International Accounting

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...