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

Which of the following statements holds true for accounting standards?

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.

The current-rate method avoids the paper gains or losses problem of the temporal method.

Subsidiaries purchase assets at different times throughout the year and therefore the balance sheet of a multinational firm may not balance if the current-rate method is used.

_____ 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.

Why do multinational firms choose to raise money in foreign markets?

The process of _____ budgeting helps a firm decide which major investment projects will be most economically advantageous for the firm by assessing each project's benefits,costs,and risks.

What are the reasons for adopting one global accounting standard across the financial world?

_____ 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.

In case of a _____ contract the firm will pay that rate specified at the beginning of the contract regardless of what the current exchange rate is at the date of the final settlement.

Premium pricing,bank fees,and interest payments are costs associated with the current-rate method of foreign-currency translation.

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

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

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

Which of the following statements holds true for a decentralized financial organization structure?

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

_____ refers to all the stock exchanges worldwide where firms can buy and sell stock for financing an investment.

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