting.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
5) The factor used to convert from one country's currency to another country's currency is called
the:
A) interest rate.
B) cost of capital.
C) exchange rate.
D) strike price.
Answer: C
Difficulty: 1 Easy
Topic: Financial Reporting for Foreign Operations
Learning Objective: 01-02 Describe accounting issues confronted by companies involved in
international trade (import and export transactions).
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
6) 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?
A) Foreign exchange translation
B) Foreign exchange risk
C) Hedging
D) Foreign currency options
Answer: B
Difficulty: 2 Medium
Topic: Sales to Customers
Learning Objective: 01-02 Describe accounting issues confronted by companies involved in
international trade (import and export transactions).
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
2
,7) Foreign exchange risk arises when:
A) business transactions are denominated in foreign currencies.
B) sales are made to customers in a domestic country.
C) goods or services purchased from suppliers in a foreign country are denominated in domestic
currency.
D) auditing reports are prepared in a foreign currency.
Answer: A
Difficulty: 2 Medium
Topic: Sales to Customers
Learning Objective: 01-02 Describe accounting issues confronted by companies involved in
international trade (import and export transactions).
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
8) In international accounting, a "hedge" is:
A) a business transaction made to reduce the exposure of foreign exchange risk.
B) the legal barriers in various divisions of a multinational company.
C) the loss in US dollar resulting from a decline in the value of the US dollar relative to foreign
currencies.
D) a form of foreign direct investment.
Answer: A
Difficulty: 2 Medium
Topic: Sales to Customers
Learning Objective: 01-02 Describe accounting issues confronted by companies involved in
international trade (import and export transactions).
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
3
, 9) Purchasing an option to buy foreign currency at a predetermined exchange rate in order to
reduce exchange risk is called:
A) transfer pricing.
B) hedging.
C) translating.
D) cross-listing.
Answer: B
Difficulty: 1 Easy
Topic: Hedges of Foreign Exchange Risk
Learning Objective: 01-02 Describe accounting issues confronted by companies involved in
international trade (import and export transactions).
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
10) What term is used to describe the process of reducing foreign exchange risk?
A) International accounting
B) Exposure
C) Hedging
D) Globalization
Answer: C
Difficulty: 1 Easy
Topic: Hedges of Foreign Exchange Risk
Learning Objective: 01-02 Describe accounting issues confronted by companies involved in
international trade (import and export transactions).
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
11) What is the advantage of foreign direct investment?
A) Helps in retaining advantage over competition
B) Reduces transportation costs
C) Creates a company tailored to a foreign market's unique characteristics
D) All of the above
Answer: D
Difficulty: 1 Easy
Topic: Foreign Direct Investment
Learning Objective: 01-03 Explain the reasons for; and the accounting issues associated with;
foreign direct investment.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
4
