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The factor used to convert from one countrys currency to another countrys currency is called the :
a) Interest rate
b) Cost of capital
c) Exchange rate
d) Strike price
2. Purchasing an option to buy foreign currency at a predetermine exchange rate in order to reduce
exchange risk is called:
a) Transfer pricing
b) Hedging
c) Translating
d) Cross-Listing
3. ABCO Corporation has a parts division in country A. Its assembly division is in country B, which has
a higher tax rate than country A. To minimize the corporations overall income tax, how should
ABCO set its transfer prices between its parts and assembly divisions?
a) The parts division should sell parts to the assembly division at low prices
b) The parts division should sell parts to the assembly division at high prices
c) It doesnt matter what transfer price is used because the divisions are part of the same
company
d) Transfer pricing has nothing to do with the total tax paid by the corporation
4. The accounting standards in code law countries tend to be :
a. Very detailed
b. Formulated by organizations such as the FASB
c. Stated broadly without much guidance on accounting procedures
d. Very conservative
5. C. Similar
6. What term is used to refer to a cultural aversion to ambiguous situations?
a) Uncertainty avoidance
b) Masculinity
c) Power distance
d) Individualism
7. De
a)
b)
c)
d)
8. In addition to the International Accounting Standards Board (IASB) which of the following
organizations was considered to be one of the two most important forces in efforts to harmonize
accounting standards ?
a) U.S. Financial Accounting Standards Board (FASB)
b) United Nations (UN)
c) North Atlantic Treaty Organization (NATO)
d) European (EU)
9. The second phase (1989-1993) of the IASCs efforts to harmonize accounting standards was aimed
at what goal ?
a) Making international accounting standards more flexible
b) Creating greater financial statement comparability across countries
c) Adding new alternatives for accounting practice desired by the international
community
d) Strengthening the enforcement power of the IASC
10. According to the Framework for Preparation and Presentation of Financial Statements of the
IASB, which of the following is NOT required for asset recognition?
a) Control of the resources
b) Ownership of the resources
c) Future economic benefit
d) Reliable measurement of the cost or value of the resources
5. What kind of exposure exists for recognized foreign currency assets and liabilities
a. cash flow exposure
6. Which items in the balance sheet are subject to accounting exposure?
a. all accounts translated at current exchange rate
7. Which of the following methods for translating foreign currency financial statements attempts to
produce consolidated financial statements as if a subsidiary had actually used the parent
companys currency for all its transactions?
a. temporal method
8. Under the temporal method of consolidating foreign currency financial statements, what exchange
rate should be used for translating the depreciation expense recorded by asubsidiary?
a. historical rate
9. Under FASB ASC 830, Foreign currency matters, what is the definition of Functional currency
a. the primary currency used by the subsidiary
10. How does FASB ASC 830, Foreign currency matters define a Highly infliationary economy?
a. Cumulative three year inflation over 100%
CASE 1
CASE 2
ESSAY
reporting standards.