Exam 15: Understanding the Roles of Finance and Accounting in Global Competitive Advantage

On January 1, 2009, Company X signs an agreement to import 100 pounds of coffee from Company Y on April 1, 2009 at a price of $5.00 per pound.On April 1, 2009, the market price of coffee is $6.00 a pound.Instead of having to pay $6.00 a pound for coffee, the importer needs to pay $5.00.However, the importer's gain is the exporter's loss.The exporter must now sell 100 pounds of coffee at only $5.00 per pound even though it could have sold it in the open market for $6.00 per pound if it had not signed the agreement.The above is an example of a(n):

Which of the following statements holds true for generally accepted accounting principles (GAAP)?

The _____ is the major entity proposing international standards of accounting and was formerly known as the International Accounting Standards Committee (IASC).

_____ refers to the ways in which a multinational firm's assets are financed, from short-term borrowing to long-term debt and equity.

What are the disadvantages of transfer pricing?

Which of the following statements holds true for transnational investment?

Which of the following statements holds true for equity financing?

The United States doesn't mandate using the IFRS.Instead, the United States has the _____, which issues standards known as generally accepted accounting principles (GAAP).

An Indonesian importer needs U.S.dollars to pay for the shipment that he has just received.He will have to purchase the dollars to pay for the shipment.He exchanges rupiah for U.S.dollars which he pays to the foreign exporter.The rate at which he buys US dollars in the market is known as the _____.

Which of the following statements holds true for international financial reporting standards (IFRS)?

Despite the costs associated with a forward contract, companies often prefer it to protect themselves against a potential larger downside loss.

One alternative investment strategy approved by the Sharia is _____ that allows profit and loss sharing.

The internal forward rate is a company-generated forecast of future spot-exchange rates.

_____ refers to the pricing that takes place between entities owned by the same parent firm where one subsidiary (or subunit of the company)charges another subsidiary (or subunit)for a product or service supplied to that subsidiary.

In countries where companies tend to rely more on banks for funding, accounting rules are framed such that assets are valued conservatively to protect a bank's investment.

Which of the following statements holds true for "mudarabah," an investment partnership approved by the Sharia?

The downsides of a(n)_____ financial organization structure are higher costs (due to having to hire more employees), some unavoidable duplication of effort, and a diminishment of control.

Governments use financial statements to ensure that the companies are paying their fair share of taxes.

McDonald's was the first foreign company to issue yuan-denominated bonds.

_____ refers to a method of foreign currency translation in which items in the subsidiaries' financial statements are translated at the current exchange rate into the currency of the parent corporation.