Question 1

Which of the following is true of responsibility accounting?

Accepted Answer

A)  It suggests that foreign subsidiaries should be held responsible for profitability of the parent companies. 
B)  Responsibility accounting suggests that local manager should be held responsible for the translation adjustment. 
C)  It suggests that costs, revenues, assets, and liabilities should be traced to the individual manager who is responsible for them. 
D)  It suggests that managers should be held accountable for items that are both controllable and uncontrollable. 
A)  It suggests that foreign subsidiaries should be held responsible for profitability of the parent companies. 
B)  Responsibility accounting suggests that local manager should be held responsible for the translation adjustment. 
C)  It suggests that costs, revenues, assets, and liabilities should be traced to the individual manager who is responsible for them. 
D)  It suggests that managers should be held accountable for items that are both controllable and uncontrollable.

Question 2

Implementing multinational corporate strategy to influence human behavior in a positive way should include:

Accepted Answer

A)  a target for managers that is possible under ideal conditions. 
B)  consideration of cultural differences across units. 
C)  all exchange rate gains and losses. 
D)  measures of profit, residual income, and return on investment for all units. 
A)  a target for managers that is possible under ideal conditions. 
B)  consideration of cultural differences across units. 
C)  all exchange rate gains and losses. 
D)  measures of profit, residual income, and return on investment for all units.

Question 3

Novo Limited uses the same management control system in all of its 100 facilities throughout the world on the assumption that the culture at the home office is applicable to all other locations. What principle underlies Novo's control system?

Accepted Answer

A)  Polycentrism 
B)  Ethnocentrism 
C)  Geocentrism 
D)  Egocentrism 
A)  Polycentrism 
B)  Ethnocentrism 
C)  Geocentrism 
D)  Egocentrism

Question 4

What term is used to describe the process involving revising existing goals and adopting new goals?

Accepted Answer

A)  Strategy formulation 
B)  Strategic planning 
C)  Strategy implementation 
D)  Capital budgeting 
A)  Strategy formulation 
B)  Strategic planning 
C)  Strategy implementation 
D)  Capital budgeting

Question 5

If only one currency is used for evaluating subsidiary performance in a multinational corporation, what currency is it most likely to be?

Accepted Answer

A)  Euros 
B)  Local currency of the subsidiary 
C)  Currency of the parent company's home country 
D)  None of the above 
A)  Euros 
B)  Local currency of the subsidiary 
C)  Currency of the parent company's home country 
D)  None of the above

Question 6

Schlamp & Co. is considering building a manufacturing facility in Country Z, which has changed it labor laws frequently and dramatically in the past decade. What kind of risk is created by these legislative actions?

Accepted Answer

A)  Physical risk 
B)  Political risk 
C)  Financial risk 
D)  Economic risk 
A)  Physical risk 
B)  Political risk 
C)  Financial risk 
D)  Economic risk

Question 7

Which of the following is NOT a perspective under the balanced scorecard approach?

Accepted Answer

A)  Parent company perspective 
B)  Internal business perspective 
C)  Customer perspective 
D)  Financial perspective 
A)  Parent company perspective 
B)  Internal business perspective 
C)  Customer perspective 
D)  Financial perspective

Question 8

Which capital budgeting technique recognizes the time value of money?

Accepted Answer

A)  Payback period 
B)  Internal rate of return 
C)  Book rate of return 
D)  Return on investment 
A)  Payback period 
B)  Internal rate of return 
C)  Book rate of return 
D)  Return on investment

Question 9

Under what condition should the gain or loss from translating foreign currency profit of subsidiary into the parent's home currency be included in the subsidiary's measure of performance?

Accepted Answer

A)  If the subsidiary manager is authorized to hedge the translation exposure 
B)  If there is a translation gain, but not if there is a translation loss 
C)  If the multinational corporation is using the same method of translation for performance evaluation as it does for financial reporting 
D)  If the impact on cash flows from foreign exchange is minimal 
A)  If the subsidiary manager is authorized to hedge the translation exposure 
B)  If there is a translation gain, but not if there is a translation loss 
C)  If the multinational corporation is using the same method of translation for performance evaluation as it does for financial reporting 
D)  If the impact on cash flows from foreign exchange is minimal

Question 10

Influencing subordinates to behave in accordance with the goals and objectives of the organization is referred to as:

Accepted Answer

A)  performance evaluation. 
B)  management control. 
C)  strategic planning. 
D)  goal congruence. 
A)  performance evaluation. 
B)  management control. 
C)  strategic planning. 
D)  goal congruence.

