International Accounting Exam
Questions and Answers 100% Solved
foreign exchange risk - ✔✔as the value of the foreign currency
is likely to change in relation to the
company's home country currency
made a sale but exchange rates changed after the sale or during journal
entries - ✔✔Dr. Accounts receivable 100,000
Cr. Sales revenue 100,000
Dr. Cash 90,909
Dr. Loss on foreign exchange 9,091
Cr. Accounts receivable 100,000
Hedging - ✔✔protect itself against a loss from an exchange rate fluctuation
hedging can be done by - ✔✔Foreign currency option
Forward contract
Foreign Direct Investment - ✔✔occurs when a company invests in a
business operation in a foreign country. This represents an alternative to
exporting to customers in a foreign country
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,Forward contract - ✔✔this is an obligation to exchange foreign currency at
a date in the future, which is typically 30, 60 or 90 days.
Foreign currency option - ✔✔the right (but not the obligation) to sell foreign
currency at a specific exchange rate for a specified period of time
Foreign Direct Investment two types - ✔✔greenfield investment and (2)
acquisition
who creates IFRS - ✔✔Global Accounting standards
Global Auditing standards
International capital markets - ✔✔As of Dec. 31, 2017 there were 496
companies representing 46 countries cross-listed on the New York Stock
Exchange (NYSE). In addition, over 50 U.S. companies are cross-listed on
the London Stock Exchange
IFRS accounting for research and development - ✔✔research expenditures
to be expenses on the income statement. However, some development
expenditures may be capitalized as assets on the balance sheet
IFRS method for asset evaluation - ✔✔Cost Model
Revaluation Model
Cross-Listing - ✔✔When a company offers its shares on an exchange
outside of its home country, this is referred to as
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, International Auditing
problems - ✔✔Language and cultural differences
Different accounting standards
Different auditing standards
Taxation - ✔✔governments in the various countries often examine carefully
the inter-company transactions to assure that sufficient profits are being
recorded in that country
Transfer pricing - ✔✔setting prices on goods and services exchanged
between separate divisions within the same company. These prices have a
direct impact on the profits of the different divisions.
U.S. income taxes - ✔✔the U.S. government will tax the company's foreign-
based income.
Foreign income taxes - ✔✔the foreign government will tax the company's
profits at applicable rates.
FDI creates two new accounting issues - ✔✔Foreign Currencies
Accounting Rules
Reasons for Foreign Direct Investment - ✔✔Increase sales and profits
Enter rapidly growing or emerging markets
3
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
Questions and Answers 100% Solved
foreign exchange risk - ✔✔as the value of the foreign currency
is likely to change in relation to the
company's home country currency
made a sale but exchange rates changed after the sale or during journal
entries - ✔✔Dr. Accounts receivable 100,000
Cr. Sales revenue 100,000
Dr. Cash 90,909
Dr. Loss on foreign exchange 9,091
Cr. Accounts receivable 100,000
Hedging - ✔✔protect itself against a loss from an exchange rate fluctuation
hedging can be done by - ✔✔Foreign currency option
Forward contract
Foreign Direct Investment - ✔✔occurs when a company invests in a
business operation in a foreign country. This represents an alternative to
exporting to customers in a foreign country
1
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,Forward contract - ✔✔this is an obligation to exchange foreign currency at
a date in the future, which is typically 30, 60 or 90 days.
Foreign currency option - ✔✔the right (but not the obligation) to sell foreign
currency at a specific exchange rate for a specified period of time
Foreign Direct Investment two types - ✔✔greenfield investment and (2)
acquisition
who creates IFRS - ✔✔Global Accounting standards
Global Auditing standards
International capital markets - ✔✔As of Dec. 31, 2017 there were 496
companies representing 46 countries cross-listed on the New York Stock
Exchange (NYSE). In addition, over 50 U.S. companies are cross-listed on
the London Stock Exchange
IFRS accounting for research and development - ✔✔research expenditures
to be expenses on the income statement. However, some development
expenditures may be capitalized as assets on the balance sheet
IFRS method for asset evaluation - ✔✔Cost Model
Revaluation Model
Cross-Listing - ✔✔When a company offers its shares on an exchange
outside of its home country, this is referred to as
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, International Auditing
problems - ✔✔Language and cultural differences
Different accounting standards
Different auditing standards
Taxation - ✔✔governments in the various countries often examine carefully
the inter-company transactions to assure that sufficient profits are being
recorded in that country
Transfer pricing - ✔✔setting prices on goods and services exchanged
between separate divisions within the same company. These prices have a
direct impact on the profits of the different divisions.
U.S. income taxes - ✔✔the U.S. government will tax the company's foreign-
based income.
Foreign income taxes - ✔✔the foreign government will tax the company's
profits at applicable rates.
FDI creates two new accounting issues - ✔✔Foreign Currencies
Accounting Rules
Reasons for Foreign Direct Investment - ✔✔Increase sales and profits
Enter rapidly growing or emerging markets
3
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
