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

Which of the following statements holds true for debt financing?

Some companies may gain greater efficiencies and stronger controls by making a move from the GAAP to the IFRS.

_____ refers to the company-generated forecast of future spot exchange rates.

What are the advantages of a fronting loan?

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

The Indian subsidiary of a US-based MNC purchased three Caterpillars for its mining work.At the end of the financial year,the financial statements of the subsidiaries need to be translated into the currency of the parent corporation.When the Caterpillars were purchased,the exchange rate was 50 INR= 1USD.The present exchange rate is 60 INR= 1USD.The financial statement of the Indian subsidiary is translated into the currency of the parent corporation at the exchange rate of 60 INR= 1USD.The above serves as an example of the _____ of foreign-currency translation.

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

In the United States and Great Britain,companies tend to rely more on banks for funding than on individual investors.

An interim step toward the United States adopting IFRS would be to permit US firms that operate globally to file only under IFRS,rather than under both GAAP and IFRS,thereby reducing their financial-statement preparation costs.

Which of the following statements holds true for fronting loan?

_____ refers to the organized trading of securities through exchanges.

What are the disadvantages of transfer pricing?

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

Companies face currency risk because they typically price their products and services in the local currency of each country in which they operate.

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:

An ice cream vendor signs a franchising agreement with the distributor.Under the agreement the distributor agrees to provide ice cream stock with a 10% discount on payment within 30 days,and a 20% discount on payment within 10 days.The distributor allows the operator 90 days to pay for the ice cream stock in full.The above serves as an example of:

What are the advantages of a centralized structure in an organization?

Most of the developed nations require consolidated statements so that losses can't be hidden under an unconsolidated subsidiary.

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

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