Question 11

Why is depreciation added to net income to determine cash flow from operations?

Accepted Answer

A)  To compensate for financial risk. 
B)  Depreciation is an expense but not a cash outflow. 
C)  It is standard procedure when capital budgeting for a multinational corporation. 
D)  Net income is understated due to excessive depreciation. 
A)  To compensate for financial risk. 
B)  Depreciation is an expense but not a cash outflow. 
C)  It is standard procedure when capital budgeting for a multinational corporation. 
D)  Net income is understated due to excessive depreciation.

Question 12

Which of the following is a true statement about the use of the payback period technique in capital budgeting?

Accepted Answer

A)  It is simple to use and understand. 
B)  It considers the time value of money. 
C)  It is not possible to appraise risk with this technique. 
D)  It is mainly used to measure profitability of a project. 
A)  It is simple to use and understand. 
B)  It considers the time value of money. 
C)  It is not possible to appraise risk with this technique. 
D)  It is mainly used to measure profitability of a project.

Question 13

SSM Corporation, a multinational healthcare system, measures the number of minutes between a patient's arrival at the emergency room and the time he/she is seen by a physician. This measure focuses on what aspect of the balanced scorecard?

Accepted Answer

A)  Financial perspective 
B)  Customer perspective 
C)  Internal business processes perspective 
D)  Innovation and learning perspective 
A)  Financial perspective 
B)  Customer perspective 
C)  Internal business processes perspective 
D)  Innovation and learning perspective

Question 14

Which of the following factors is generally considered in performing the environmental analysis phase of strategy formulation?

Accepted Answer

A)  Competitors 
B)  Government regulations 
C)  Customer demand 
D)  All of the above 
A)  Competitors 
B)  Government regulations 
C)  Customer demand 
D)  All of the above

Question 15

Which of the following is NOT an influence affecting the operating environment of foreign subsidiaries?

Accepted Answer

A)  Regulatory controls 
B)  Social norms and attitudes 
C)  Inflation rates 
D)  All of the above are influences. 
A)  Regulatory controls 
B)  Social norms and attitudes 
C)  Inflation rates 
D)  All of the above are influences.

Question 16

Why is the multinational capital budgeting process more complex than capital budgeting in a domestic environment?

Accepted Answer

A)  Cash flows must be predicted. 
B)  An appropriate discount rate must be selected. 
C)  Involvement of additional risks affecting future cash flows. 
D)  The payback period is shorter. 
A)  Cash flows must be predicted. 
B)  An appropriate discount rate must be selected. 
C)  Involvement of additional risks affecting future cash flows. 
D)  The payback period is shorter.

Question 17

What measures may be used in the performance evaluation system of a multinational corporation?

Accepted Answer

A)  Financial measures such as profit, cost, and return on investment 
B)  Quality and customer satisfaction 
C)  Market share 
D)  All of the above 
A)  Financial measures such as profit, cost, and return on investment 
B)  Quality and customer satisfaction 
C)  Market share 
D)  All of the above

Question 18

How is the payback period used in capital budgeting?

Accepted Answer

A)  As a measure of a project's risk 
B)  To determine the amount of funds that will be required in the future 
C)  To measure the relationship between the project's return and the company's cost of capital 
D)  None of the above 
A)  As a measure of a project's risk 
B)  To determine the amount of funds that will be required in the future 
C)  To measure the relationship between the project's return and the company's cost of capital 
D)  None of the above

Question 19

Senior management of Bina Confections Ltd., a multinational corporation, has taken a polycentric approach to manufacturing, marketing, and distributing its candies. What would be evidence of this perspective?

Accepted Answer

A)  Explicit policy and procedures manuals for managing foreign operations 
B)  High degree of decentralization of decision-making authority 
C)  Standard product branding and packaging throughout the organization 
D)  Implementing strategies perfected by managers at the home office 
A)  Explicit policy and procedures manuals for managing foreign operations 
B)  High degree of decentralization of decision-making authority 
C)  Standard product branding and packaging throughout the organization 
D)  Implementing strategies perfected by managers at the home office

Question 20

In designing an effective management control system for a multinational corporation, the accountant should measure factors appropriate for each unit's level of responsibility. Which of the following measures would be appropriate for evaluating the performance of an investment center?

