Exam 15: Global Business and Accounting

Accounting terminology Listed below are nine technical accounting terms introduced in this chapter: Each of the following statements may (or may not) describe one of these technical terms. In the space provided below each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms. _____ (a) The strategy of creating offsetting positions so that losses from currency fluctuations will be offset by gains resulting from the same fluctuations. _____ (b) The price of foreign currency, stated in terms of the domestic currency. _____ (c) An item likely to appear in the income statements of American-based importers when foreign exchange rates are rising. _____ (d) The organization responsible for developing uniform worldwide accounting standards. _____ (e) Payments made to foreign officials to expedite paperwork. _____ (f ) The process of restating an amount of foreign currency in terms of the equivalent number of U.S. dollars. _____ (g ) An item likely to appear in the income statements of American-based exporters when foreign exchange rates are falling.

"Adoption" means replacing current financial reporting standards with International Financial Reporting Standards.

An exchange rate represents the price of one currency stated in terms of another.

Which of the following environmental factors does not impact the cost of doing business in a foreign country?

Rochester, Inc. purchased cameras from a Japanese company at a price of 4 million yen. On the purchase date, the exchange rate was $0.0100 per Japanese yen, but when Rochester, Inc., paid the liability, the exchange rate was $0.0103 per yen. When this foreign account payable was paid, Rochester, Inc., recorded a:

Low individualism and high long-term orientation is indicative of which culture?

A corporation that uses a strategy of hedging all contracts specifying a foreign currency (i.e. foreign accounts receivable and foreign accounts payable):

Prepare journal entries for the following transactions for Inter-Global Co. October 10: Purchased merchandise on account from Le Monde, a French company, for 80,000 euros. The exchange rate was $0.82. November 2: Paid Le Monde for the merchandise purchased on October 1. The exchange rate at this date was $0.83. November 15: Sold merchandise to Nippon, a Japanese company for 300,000 yen on account. The rate of exchange was $0.0091. November 20: The Japanese company paid the full amount. The exchange rate was $0.0090. December 5: Sold merchandise to Ponti, an Italian company for $24,000. The exchange rate is $0.81. The Italian company agrees to pay in U.S. dollars. December 18: Collected the full amount from the Italian company.

Samson Corporation buys a foreign currency future contract as a hedging strategy to protect against possible losses from fluctuations in a particular foreign exchange. This strategy suggests that Samson Corporation has:

Of the following globalization strategies, which would be least demanding in terms of the quantity and variety of accounting information required?

At the current exchange rate of $1.40 per British pound, a one-day pass to Worldwide Theme Park of Florida sells for 45 pounds at travel agencies throughout Great Britain. If the exchange rate increases to $1.70 per pound, what will happen to the price of a one-day pass sold in Great Britain?

The number of dollars equivalent to 50,000 on this date is:

A U. S. public corporation's decision to globalize impacts all of following except:

Under the Foreign Corrupt Practices Act, American business firms are required to:

Differentiate between Adoption and Convergence as related to International Financial Reporting Standards.

The price of one currency stated in terms of another currency is the:

Walblue imports a desk from a French manufacturer for sale in its chain of U.S. stores. The cost of a desk to Walblue is 3,700 euros (€). What is the dollar cost of one of these desks if the exchange rate is currently 1.117 euros per U.S. dollar? (round to nearest cent)

To convert a foreign currency into dollars, divide the foreign currency by the foreign exchange rate.

Accounting as a profession did not exist in England prior to 1988.

Making accurate estimates of costs is a challenge for global companies.