Question 1

What is the entry point for most companies into the world of international business?

Accepted Answer

A)  Transfer pricing 
B)  Exporting 
C)  Foreign direct investment 
D)  Cross-listing on international stock exchanges 
A)  Transfer pricing 
B)  Exporting 
C)  Foreign direct investment 
D)  Cross-listing on international stock exchanges

Question 2

Many countries have recently liberalized their investment laws. What is the primary reason for these actions?

Accepted Answer

A)  To make it more difficult for multinational companies to compete with domestic corporations 
B)  To encourage foreign direct investment 
C)  To enable funds to flow out of their country more easily 
D)  To make taxing foreign companies easier 
A)  To make it more difficult for multinational companies to compete with domestic corporations 
B)  To encourage foreign direct investment 
C)  To enable funds to flow out of their country more easily 
D)  To make taxing foreign companies easier

Question 3

The following data relates to Alpha Inc. and Sigma Solutions:   Which of the following statements is true of Alpha and Sigma?

Accepted Answer

A)  Sigma Solutions is more multinational as its ratio of foreign sales to total sales is more than Alpha Inc. 
B)  Alpha Inc. is more multinational as its ratio of foreign employment to total employment is more than Sigma Solutions. 
C)  Sigma Solutions has a higher multinationality index than that of Alpha Inc. 
D)  Alpha Inc. has a higher multinationality index than that of Sigma Solutions. 
A)  Sigma Solutions is more multinational as its ratio of foreign sales to total sales is more than Alpha Inc. 
B)  Alpha Inc. is more multinational as its ratio of foreign employment to total employment is more than Sigma Solutions. 
C)  Sigma Solutions has a higher multinationality index than that of Alpha Inc. 
D)  Alpha Inc. has a higher multinationality index than that of Sigma Solutions.

Question 4

Which of the following statements is true about international transfer pricing?

Accepted Answer

A)  It is a violation of the Foreign Corrupt Practices Act. 
B)  It is accomplished using guidelines set up by the FASB. 
C)  It can be used to minimize the amount of worldwide taxes. 
D)  It cannot be regulated by countries. 
A)  It is a violation of the Foreign Corrupt Practices Act. 
B)  It is accomplished using guidelines set up by the FASB. 
C)  It can be used to minimize the amount of worldwide taxes. 
D)  It cannot be regulated by countries.

Question 5

What group is primarily responsible for the creation of International Financial Reporting Standards (IFRS)?

Accepted Answer

A)  Financial Accounting Standards Board (FAS
B)  
B)  International Forum on Accountancy Development (IFA
D)  
C)  International Federation of Accountants (IF
A)  
D)  International Accounting Standards Board (IAS
B)  
A)  Financial Accounting Standards Board (FAS
B)  
B)  International Forum on Accountancy Development (IFA
D)  
C)  International Federation of Accountants (IF
A)  
D)  International Accounting Standards Board (IAS
B)

Question 6

Which of the following statements is true about U.S. taxation of foreign subsidiaries?

Accepted Answer

A)  The U.S. income taxes income generated by subsidiaries incorporated in foreign countries. 
B)  U.S. multinationals do not pay tax on their worldwide income if incorporated in the U.S. 
C)  Transfer pricing will eliminate taxes by the U.S. government on multinational corporations. 
D)  U.S. tax on foreign operations does not have to be paid until the income is brought back to the U.S. 
A)  The U.S. income taxes income generated by subsidiaries incorporated in foreign countries. 
B)  U.S. multinationals do not pay tax on their worldwide income if incorporated in the U.S. 
C)  Transfer pricing will eliminate taxes by the U.S. government on multinational corporations. 
D)  U.S. tax on foreign operations does not have to be paid until the income is brought back to the U.S.

Question 7

The ownership and control of foreign assets, such as a manufacturing plant, is called:

Accepted Answer

A)  a hedge. 
B)  foreign direct investment. 
C)  an option. 
D)  derivatives. 
A)  a hedge. 
B)  foreign direct investment. 
C)  an option. 
D)  derivatives.

Question 8

The operations of Silver Lights Inc. incorporated in the U.S. are spread out in Ireland, Finland, and Chile. Which of the following statements is true about the operations of Silver Lights Inc.?