Accepted Answer

A)  Output on costs of input 
B)  Residual income 
C)  EBIT 
D)  All of the above 
A)  Output on costs of input 
B)  Residual income 
C)  EBIT 
D)  All of the above

Which of the following is true of responsibility accounting?

Implementing multinational corporate strategy to influence human behavior in a positive way should include:

Novo Limited uses the same management control system in all of its 100 facilities throughout the world on the assumption that the culture at the home office is applicable to all other locations. What principle underlies Novo's control system?

What term is used to describe the process involving revising existing goals and adopting new goals?

If only one currency is used for evaluating subsidiary performance in a multinational corporation, what currency is it most likely to be?

Schlamp & Co. is considering building a manufacturing facility in Country Z, which has changed it labor laws frequently and dramatically in the past decade. What kind of risk is created by these legislative actions?

Which of the following is NOT a perspective under the balanced scorecard approach?

Which capital budgeting technique recognizes the time value of money?

Under what condition should the gain or loss from translating foreign currency profit of subsidiary into the parent's home currency be included in the subsidiary's measure of performance?

Influencing subordinates to behave in accordance with the goals and objectives of the organization is referred to as:

Why is depreciation added to net income to determine cash flow from operations?

Which of the following is a true statement about the use of the payback period technique in capital budgeting?

SSM Corporation, a multinational healthcare system, measures the number of minutes between a patient's arrival at the emergency room and the time he/she is seen by a physician. This measure focuses on what aspect of the balanced scorecard?

Which of the following factors is generally considered in performing the environmental analysis phase of strategy formulation?

Which of the following is NOT an influence affecting the operating environment of foreign subsidiaries?

Why is the multinational capital budgeting process more complex than capital budgeting in a domestic environment?

What measures may be used in the performance evaluation system of a multinational corporation?

How is the payback period used in capital budgeting?

Senior management of Bina Confections Ltd., a multinational corporation, has taken a polycentric approach to manufacturing, marketing, and distributing its candies. What would be evidence of this perspective?

In designing an effective management control system for a multinational corporation, the accountant should measure factors appropriate for each unit's level of responsibility. Which of the following measures would be appropriate for evaluating the performance of an investment center?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

International Taxation

International Transfer Pricing

Auditing and Corporate Governance: An International Perspective

International Sustainability Reporting

Filters

Exam 10: Management Accounting Issues in Multinational Corporations

Which of the following is true of responsibility accounting?

Implementing multinational corporate strategy to influence human behavior in a positive way should include:

Novo Limited uses the same management control system in all of its 100 facilities throughout the world on the assumption that the culture at the home office is applicable to all other locations. What principle underlies Novo's control system?

What term is used to describe the process involving revising existing goals and adopting new goals?

If only one currency is used for evaluating subsidiary performance in a multinational corporation, what currency is it most likely to be?

Schlamp & Co. is considering building a manufacturing facility in Country Z, which has changed it labor laws frequently and dramatically in the past decade. What kind of risk is created by these legislative actions?

Which of the following is NOT a perspective under the balanced scorecard approach?

Which capital budgeting technique recognizes the time value of money?

Under what condition should the gain or loss from translating foreign currency profit of subsidiary into the parent's home currency be included in the subsidiary's measure of performance?

Influencing subordinates to behave in accordance with the goals and objectives of the organization is referred to as:

Why is depreciation added to net income to determine cash flow from operations?

Which of the following is a true statement about the use of the payback period technique in capital budgeting?

SSM Corporation, a multinational healthcare system, measures the number of minutes between a patient's arrival at the emergency room and the time he/she is seen by a physician. This measure focuses on what aspect of the balanced scorecard?

Which of the following factors is generally considered in performing the environmental analysis phase of strategy formulation?

Which of the following is NOT an influence affecting the operating environment of foreign subsidiaries?

Why is the multinational capital budgeting process more complex than capital budgeting in a domestic environment?

What measures may be used in the performance evaluation system of a multinational corporation?

How is the payback period used in capital budgeting?

Senior management of Bina Confections Ltd., a multinational corporation, has taken a polycentric approach to manufacturing, marketing, and distributing its candies. What would be evidence of this perspective?

In designing an effective management control system for a multinational corporation, the accountant should measure factors appropriate for each unit's level of responsibility. Which of the following measures would be appropriate for evaluating the performance of an investment center?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

International Taxation

International Transfer Pricing

Auditing and Corporate Governance: An International Perspective

International Sustainability Reporting

Filters