International Accounting Midterm 1
Exam Questions and Answers 100%
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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 (FDI)
Toyota, a Japanese automaker, builds an assembly plant in Ohio. This is
an example of what? - ✔✔Greenfield investment
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 NYSE must report their
income in terms of what? - ✔✔The Generally accepted accounting
principles (GAAP) of the United States
When a foreign subsidiary pays dividends to its U.S. 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 IFRS? -
✔✔International Accounting Standards Board (IASB)
Assume that ABCO is a U.S. 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 U.S. corporation, U.S. generally
accepted accounting principles must be used for the consolidated financial
statements
What is the primary provision of the Foreign Corrupt Practices Act? - ✔✔To
prohibit U.S. companies from paying bribes to foreign government officials
to obtain business.
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
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 (FDI)
Toyota, a Japanese automaker, builds an assembly plant in Ohio. This is
an example of what? - ✔✔Greenfield investment
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 NYSE must report their
income in terms of what? - ✔✔The Generally accepted accounting
principles (GAAP) of the United States
When a foreign subsidiary pays dividends to its U.S. 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 IFRS? -
✔✔International Accounting Standards Board (IASB)
Assume that ABCO is a U.S. 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 U.S. corporation, U.S. generally
accepted accounting principles must be used for the consolidated financial
statements
What is the primary provision of the Foreign Corrupt Practices Act? - ✔✔To
prohibit U.S. companies from paying bribes to foreign government officials
to obtain business.
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
