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

What facts must be considered by an organization when using centralized depositories?

Which of the following statements holds true for capital budgeting?

_____ 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.

What is the role of government in terms of international business and finance?

In countries like Switzerland, Germany, and Japan, accounting rules are designed to help individual investors.

The Mexican subsidiary of an American durables giant acquired a market research firm a few months ago. The rate of exchange at the time of acquisition was 12 pesos= 1 dollar. At the end of the financial year the subsidiaries' financial statements need to be translated into the currency of the parent corporation. The current exchange rate is 10 pesos= 1 dollar. The subsidiaries' financial statement is translated into the currency of the parent corporation at the exchange rate of 12 pesos= 1 dollar. The above serves as an example of the _____ of foreign-currency translation.

Which of the following statements holds true for debt financing?

The advantage of the _____ agreement between the parent and foreign subsidiaries is that if the exchange rate changes, the subsidiary will be not be blamed or credited for the change.

_____ refers to a method of foreign currency translation that uses exchange rates based on the rate at which the assets and liabilities were originally acquired or incurred.

Which of the following statements holds true for a consolidated financial statement?

In which of the following countries is the use of the international financial reporting standards (IFRS) not mandatory?

GE is commissioned to build a new power station for which the overall construction effort is contracted through GE Power Systems. But in addition to generators, GE may need other items such as switching technology or light fixtures that are manufactured by its subsidiary. GE Power Systems would purchase items it doesn't manufacture internally from GE Automation, another subsidiary of GE and then sell them on to the customer as part of the construction project. The above serves as an example of:

_____ is the risk of a change in the exchange rate that will adversely affect the company.

The regional CFOs play an important role in the functioning of an organization with a decentralized structure. Explain.

Most IASB statements provide three acceptable alternatives since it is difficult to get an agreement while formulating the international reporting standards.

Which of the following statements holds true for transnational financing?

An organization wants to raise cash in order to fund its expansion plans. The company that currently has 500,000 ordinary shares decides to issue 125,000 new shares to raise cash. The above is an example of:

Multinational firms often organize as separate legal entities (i.e., companies) in different countries to gain advantages, such as limiting liability or taking advantage of local corporate tax regulations.

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

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