International Accounting 4E Timothy DoupnikHector Perera Test Bank Chapter 001.docx
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International Accounting 4E Timothy DoupnikHector Perera Test Bank Chapter 001.docx
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InternationalAccounting4ETimothyDoupnikHectorPereraTestBankChapter001
Chapter01
IntroductiontoInternationalAccounting
MultipleChoiceQuestions
1.
Whichofthefollowinggroupsisasupranationalorganization?
A.
UnitedNations
B.
OrganizationforEconomicCooperationandDevelopment
C.
InternationalFederationofAccountants
D.
Alloftheabove
2.
Determinationofnetpresentvalueinvolves:
A.
forecastingfutureprofitsandcashflows.
B.
discountingfuturecashflowsbacktotheirpresentvalue.
C.
analysisonanafter-taxbasis.
D.
Alloftheabove
3.
Inwhichofthefollowinglevelscaninternationalaccountingbedefined?
A.
Supranationalorganizations
B.
Company
C.
Country
D.
Alloftheabove
4.
Whichofthefollowingfunctionalareasisincludedinthestudyofinternationalaccounting?
A.
Financialaccounting
B.
Accountinginformationsystems
C.
Taxation
D.
Alloftheabove
5.
Thefactorusedtoconvertfromonecountry'scurrencytoanothercountry'scurrencyiscalledthe:
A.
interestrate.
B.
costofcapital.
C.
exchangerate.
D.
strikeprice.
6.
WhatisthetermusedtodescribethepossibilitythataforeigncurrencywilldecreaseinU.S.dollarvalueoverthelifeofanassetsuchasAccountsReceivable?
A.
Foreignexchangetranslation
B.
Foreignexchangerisk
C.
Hedging
D.
Foreigncurrencyoptions
7.
Foreignexchangeriskariseswhen:
A.
businesstransactionsaredenominatedinforeigncurrencies.
B.
salesaremadetocustomersinadomesticcountry.
C.
goodsorservicespurchasedfromsuppliersinaforeigncountryaredenominatedindomesticcurrency.
D.
auditingreportsarepreparedinaforeigncurrency.
8.
Ininternationalaccounting,a"hedge"is:
A.
abusinesstransactionmadetoreducetheexposureofforeignexchangerisk.
B.
thelegalbarriersinvariousdivisionsofamultinationalcompany.
C.
thelossinUSdollarresultingfromadeclineinthevalueoftheUSdollarrelativetoforeigncurrencies.
D.
aformofforeigndirectinvestment.
9.
Purchasinganoptiontobuyforeigncurrencyatapredeterminedexchangerateinordertoreduceexchangeriskiscalled:
A.
transferpricing.
B.
hedging.
C.
translating.
D.
cross-listing.
10.
Whattermisusedtodescribetheprocessofreducingforeignexchangerisk?
A.
Internationalaccounting
B.
Exposure
C.
Hedging
D.
Globalization
11.
Whatistheadvantageofforeigndirectinvestment?
A.
Helpsinretainingadvantageovercompetition
B.
Reducestransportationcosts
C.
Createsacompanytailoredtoaforeignmarket'suniquecharacteristics
D.
Alloftheabove
12.
Howshouldwerecognizethedifferenceinthevalueofareceivableinaforeigncurrencyatthetimeitwasrecordedandthetimethecashwasreceived?
A.
Asanadjustmenttostockholders'equity
B.
Asanadjustmenttopurchases
C.
Asanextraordinarycapitalexpenditure
D.
Asapriorperiodadjustment
13.
WhatcurrencyisusedintheUnitedKingdom?
A.
Crown
B.
Euro
C.
Britishpound
D.
UKdollar
14.
WhichoftheseEuropeancountriesdoesNOTusetheEuroasitsdomesticcurrency?
A.
France
B.
UnitedKingdom
C.
Ireland
D.
TheNetherlands
15.
Whichofthefollowingtermsisusedtodescribethecombiningofthefinancialstatementsofallsubsidiaries,bothforeignanddomestic,intothefinancialstatementsoftheparent?
A.
Convergence
B.
Hedging
C.
Consolidation
D.
Incorporation
16.
WhichofthefollowingstatementsistrueaboutU.S.taxationofforeignsubsidiaries?
A.
TheU.S.incometaxesincomegeneratedbysubsidiariesincorporatedinforeigncountries.
B.
U.S.multinationalsdonotpaytaxontheirworldwideincomeifincorporatedintheU.S.
C.
TransferpricingwilleliminatetaxesbytheU.S.governmentonmultinationalcorporations.
D.
U.S.taxonforeignoperationsdoesnothavetobepaiduntiltheincomeisbroughtbacktotheU.S.
17.
Whyisauditingamultinationalcorporationpotentiallymoredifficultthanauditinganentitythathasonlydomesticoperations?
A.
Languagedifferences
B.
Culturaldifferences
C.
Multiplesetsofaccountingstandards
D.
Alloftheabove
18.
Whatistheentrypointformostcompaniesintotheworldofinternationalbusiness?
A.
Transferpricing
B.
Exporting
C.
Foreigndirectinvestment
D.
Cross-listingoninternationalstockexchanges
19.
ForaU.S.multinationalcorporation,consolidatingthefinancialstatementsofforeignsubsidiariesrequirestwosteps.First,theforeignsubsidiary'sstatementsmustberestatedaccordingtotheU.S.GAAP.Thenextstepisto:
A.
converttheaccountbalancesintoU.S.dollars.
B.
determinetheexchangerategainorloss.
C.
calculatethetranslationadjustment.
D.
restatetheincomeusinginternationalaccountingstandards.
20.
Whensettingtransferpricesamonginternationalsubsidiaries,thecorporationmust:
A.
makesurethatthetotaltaxisminimized.
B.
ensurethatthetransferpricesareacceptabletothetaxingauthoritiesinthecountriesinvolved.
C.
dowhateverittakestomaketaxespaidintheUnitedStatesaslowaspossible.
D.
followthetransferpricingpolicyusedfordomestictransfers.
21.
WhatistheprimaryprovisionoftheForeignCorruptPracticesAct?
A.
TospecifywhichcorruptpracticesareacceptableunderU.S.law
B.
TospecifyhowtoaccountforbribespaidbyU.S.corporationstoobtainbusinessfromforeigngovernments
C.
Toinforminternalauditorshowtodetectfraudinmultinationalcorporations
D.
ToprohibitU.S.companiesfrompayingbribestoforeigngovernmentofficialstoobtainbusiness
22.
Whatisakeyobjectiveofacompany'sperformanceevaluationsystem?
A.
Todeterminehowmuchtopayexecutivesinbonusesandothercompensation
B.
Toensurethatthedomesticandforeignoperationsareachievingtheirobjectives
C.
Tocontrolforeignsubsidiaries
D.
Toassesstheeffectofforeignexchangeratesonpublishedfinancialstatements
23.
Whatistheprimaryroleofinternalauditinginamultinationalcorporation?
A.
Toassisttheexternalauditorsincompletingthefinancialstatementauditinatimelyfashion
B.
Tomakesurethatemployeescomplywithlocalcustomsandtraditions
C.
Toensurethatcorporatepoliciesandproceduresarebeingfollowedandtoassessoperatingefficiency
D.
Topreparetheconsolidatedfinancialstatementofthecorporationincompliancewithinternationalaccountingstandards
24.
BelmonteCorporation,withadivisionlocatedinGermany,musttranslateitsfinancialstatementsfromeurostoU.S.dollars.Whatisthemajoraccountingissueinvolvedintranslation?
A.
Mostaccountantsarenotconversantinforeigncurrencyexchange.
B.
U.S.GAAPmaydifferfromGermanGAAP.
C.
TheU.S.dollarhasbeensteadilyfallingrelativetotheeuro.
D.
Theresultingbalancesheetmaynotbalance.
25.
Theownershipandcontrolofforeignassets,suchasamanufacturingplant,iscalled:
A.
ahedge.
B.
foreigndirectinvestment.
C.
anoption.
D.
derivatives.
26.
Whatisa"greenfield"investment?
A.
Farmlandheldforspeculation
B.
Foreigndirectinvestmentwherebyanewfacilityisconstructedabroad
C.
Purchasinganexistingfacilityasaforeigndirectinvestment
D.
AforeigninvestmentthathasbeenapprovedbytheEnvironmentalProtectionAgency
27.
Whichofthefollowingisanexampleofa"greenfield"investment?
A.
NikecontractswithafootwearcompanyinChinatomakeathleticshoes.
B.
AChineseoilcompanybuysaU.S.oilcompany.
C.
Toyota,aJapaneseautomaker,buildsanassemblyplantinOhio.
D.
Daimler,aGermanautomaker,mergeswithChrysler,aU.S.automaker.
28.
Whichofthefollowingisareasonforforeigndirectinvestment?
A.
Toreducecostsofdoingbusiness
B.
Toprotectdomesticmarkets
C.
Toprotectforeignmarkets
D.
Alloftheabove
29.
Atranslationadjustmentmaybenecessarywhen:
A.
notestofinancialstatementsareconvertedfromonelanguagetoanother.
B.
foreigncurrencyfinancialstatementsareconvertedtoanothercurrency.
C.
purchasinggoodsfromadomesticcompany.
D.
hedgingforeigncurrency.
30.
Whatis"transferpricing?
"
A.
Thecosttoconvertfromonecountry'sGAAPtoanothercountry'sGAAP
B.
Thevalueofsalesmadeinaforeigncountry
C.
Thepricesestablishedtorecordanintercompanysale
D.
Thetaxespaidonsalesinaforeigncountry
31.
ABCOCorporationhasitstwowhollyownedsubsidiaries,DeltaandParry,inCountryAandCountryB,respectively.ParrypurchasesapartforitsproductionfromDelta.CountryB
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