Question 1

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.

Accepted Answer

The answer of Accounting terminology
Listed below are nine technical accounting...

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  Sales and Use taxes in the United States. 
B)  Laws regulating the transfer of profits out of a country. 
C)  Tax and tariff regulations. 
D)  Restricted access to communication and transportation networks.

Question 5

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.

Question 6

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

Accepted Answer

A)  United States. 
B)  Great Britain. 
C)  Japan. 
D)  Germany.

Question 7

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.

Question 8

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.

Accepted Answer

The answer of Prepare journal entries for the following transactions...

Question 9

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.

Question 10

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

Accepted Answer

A)  Exporting. 
B)  International licensing. 
C)  Joint ventures. 
D)  Establishing a wholly owned foreign subsidiary.

Question 11

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.

Question 12

The number of dollars equivalent to F1F1F1S1F1F1F1050,000 on this date is:

Accepted Answer

A)  31,250. 
B)  80,000. 
C)  32,500. 
D)  Depends upon whether the item is a receivable or a payable.

Question 13

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

Accepted Answer

A)  Internal procedures. 
B)  Who owns stock in the company. 
C)  Production processes. 
D)  Accounting outputs.

Question 14

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.

Question 15

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

Accepted Answer

The answer of Differentiate between Adoption and Convergence as related...

Question 16

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.

Question 17

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)

Accepted Answer

A)  $1,117.00. 
B)  $4,132.90. 
C)  $3,312.44. 
D)  $3,700.00.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 15: Global Business and Accounting

"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?

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) :

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.