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Chapter 15 Global Business and Accounting Answer Key
True / False Questions
1.
An international joint venture involves the creation of a new company that is owned by two
or more firms from different countries.
2.
A wholly owned international subsidiary exists when a company owns 100% equity control
of a foreign subsidiary.
3.
Licensing maintains control over product creation while exporting involves giving up some
control for a monetary return.
4.
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.
5.
Differences in accounting practices among countries reflect the different sources of capital
in those countries.
6.
Although cultural differences are significant in business dealings, they pose no difficulties
to the design and implementation of an accounting system.
7.
In a planned economy, the government uses central planning to allocate resources and
determines output among various segments of the economy.
8.
Cultural traits in the United States include high uncertainty avoidance and a long-term
orientation.
9.
The accounting profession has been slow to develop in Asian countries because of strict
governmental control of accounting regulations.
10.
The standards issued by the International Accounting Standards Board must be followed
by all multinational companies.
11.
Generally accepted accounting principles (GAAP) in the United States are fully converged
with International Financial Reporting Standards (IFRS).
12.
"Convergence" means abandoning a country's financial reporting standards and replacing
them with the International Financial Reporting Standards.
13.
Canada has adopted IFRS, but Mexico and the European Union have chosen not to adopt
International Financial Reporting Standards.
14.
"Convergence" means changing the country's existing standards so that IFRS "equivalent"
financial reports are produced.
15.
An exchange rate represents the price of one currency stated in terms of another.
16.
To convert a foreign currency into dollars, divide the foreign currency by the foreign
exchange rate.
17.
To convert a dollar amount into a foreign currency divide the dollar amount by the
exchange rate.
18.
A dollar that is stronger than the British pound would make travel to the United States
more attractive to British citizens.
19.
The statement that "the yen has fallen against the dollar" means that the yen has become
less valuable relative to the dollar.
20.
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.
21.
Whenever an American corporation sells merchandise to a foreign company, the
transaction must be stipulated in U.S. dollars.
22.
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.
23.
An increase in the exchange rate between a transaction date and the date of payment will
cause the debtor to incur a loss.
24.
As foreign exchange rates fall, importers based in the United States will lose and exporters
will gain.
25.
Hedging refers to the strategy of taking offsetting positions so that gains in one currency
offset losses in another currency.
26.
A company has a "hedged position" when it has similar amounts of accounts receivable
and accounts payable in the same foreign currency.
27.
Future contracts are used by companies to hedge against losses in foreign currencies.
28.
Making accurate estimates of costs is a challenge for global companies.
29.
The consolidated financial statements of a U.S.-based corporation are expressed in U.S.
dollars and conform to International Financial Reporting Standards.
30.
Companies choose a standard exchange rate to compute the cost buildup in their domestic
currency.
31.
Payments made by American companies to motivate foreign officials to undertake actions
more rapidly than they might otherwise are prohibited by the Foreign Corrupt Practices
Act.
32.
One of the most important requirements of the Foreign Corrupt Practices Act is the
maintenance of an adequate system of internal control procedures.
33.
The Foreign Corrupt Practices Act distinguishes between influence peddling and
facilitating payments. Facilitating payments are prohibited, while influence peddling is
allowed.
34.
The Foreign Corrupt Practices Act allows Americans doing business in countries where
bribes are legal to also negotiate bribes.
Multiple Choice Questions
35.
Accounting practices are affected by all of the following
except
:
36.
An international joint venture is:
37.
A U.S. public corporation's decision to globalize impacts all of following
except
:
38.
In Japan, financial reporting requirements are based primarily on the need to provide
information to:
39.
Low individualism and high long-term orientation is indicative of which culture?
40.
When the government uses central planning to allocate resources and to determine output
among various segments of the economy, this is known as:
41.
Which of the following is true about foreign trade zones?
42.
Establishing international accounting standards is the responsibility of:
43.
Which of the following statements is correct?
44.
"Adoption" means abandoning a country's financial reporting standards and replacing them
with:
45.
The price of one currency stated in terms of another currency is the:
46.
If the exchange rate for a foreign currency (stated in dollars) has risen, a dollar will
purchase:
47.
Consider the following statement: "A strong dollar rose sharply against the British pound,
but fell slightly against the Japanese yen." This statement indicates that:
In a recent financial journal, the exchange rate between the dollar and the British pound
was quoted in two ways:
48.
Refer to the above data. The number of pounds equal to $50,000 on this date is:
49.
Refer to the above data. The number of dollars equivalent to £50,000 on this date is:
In a recent financial journal, the exchange rate between the dollar and the Japanese yen
(¥) was quoted two ways:
50.
Refer to the above data. The number of Japanese yen equivalent to $40,000 on this date is:
(rounded to whole ¥)
51.
Refer to the above data. The number of dollars equivalent to ¥5,250,000 on this date is:
