Exam 15: Global Business and Accounting

Having a liability that is fixed in terms of a foreign currency results in a loss for the debtor if the exchange rate falls between the transaction date and the payment date.

On November 1,a French company purchased machinery from an American company for 800,000 euros when the exchange rate was $0.83.When preparing financial statements on December 31,assuming the rate for euros was $0.88,what amount of gain or loss should the American company report?

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:

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

Exact Instruments sold equipment to a British research group at a price of 70,000 British pounds on December 1,2017 with payment due in 90 days.Using the following exchange rates,what gain or loss from currency fluctuations should be recognized in 2017 and 2018,respectively?

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

Tuliptime,Inc.sold American fashions to a Japanese company at a price of 4 million yen.On the sale date,the exchange rate was $0.0100 per Japanese yen,but when Tuliptime received payment from its customer,the exchange rate was $0.0103 per yen.When the foreign receivable was collected,Tuliptime:

[The following information applies to the questions displayed below.] In a recent financial journal,the exchange rate between the dollar and the British pound was quoted in two ways: -The number of pounds equal to $50,000 on this date is:

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

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

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

In a planned economy,the government uses central planning to allocate resources and determine output among various segments of the economy.

Differentiate between adoption and convergence as related to International Financial Reporting Standards.

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:

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.

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?

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."

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

In a planned economy,ownership of land and the means of production are private,and markets dictate the allocation of resources and the output among segments of the economy.