Exam 15: Global Business and Accounting

Payments made by American companies to motivate foreign officials to undertake actions more rapidly than they might otherwise are prohibited by the Foreign Corrupt Practices Act.

Exact Instruments sold equipment to a British research group at a price of 70,000 British pounds on December 1, 2011 with payment due in 90 days. Using the following exchange rates, what gain or loss from currency fluctuations should be recognized in 2011 and 2012, respectively? Dec. 1, 2011 $1.78 per British pound Dec) 31, 2011 $1.82 per British pound Mar) 1, 2012 $1.77 per British pound

An American corporation making purchases from foreign companies will experience gains and losses from exchange rate fluctuations if (a) the purchase prices are stated in terms of the foreign currency and (b) the purchases are made on account.

The statement that "the yen has fallen against the dollar" means that the yen has become less valuable relative to the dollar.

Utah Ranchers exports beef to Japan. In the space provided below, prepare journal entries to record the following events. 2010 Nov. 1 Sold beef steaks to a Japanese restaurant chain at a price of 1 million yen, due in 90 days. The current exchange rate is $0.0101 U. S. dollars per yen. (Utah uses the periodic inventory method.) Dec. 31 Utah made a year-end adjusting entry relating to the account receivable from the Japanese restaurant chain. The exchange rate at year-end is $0.0102 U. S. dollars per yen. 2011 Feb. 1 Received a check for $10,300 from the Universal Bank in full settlement of the receivable from the Japanese restaurant chain. The exchange rate at this date is $0.0103 U. S. dollars per yen.

Whenever an American corporation sells merchandise to a foreign company, the transaction must be stipulated in U.S. dollars.

The number of pounds equal to $50,000 on this date is:

A wholly owned international subsidiary exists when a company owns 100% of the equity in a U.S. foreign subsidiary.

The Foreign Corrupt Practices Act allows Americans doing business in countries where bribes are legal to also negotiate bribes.

Barter Corp. sold American telecommunications equipment to a British company for 650,000 pounds. On the sale date, the exchange rate was $1.65 per British pound, but when Barter received payment from its customer, the exchange rate was $1.60 per pound. When the foreign receivable was collected, Barter Enterprises:

Future contracts are used by companies to hedge against losses in foreign currencies.

When the government uses central planning to allocate resources and to determine output among various segments of the economy, this is known as:

A company has a "hedged position" when it has similar amounts of accounts receivable and accounts payable in that same foreign currency.

An International joint venture is:

With regard to this transaction, Brown's financial statements at December 31, 2011 include:

The number of Japanese yen equivalent to $40,000 on this date is: (rounded to whole )

Which of the following businesses or individuals would benefit most from a strong U.S. dollar?

Consider the following statement: "A strong dollar rose sharply against the British pound, but fell slightly against the Japanese yen." This statement indicates that:

Hayden, Inc. purchased knobs from a Greek company for 185,000 Euros. On the purchase date the exchange rate was $0.80 per Euro, but when Hayden paid the liability, the exchange rate was $0.70 per Euro. When this foreign account payable was paid, Hayden, Inc., recorded a:

Blue Waters is an American company that does business with several Japanese corporations. In recent months, Blue Waters has been reporting losses from increases in the exchange rate of the Japanese yen. The majority of Blue Waters transactions with the Japanese companies probably consist of: