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

The purpose of accounting is to communicate the organization's financial position to company managers,investors,banks,and the government.

Which of the following statements is true about bilateral netting?

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

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.

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

Two friends consider opening a driving range for golfers.They estimate such a range could generate rentals of 20,000 buckets at $3 a bucket in the first year,and expect rentals to grow at 750 buckets a year thereafter.The equipment requirements include ball dispensing machines,the ball pick-up,and the vehicle tractor that will cost $8,000,$2,000,and $8,000 respectively.The net working capital is $3,000 to start with,and is expected to grow at 5% per year.The annual fixed operating cost for balls and baskets will initially be $3,000 and is expected to grow at 5% per year.The fixed costs of leasing the land and its upkeep will be $53,000 per year.The above is an example of:

_____ refers to a central location where the cash balances of a parent and its subsidiaries are pooled.

Which of the following statements holds true for transnational financing?

Sharia prohibits "gharar" which means "_____" and includes conventional practices like short selling.

_____ refers to a country that has very advantageous (i.e.,low) corporate income taxes.

Which of the following statements holds true for trade credit?

Adhering to GAAP as well as IFRS helps companies in creating globally shared service center for accounting,rather than having accounting departments in different regions.

Joan wants to buy a new loom for her weaving business.She applies to a bank for a loan of $50,000.It is a long-term loan that she intends to pay in five years time at a fixed interest rate.This is an example of:

_____ refers to Islamic law which,in terms of finance,prohibits charging interest on money and other common business activities,including short selling.

Explain how Brazilian government policies have boosted foreign investment and innovation.

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:

_____ 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 centralized financial organization structure?

In the case of _____ financing,firms can borrow money from banks or by selling bonds.

Why do some firms choose a decentralized financial organization structure?