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Chapter 01
Introduction to International Accounting
Multiple Choice Questions
1. Which of the following groups is a supranational organization?
A) United Nations
B) Organization for Economic Cooperation and Development
C) International Federation of Accountants
D) All of the above
Answer: D Level: Easy LO: 1
2. Determination of net present value involves:
A) forecasting future profits and cash flows.
B) discounting future cash flows back to their present value.
C) analysis on an after-tax basis.
D) All of the above
Answer: D Level: Medium LO: 1
3. International accounting can be defined in terms of which the following levels?
A) Supranational organizations
B) Company
C) Country
D) All of the above
Answer: D Level: Easy LO: 1
4. The factor used to convert from one country's currency to another country's currency is called the:
A) Interest rate.
B) Cost of capital.
C) Exchange rate.
D) Strike price.
Answer: C Level: Easy LO: 2
5. What is the term used to describe the possibility that a foreign currency will decrease in US $ value over the life of an asset such as Accounts Receivable?
A) foreign exchange translation
B) foreign exchange risk
C) hedging
D) foreign currency options
Answer: B Level: Medium LO: 2
6. Foreign exchange risk arises when:
A) business transactions are denominated in foreign currencies.
B) sales are made to customers in a foreign country.
C) goods or services are purchased from suppliers in a foreign country.
D) accounting reports are prepared in a foreign currency.
Answer: A Level: Medium LO: 2
7. As used in international...