Accepted Answer

A)  The financial statements of Silver Lights must be prepared in local currencies of the branch countries for consolidation purposes. 
B)  The external auditor of Silver Lights must be proficient in U.S. auditing and financial reporting standards to audit the operations of branch offices. 
C)  Silver Lights Inc. must give credit for the corporate tax paid as per U.S. tax laws to provide relief from double taxation. 
D)  The transfer of parts between U.S. operations and other branches should be at the highest acceptable price most profitable to Silver Lights Inc. keeping in view the rate of tax and tax authorities in respective nations. 
A)  The financial statements of Silver Lights must be prepared in local currencies of the branch countries for consolidation purposes. 
B)  The external auditor of Silver Lights must be proficient in U.S. auditing and financial reporting standards to audit the operations of branch offices. 
C)  Silver Lights Inc. must give credit for the corporate tax paid as per U.S. tax laws to provide relief from double taxation. 
D)  The transfer of parts between U.S. operations and other branches should be at the highest acceptable price most profitable to Silver Lights Inc. keeping in view the rate of tax and tax authorities in respective nations.

Question 9

Which of the following is true about foreign direct investment?

Accepted Answer

A)  It is a means of reducing transportation costs in export sales. 
B)  Since the 1980s, foreign direct investment has been relatively stable worldwide. 
C)  Only very large corporations are undertaking foreign direct investment. 
D)  It refers only to the amount of money U.S. corporations put into non-U.S. businesses. 
A)  It is a means of reducing transportation costs in export sales. 
B)  Since the 1980s, foreign direct investment has been relatively stable worldwide. 
C)  Only very large corporations are undertaking foreign direct investment. 
D)  It refers only to the amount of money U.S. corporations put into non-U.S. businesses.

Question 10

What is the advantage of foreign direct investment?

Accepted Answer

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 
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

Question 11

What currency is used in the United Kingdom?

Accepted Answer

A)  Crown 
B)  Euro 
C)  British pound 
D)  UK dollar 
A)  Crown 
B)  Euro 
C)  British pound 
D)  UK dollar

Question 12

Foreign exchange risk arises when:

Accepted Answer

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. 
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.

Question 13

Which of these European countries does NOT use the Euro as its domestic currency?

Accepted Answer

A)  France 
B)  United Kingdom 
C)  Ireland 
D)  The Netherlands 
A)  France 
B)  United Kingdom 
C)  Ireland 
D)  The Netherlands

Question 14

What is "transfer pricing?"

Accepted Answer

A)  The cost to convert from one country's GAAP to another country's GAAP 
B)  The value of sales made in a foreign country 
C)  The prices established to record an intercompany sale 
D)  The taxes paid on sales in a foreign country 
A)  The cost to convert from one country's GAAP to another country's GAAP 
B)  The value of sales made in a foreign country 
C)  The prices established to record an intercompany sale 
D)  The taxes paid on sales in a foreign country

Question 15

Purchasing an option to buy foreign currency at a predetermined exchange rate in order to reduce exchange risk is called:

Accepted Answer

A)  transfer pricing. 
B)  hedging. 
C)  translating. 
D)  cross-listing. 
A)  transfer pricing. 
B)  hedging. 
C)  translating. 
D)  cross-listing.

Question 16

What share of the world's gross domestic product (GDP) is generated by the 100 largest multinational companies?

Accepted Answer

A)  4% 
B)  12% 
C)  50% 
D)  75% 
A)  4% 
B)  12% 
C)  50% 
D)  75%

Question 17

A translation adjustment may be necessary when:

Accepted Answer

A)  notes to financial statements are converted from one language to another. 
B)  foreign currency financial statements are converted to another currency. 
C)  purchasing goods from a domestic company. 
D)  hedging foreign currency. 
A)  notes to financial statements are converted from one language to another. 
B)  foreign currency financial statements are converted to another currency. 
C)  purchasing goods from a domestic company. 
D)  hedging foreign currency.

Question 18

ABCO Corporation has its two wholly owned subsidiaries, Delta and Parry, in Country A and Country B, respectively. Parry purchases a part for its production from Delta. Country B 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 subsidiaries?

Accepted Answer

A)  Delta should sell parts to Parry at low prices. 
B)  Delta should sell parts to Parry at high prices. 
C)  It doesn't matter what transfer price is used because the subsidiaries are part of the same company. 
D)  Transfer pricing does not affect the total tax paid by the corporation. 
A)  Delta should sell parts to Parry at low prices. 
B)  Delta should sell parts to Parry at high prices. 
C)  It doesn't matter what transfer price is used because the subsidiaries are part of the same company. 
D)  Transfer pricing does not affect the total tax paid by the corporation.

Question 19

Foreign companies that are listed on the New York Stock Exchange (NYSE) and following their domestic GAAP must report their income in terms of:

Accepted Answer

A)  the International Accounting Standards. 
B)  the GAAP of their home country. 
C)  the GAAP of the United States. 
D)  All of the above 
A)  the International Accounting Standards. 
B)  the GAAP of their home country. 
C)  the GAAP of the United States. 
D)  All of the above

Question 20

What is the primary provision of the Foreign Corrupt Practices Act?

Accepted Answer

A)  To specify which corrupt practices are acceptable under U.S. law 
B)  To specify how to account for bribes paid by U.S. corporations to obtain business from foreign governments 
C)  To inform internal auditors how to detect fraud in multinational corporations 
D)  To prohibit U.S. companies from paying bribes to foreign government officials to obtain business 
A)  To specify which corrupt practices are acceptable under U.S. law 
B)  To specify how to account for bribes paid by U.S. corporations to obtain business from foreign governments 
C)  To inform internal auditors how to detect fraud in multinational corporations 
D)  To prohibit U.S. companies from paying bribes to foreign government officials to obtain business

What is the entry point for most companies into the world of international business?

Many countries have recently liberalized their investment laws. What is the primary reason for these actions?

The following data relates to Alpha Inc. and Sigma Solutions: Which of the following statements is true of Alpha and Sigma?

Which of the following statements is true about international transfer pricing?

What group is primarily responsible for the creation of International Financial Reporting Standards (IFRS)?

Which of the following statements is true about U.S. taxation of foreign subsidiaries?

The ownership and control of foreign assets, such as a manufacturing plant, is called:

The operations of Silver Lights Inc. incorporated in the U.S. are spread out in Ireland, Finland, and Chile. Which of the following statements is true about the operations of Silver Lights Inc.?

Which of the following is true about foreign direct investment?

What is the advantage of foreign direct investment?

What currency is used in the United Kingdom?

Foreign exchange risk arises when:

Which of these European countries does NOT use the Euro as its domestic currency?

What is "transfer pricing?"

Purchasing an option to buy foreign currency at a predetermined exchange rate in order to reduce exchange risk is called:

What share of the world's gross domestic product (GDP) is generated by the 100 largest multinational companies?

A translation adjustment may be necessary when:

Foreign companies that are listed on the New York Stock Exchange (NYSE) and following their domestic GAAP must report their income in terms of:

What is the primary provision of the Foreign Corrupt Practices Act?

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

International Taxation

International Transfer Pricing

Management Accounting Issues in Multinational Corporations

Auditing and Corporate Governance: An International Perspective

International Sustainability Reporting

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Exam 1: Introduction to International Accounting

What is the entry point for most companies into the world of international business?

Many countries have recently liberalized their investment laws. What is the primary reason for these actions?

The following data relates to Alpha Inc. and Sigma Solutions: Which of the following statements is true of Alpha and Sigma?

Which of the following statements is true about international transfer pricing?

What group is primarily responsible for the creation of International Financial Reporting Standards (IFRS)?

Which of the following statements is true about U.S. taxation of foreign subsidiaries?

The ownership and control of foreign assets, such as a manufacturing plant, is called:

The operations of Silver Lights Inc. incorporated in the U.S. are spread out in Ireland, Finland, and Chile. Which of the following statements is true about the operations of Silver Lights Inc.?

Which of the following is true about foreign direct investment?

What is the advantage of foreign direct investment?

What currency is used in the United Kingdom?

Foreign exchange risk arises when:

Which of these European countries does NOT use the Euro as its domestic currency?

What is "transfer pricing?"

Purchasing an option to buy foreign currency at a predetermined exchange rate in order to reduce exchange risk is called:

What share of the world's gross domestic product (GDP) is generated by the 100 largest multinational companies?

A translation adjustment may be necessary when:

Foreign companies that are listed on the New York Stock Exchange (NYSE) and following their domestic GAAP must report their income in terms of:

What is the primary provision of the Foreign Corrupt Practices Act?

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

International Taxation

International Transfer Pricing

Management Accounting Issues in Multinational Corporations

Auditing and Corporate Governance: An International Perspective

International Sustainability Reporting

Filters