Exam (elaborations)
Test Bank for International Accounting Midterm 6th Edition by Timothy Doupnik
- Course
- Institution
Test Bank for International Accounting Midterm 6th Edition by Timothy Doupnik
[Show more]
Content preview
Test Bank for International AccountingMidterm 6th Edition by Timothy Doupnik
Foreign exchange risk arises when - ANSBusiness transactions are denominated in foreign
currencies
As used in international accounting, a "hedge" is - ANSA business transaction made to reduce
the exposure of foreign exchange risk
The ownership and control of foreign assets such as a manufacturing plant is called -
ANSForeign Direct Investment
Define Greenfield Investment - ANSA form of foreign direct investment where a parent company
starts a new venture in a foreign company by constructing new operational facilities from the
ground up
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 corporation's overall income tax, how
should ABCO set its transfer prices between its parts and assembly divisions? - ANSThe parts
division should sell parts to the assembly division at high prices
Foreign companies whose stocks are listed on the New York Stock Exchange must report their
income in terms of - ANSThe generally accepted accounting principles of the United States
When a foreign subsidiary pays dividends to its US parent, this process is known as -
ANSRepatriation
Why would a company want its stock cross-listed on the stock exchanges of several countries? -
ANSTo gain access to more financial resources than are available in its home country
What group is primarily responsible for the creation of International Financial Reporting
Standards (IFRS)? - ANSInternational Accounting Standards Board (IASB)
Assume that ABCO is a US multinational corporation. Its foreign subsidiaries must report
income in their respective countries according to GAAP in those countries. How must ABCO
report its consolidated financial statements? - ANSSince ABCO is a US corporation, US
generally accepted accounting principles must be used for the consolidated financial statements
What is the primary provision of the Foreign Corrupt Practices Act? - ANSTo prohibit US
companies from paying bribes to foreign government officials to obtain business
, Which of the following is not a problem caused by accounting diversity? - ANSLack of qualified
international auditors
In countries such as the US, there is great demand for public disclosure of accounting
information. What is the reason for this? - ANSBusinesses rely heavily on financing through
issuance of stock to the public
Historical cost is the primary basis for asset valuation under US GAAP. Why is historical cost
NOT as important in the accounting systems of Latin America as in the US? - ANSThe countries
of Latin America have experienced very high rates of inflation, which would make historical
costs meaningless to readers of financial statements
What does "harmonization" mean in the context of international accounting? - ANSReducing the
diversity of accounting standards
It is generally believed that the 1997 financial crisis in East Asia was partly due to accounting
factors in that part of the world. Which of the following accounting values was lacking in that part
of the world, and thereby contributed to the crisis? - ANSTransparency
International accounting diversity can be found in terms of (3) - ANSTerminology used in the
financial statements, the amount of information disclosed in the financial statements, the order
of items in the financial statements
What term is used to refer to the decision about whether to report an item in the financial
statements? - ANSRecognition
What method of fixed asset valuation would most likely be used in countries that regularly
experience high rates of inflation? - ANSFair value
Under US GAAP, fixed assets are generally reported on the balance sheet at their -
ANSHistorical Cost
IFRS allows for which two methods of valuing property, plant, and equipment - ANSHistoric cost
and fair value
From a practical standpoint, what is the goal of accounting standards harmonization? -
ANSReducing the conflict among national accounting standards
What does convergence mean? - ANSConvergence means developing high-quality standards in
partnership with national standard-setters
What do proponents of convergence believe convergence would do? - ANSHelp raise the
quality of accounting practice internationally
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller AllLegitExams. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
55534 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 15 years now