Question 1

Companies choose a standard exchange rate to compute the cost buildup in their domestic currency.

Accepted Answer

A) True 
 B)False  True

Question 2

The Foreign Corrupt Practices Act distinguishes between influence peddling and facilitating payments.Facilitating payments are prohibited,while influence peddling is allowed.

Accepted Answer

A) True 
 B)False  False

Question 3

An international joint venture is:

Accepted Answer

A) A company owned by two or more companies from different countries. 
B) A contractual agreement between a company and a foreign party. 
C) A company that owns 100 percent of a foreign company. 
D) A company that owns more than 75 percent of a foreign company. 
A) A company owned by two or more companies from different countries. 
B) A contractual agreement between a company and a foreign party. 
C) A company that owns 100 percent of a foreign company. 
D) A company that owns more than 75 percent of a foreign company. A

Question 4

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:

Accepted Answer

A) Foreign accounts payable and expects the exchange rate to fall. 
B) Foreign accounts receivable and expects the exchange rate to rise. 
C) Foreign accounts payable and expects the exchange rate to rise. 
D) Foreign accounts receivable and expects the exchange rate to fall. 
A) Foreign accounts payable and expects the exchange rate to fall. 
B) Foreign accounts receivable and expects the exchange rate to rise. 
C) Foreign accounts payable and expects the exchange rate to rise. 
D) Foreign accounts receivable and expects the exchange rate to fall.

Question 5

If the exchange rate for a foreign currency (stated in dollars)has risen,a dollar will purchase:

Accepted Answer

A) An increased amount of that foreign currency. 
B) An unchanged amount of that foreign currency. 
C) A smaller amount of that foreign currency. 
D) An undetermined amount of that foreign currency. 
A) An increased amount of that foreign currency. 
B) An unchanged amount of that foreign currency. 
C) A smaller amount of that foreign currency. 
D) An undetermined amount of that foreign currency.

Question 6

Exporting transactions-journal entries
Jung Farms exports wheat to Germany.In the space provided below,prepare journal entries to record the following events.
Nov.15,2014: Sold wheat to a German restaurant chain at a price of 2 million euros,due in 90 days.The current exchange rate is $0.80 U.S.dollars per euro.(Jung uses the periodic inventory method.)
Dec.31,2014: Jung made a year-end adjusting entry relating to the account receivable from the German restaurant chain.The exchange rate at year-end is $0.85 U.S.dollars per Euro.
Feb.15,2015: Received a check for $1,640,000 from the InterContinental Bank in full settlement of the receivable from the German restaurant chain.The exchange rate at this date is $0.82 U.S.dollars per euro.

Accepted Answer

The answer of Exporting transactions-journal entries
Jung Farms exports wheat to...

Question 7

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:

Accepted Answer

A) Credit sales at prices stated in U.S.dollars. 
B) Credit sales at prices stated in Japanese yen. 
C) Credit purchases at prices stated in U.S.dollars. 
D) Credit purchases at prices stated in Japanese yen. 
A) Credit sales at prices stated in U.S.dollars. 
B) Credit sales at prices stated in Japanese yen. 
C) Credit purchases at prices stated in U.S.dollars. 
D) Credit purchases at prices stated in Japanese yen.

Question 8

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?

Accepted Answer

A) The price will be unchanged. 
B) The price will fall to 37 pounds. 
C) The price will increase to 54 pounds. 
D) The price will fall by 12 pounds. 
A) The price will be unchanged. 
B) The price will fall to 37 pounds. 
C) The price will increase to 54 pounds. 
D) The price will fall by 12 pounds.

Question 9

The consolidated financial statements of a U.S.-based corporation are expressed in U.S.dollars and conform to International Financial Reporting Standards.

Accepted Answer

A) True 
 B)False

Question 10

Differences in accounting practices among countries reflect the different sources of capital in those countries.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) Current ratio. 
B) Exchange rate. 
C) Facilitating payment. 
D) International clearing price. 
A) Current ratio. 
B) Exchange rate. 
C) Facilitating payment. 
D) International clearing price.

Question 12

"Convergence" means abandoning a country's financial reporting standards and replacing them with the International Financial Reporting Standards.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Trente Switch and Signal sold equipment to a Canadian transportation company at a price of 300,000 Canadian dollars with payment due in 60 days.On the date of sale,the exchange rate was 1.50 Canadian dollars per U.S.dollar.Trente decided to hedge the risk of currency fluctuations by purchasing 300,000 Canadian dollars with payment due in 60 days.If the exchange rate in 60 days is 1.25 Canadian dollars per U.S.dollar,Trente Switch and Signal will:

Accepted Answer

A) Recognize a net gain of $40,000 on the two transactions. 
B) Recognize a $40,000 gain when it collects the receivable and incur a $40,000 loss when it pays the liability. 
C) Incur a $40,000 loss when it collects the receivable and recognize a $40,000 gain when it pays the liability. 
D) Incur a net loss of $40,000 on the two transactions. 
A) Recognize a net gain of $40,000 on the two transactions. 
B) Recognize a $40,000 gain when it collects the receivable and incur a $40,000 loss when it pays the liability. 
C) Incur a $40,000 loss when it collects the receivable and recognize a $40,000 gain when it pays the liability. 
D) Incur a net loss of $40,000 on the two transactions.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) Refuse to transact business in countries that sanction official corruption. 
B) Report all bribery attempts to the International Monetary Fund and World Bank. 
C) Maintain an adequate system of internal control limiting access to company assets to authorized personnel. 
D) Maintain a list of all personnel employed by the company during the last 10 years. 
A) Refuse to transact business in countries that sanction official corruption. 
B) Report all bribery attempts to the International Monetary Fund and World Bank. 
C) Maintain an adequate system of internal control limiting access to company assets to authorized personnel. 
D) Maintain a list of all personnel employed by the company during the last 10 years.

Question 17

Which of the following is true about foreign trade zones?

Accepted Answer

A) They are illegal in the United States. 
B) Goods imported into these designated U.S.areas are duty free until they leave the zone. 
C) They have a special excise tax. 
D) They are areas outside the United States that offer special tax treatments. 
A) They are illegal in the United States. 
B) Goods imported into these designated U.S.areas are duty free until they leave the zone. 
C) They have a special excise tax. 
D) They are areas outside the United States that offer special tax treatments.

Question 18

Which of the following does not affect the cost associated with producing and selling goods and services in global markets?

Accepted Answer

A) Tariffs. 
B) Duties. 
C) Special trade zones. 
D) Sales or Use tax rates in the United States. 
A) Tariffs. 
B) Duties. 
C) Special trade zones. 
D) Sales or Use tax rates in the United States.

Question 19

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:

Accepted Answer

A) Debit to Inventory of $1,200. 
B) Loss of $1,200. 
C) Credit to Accounts Payable of $41,200. 
D) Gain of $1,200. 
A) Debit to Inventory of $1,200. 
B) Loss of $1,200. 
C) Credit to Accounts Payable of $41,200. 
D) Gain of $1,200.

Question 20

A contract giving the right to receive a specified quantity of foreign currency at a future date is known as a:

Accepted Answer

A) Hedging contract. 
B) Specified contract. 
C) Foreign contract. 
D) Future contract. 
A) Hedging contract. 
B) Specified contract. 
C) Foreign contract. 
D) Future contract.

Exam 15: Global Business and Accounting

Companies choose a standard exchange rate to compute the cost buildup in their domestic currency.

The Foreign Corrupt Practices Act distinguishes between influence peddling and facilitating payments.Facilitating payments are prohibited,while influence peddling is allowed.

An international joint venture is:

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:

If the exchange rate for a foreign currency (stated in dollars)has risen,a dollar will purchase:

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:

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 consolidated financial statements of a U.S.-based corporation are expressed in U.S.dollars and conform to International Financial Reporting Standards.

Differences in accounting practices among countries reflect the different sources of capital in those countries.

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

"Convergence" means abandoning a country's financial reporting standards and replacing them with the International Financial Reporting Standards.

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

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

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

Which of the following is true about foreign trade zones?

Which of the following does not affect the cost associated with producing and selling goods and services in global markets?

A contract giving the right to receive a specified quantity of foreign currency at a future date is known as a:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

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