Question 1

An international joint venture involves the creation of a new company that is owned by two or more firms from different countries.

Accepted Answer

A) True 
 B)False

Question 2

Although cultural differences are significant in business dealings,they pose no difficulties to the design and implementation of an accounting system.

Accepted Answer

A) True 
 B)False

Question 3

Flynn Corporation purchased bicycles from a British manufacturer at a price of 45,000 British pounds on November 15,2014 with payment due in 60 days.Using the following exchange rates,what gain or loss from currency fluctuations should be recognized in 2014 and 2015,respectively?

Accepted Answer

A) A $2,250 loss in 2014 and a $900 gain in 2015. 
B) No gain or loss in 2014 and a $1,350 loss in 2015. 
C) A $2,250 gain in 2014 and a $900 loss in 2015. 
D) No gain or loss in 2014 and a $1,350 gain in 2015. 
A) A $2,250 loss in 2014 and a $900 gain in 2015. 
B) No gain or loss in 2014 and a $1,350 loss in 2015. 
C) A $2,250 gain in 2014 and a $900 loss in 2015. 
D) No gain or loss in 2014 and a $1,350 gain in 2015.

Question 4

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:

Accepted Answer

A) Credited Sales for $32,500. 
B) Debited Cash for $1,040,000. 
C) Credited Gain on Fluctuation of Foreign Currency for $32,500. 
D) Debited Loss on Fluctuation of Foreign Currency for $32,500. 
A) Credited Sales for $32,500. 
B) Debited Cash for $1,040,000. 
C) Credited Gain on Fluctuation of Foreign Currency for $32,500. 
D) Debited Loss on Fluctuation of Foreign Currency for $32,500.

Question 5

Licensing maintains control over product creation while exporting involves giving up some control for a monetary return.

Accepted Answer

A) True 
 B)False

Question 6

Assume the exchange rate for the Canadian dollar is rising relative to the U.S.dollar.An American company will incur losses from this rising exchange rate if it is making:

Accepted Answer

A) Credit sales to Canadian companies at prices stated in Canadian dollars. 
B) Credit purchases from Canadian companies at prices stated in U.S.dollars. 
C) Credit sales to Canadian companies at prices stated in U.S.dollars. 
D) Credit purchases from Canadian companies at prices stated in Canadian dollars. 
A) Credit sales to Canadian companies at prices stated in Canadian dollars. 
B) Credit purchases from Canadian companies at prices stated in U.S.dollars. 
C) Credit sales to Canadian companies at prices stated in U.S.dollars. 
D) Credit purchases from Canadian companies at prices stated in Canadian dollars.

Question 7

One of the most important requirements of the Foreign Corrupt Practices Act is the maintenance of an adequate system of internal control procedures.

Accepted Answer

A) True 
 B)False

Question 8

Hedging refers to the strategy of taking offsetting positions so that gains in one currency offset losses in another currency.

Accepted Answer

A) True 
 B)False

Question 9

Accounting practices are affected by all of the following except:

Accepted Answer

A) Political systems. 
B) Economic systems. 
C) Technology and infrastructure. 
D) Management knowledge of accounting practices. 
A) Political systems. 
B) Economic systems. 
C) Technology and infrastructure. 
D) Management knowledge of accounting practices.

Question 10

Foreign currency transactions
The following table summarizes the facts of five independent cases (labeled a through e)of American companies engaging in credit transactions with foreign corporations while the foreign exchange rate is fluctuating:   Instructions:
After evaluating the information about each case,fill the blank space that has been left in one of the four columns.
The content of each column and the word or words that you should enter in the blank spaces are described below:
Column 1 indicates the type of credit transaction in which the American company engaged with the foreign corporations.The answer entered in this column should be either "Sales" or "Purchases."
Column 2 indicates the currency in which the invoice price is stated.The answer may be either "U.S.dollars" or "Foreign currency."
Column 3 indicates the direction in which the foreign currency exchange rate has moved between the date of the credit transaction and the date of settlement.The answer in this column may be either "Rising" or "Falling."
Column 4 indicates the effect of the exchange rate fluctuation upon the income of the American company.The answers entered in this column are to be selected from the following: "Gain," "Loss," or "No effect."

