International Accounting Test #1 Exam
Questions and Answers 100% Solved
International Accounting can be described at three different levels... - ✔✔-
The influence on accounting by international political groups such as the
OECD, UN, etc.
-The accounting practices of companies in response to their own
international business activities.
-The differences in accounting, auditing and taxation standards and
practices between countries.
Most companies' first encounter with international business occurs as
________________________________. - ✔✔sales to foreign customers
Often, the sale is made on credit and it is agreed that the foreign customer
will pay in a different currency. True or False? - ✔✔False. Often, the sale is
made on credit and it is agreed that the foreign customer will pay in its own
currency.
1
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,When sales to foreign customers creates risk that the value of the foreign
currency is likely to change in relation to the company's home country
currency. - ✔✔What is foreign exchange risk?
the right (but not the obligation) to sell foreign currency at a specific
exchange rate for a specified period of time. - ✔✔Foreign currency option
(i.e., protect itself) against a loss from an exchange rate fluctuation -
✔✔Hedge
this is an obligation to exchange foreign currency at a date in the future,
which is typically 30, 60 or 90 days. - ✔✔Forward contract
occurs when a company invests in a business operation in a foreign
country. This represents an alternative to importing to customers and/or
exporting from suppliers in a foreign country. - ✔✔Foreign Direct
Investment (FDI)
Two types of foreign direct investment are
_____________________________ - ✔✔greenfield investment and
acquisition
the establishment of a new operation in the foreign country. - ✔✔Greenfield
investment
investment in an existing operation in the foreign country. - ✔✔Acquisition
2
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, What are the two primary issues that arise from foreign direct investment
(FDI)? - ✔✔-The need to convert from local to U.S. GAAP since accounting
records are usually prepared using local GAAP.
-The need to translate from local currency to U.S. dollars since accounting
records are usually prepared using local currency.
the foreign government will tax the company's profits at applicable rates. -
✔✔Foreign income taxes
the U.S. will tax the company's foreign-based income. - ✔✔U.S. income
taxes
setting prices on goods and services exchanged between separate
divisions within the same firm. These prices have a direct impact on the
profits of the different divisions. - ✔✔Transfer pricing
governments in the various countries often scrutinize transactions to assure
that sufficient profits are being recorded in that country - ✔✔Taxation
to the extent that division managers are evaluated based on divisional
profits, transfer prices influence division manager performance evaluation. -
✔✔Performance evaluation issues
3
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
Questions and Answers 100% Solved
International Accounting can be described at three different levels... - ✔✔-
The influence on accounting by international political groups such as the
OECD, UN, etc.
-The accounting practices of companies in response to their own
international business activities.
-The differences in accounting, auditing and taxation standards and
practices between countries.
Most companies' first encounter with international business occurs as
________________________________. - ✔✔sales to foreign customers
Often, the sale is made on credit and it is agreed that the foreign customer
will pay in a different currency. True or False? - ✔✔False. Often, the sale is
made on credit and it is agreed that the foreign customer will pay in its own
currency.
1
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,When sales to foreign customers creates risk that the value of the foreign
currency is likely to change in relation to the company's home country
currency. - ✔✔What is foreign exchange risk?
the right (but not the obligation) to sell foreign currency at a specific
exchange rate for a specified period of time. - ✔✔Foreign currency option
(i.e., protect itself) against a loss from an exchange rate fluctuation -
✔✔Hedge
this is an obligation to exchange foreign currency at a date in the future,
which is typically 30, 60 or 90 days. - ✔✔Forward contract
occurs when a company invests in a business operation in a foreign
country. This represents an alternative to importing to customers and/or
exporting from suppliers in a foreign country. - ✔✔Foreign Direct
Investment (FDI)
Two types of foreign direct investment are
_____________________________ - ✔✔greenfield investment and
acquisition
the establishment of a new operation in the foreign country. - ✔✔Greenfield
investment
investment in an existing operation in the foreign country. - ✔✔Acquisition
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, What are the two primary issues that arise from foreign direct investment
(FDI)? - ✔✔-The need to convert from local to U.S. GAAP since accounting
records are usually prepared using local GAAP.
-The need to translate from local currency to U.S. dollars since accounting
records are usually prepared using local currency.
the foreign government will tax the company's profits at applicable rates. -
✔✔Foreign income taxes
the U.S. will tax the company's foreign-based income. - ✔✔U.S. income
taxes
setting prices on goods and services exchanged between separate
divisions within the same firm. These prices have a direct impact on the
profits of the different divisions. - ✔✔Transfer pricing
governments in the various countries often scrutinize transactions to assure
that sufficient profits are being recorded in that country - ✔✔Taxation
to the extent that division managers are evaluated based on divisional
profits, transfer prices influence division manager performance evaluation. -
✔✔Performance evaluation issues
3
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