Accepted Answer

The answer of Foreign currency transactions
The following table summarizes the...

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

The accounting profession has been slow to develop in Asian countries because of strict governmental control of accounting regulations.

Accepted Answer

A) True 
 B)False

Question 13

The Foreign Corrupt Practices Act (FCPA)affects all of the following except:

Accepted Answer

A) United States companies. 
B) Foreign companies operating in the United States. 
C) Foreign companies operating solely in their home country. 
D) Affiliates and agents of a United States company or a foreign company operating in the United States. 
A) United States companies. 
B) Foreign companies operating in the United States. 
C) Foreign companies operating solely in their home country. 
D) Affiliates and agents of a United States company or a foreign company operating in the United States.

Question 14

Establishing international accounting standards is the responsibility of:

Accepted Answer

A) Securities and Exchange Commission. 
B) International Accounting Standards Board. 
C) Financial Accounting Standards Board. 
D) Accounting Association of America. 
A) Securities and Exchange Commission. 
B) International Accounting Standards Board. 
C) Financial Accounting Standards Board. 
D) Accounting Association of America.

Question 15

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

Accepted Answer

A) Will always be better off than if the contracts were not hedged. 
B) Recognizes a net loss if the foreign exchange rate increases. 
C) Avoids net losses from fluctuations in foreign exchange rates. 
D) Recognizes a net gain if the foreign exchange rate increases. 
A) Will always be better off than if the contracts were not hedged. 
B) Recognizes a net loss if the foreign exchange rate increases. 
C) Avoids net losses from fluctuations in foreign exchange rates. 
D) Recognizes a net gain if the foreign exchange rate increases.

Question 16

Which of the following statements is correct?

Accepted Answer

A) Germany requires companies to provide extensive segment disclosure. 
B) Brazil has the highest number of auditors per capita. 
C) The United States is the only country that permits companies to use LIFO to account for inventory. 
D) Some countries amortize goodwill,while other countries use an impairment test. 
A) Germany requires companies to provide extensive segment disclosure. 
B) Brazil has the highest number of auditors per capita. 
C) The United States is the only country that permits companies to use LIFO to account for inventory. 
D) Some countries amortize goodwill,while other countries use an impairment test.

Question 17

Canada has adopted IFRS,but Mexico and the European Union have chosen not to adopt International Financial Reporting Standards.

Accepted Answer

A) True 
 B)False

Question 18

"Adoption" means abandoning a country's financial reporting standards and replacing them with:

Accepted Answer

A) International Accounting Standards. 
B) International Financial Accounting Standards. 
C) Generally Accepted Accounting Principles. 
D) Securities and Exchange Commission Principles. 
A) International Accounting Standards. 
B) International Financial Accounting Standards. 
C) Generally Accepted Accounting Principles. 
D) Securities and Exchange Commission Principles.

Exam 15: Global Business and Accounting

An international joint venture involves the creation of a new company that is owned by two or more firms from different countries.

Although cultural differences are significant in business dealings,they pose no difficulties to the design and implementation of an accounting system.

Flynn Corporation purchased bicycles from a British manufacturer at a price of 45,000 British pounds on November 15,2014 with payment due in 60 days.Using the following exchange rates,what gain or loss from currency fluctuations should be recognized in 2014 and 2015,respectively?

Licensing maintains control over product creation while exporting involves giving up some control for a monetary return.

Assume the exchange rate for the Canadian dollar is rising relative to the U.S.dollar.An American company will incur losses from this rising exchange rate if it is making:

One of the most important requirements of the Foreign Corrupt Practices Act is the maintenance of an adequate system of internal control procedures.

Hedging refers to the strategy of taking offsetting positions so that gains in one currency offset losses in another currency.

Accounting practices are affected by all of the following except:

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

The accounting profession has been slow to develop in Asian countries because of strict governmental control of accounting regulations.

The Foreign Corrupt Practices Act (FCPA)affects all of the following except:

Establishing international accounting standards is the responsibility of:

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

Which of the following statements is correct?

Canada has adopted IFRS,but Mexico and the European Union have chosen not to adopt International Financial Reporting Standards.

"Adoption" means abandoning a country's financial reporting standards and replacing them with:

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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