Question 1

Which of the following is a non-financial measure of performance?

Accepted Answer

A)  Return on investment 
B)  Market share 
C)  Earnings per share 
D)  Return on equity 
A)  Return on investment 
B)  Market share 
C)  Earnings per share 
D)  Return on equity

Question 2

What discount rate should be used for calculating net present values of capital investment alternatives?

Accepted Answer

A)  Corporate borrowing rate 
B)  Desired rate of return 
C)  Internal rate of return 
D)  Corporation's return on investment 
A)  Corporate borrowing rate 
B)  Desired rate of return 
C)  Internal rate of return 
D)  Corporation's return on investment

Question 3

Why is it believed that Japanese companies prefer the payback period over the discounted cash flow methods for evaluating capital investment alternatives?

Accepted Answer

A)  It is consistent with their corporate strategy of investing in new technology. 
B)  Japanese companies compete using very short product life cycles. 
C)  Cash flows over a long period of time are difficult to predict with much accuracy. 
D)  All of the above 
A)  It is consistent with their corporate strategy of investing in new technology. 
B)  Japanese companies compete using very short product life cycles. 
C)  Cash flows over a long period of time are difficult to predict with much accuracy. 
D)  All of the above

Question 4

Which of the following items are controlled by the parent company?

Accepted Answer

A)  Lost production due to labor strikes 
B)  Foreign exchange losses 
C)  Sales revenue determined by discretionary transfer pricing 
D)  Restrictions on foreign exchange spending 
A)  Lost production due to labor strikes 
B)  Foreign exchange losses 
C)  Sales revenue determined by discretionary transfer pricing 
D)  Restrictions on foreign exchange spending

Question 5

A ________ combines financial measures of past performance with nonfinancial measures of the drivers of future performance to provide management with a road map for creating shareholder value.

Accepted Answer

A)  profit center 
B)  balanced scorecard 
C)  cost driver 
D)  operating budget 
A)  profit center 
B)  balanced scorecard 
C)  cost driver 
D)  operating budget

Question 6

When a unit of a multinational corporation creates knowledge in specific areas that can be used by other units within the organization, that unit is called a(n):

Accepted Answer

A)  implementer. 
B)  global innovator. 
C)  local innovator. 
D)  integrated player. 
A)  implementer. 
B)  global innovator. 
C)  local innovator. 
D)  integrated player.

Question 7

The process of identifying, evaluating, and selecting projects that require substantial amounts of resources and are expected to generate benefits for many years into the future is called:

Accepted Answer

A)  strategy formulation. 
B)  short-term planning. 
C)  capital budgeting. 
D)  operational budgeting. 
A)  strategy formulation. 
B)  short-term planning. 
C)  capital budgeting. 
D)  operational budgeting.

Question 8

A company that recognizes and adapts its business practices to differences across cultures in which it operates is referred to as being:

Accepted Answer

A)  geocentric. 
B)  ethnocentric. 
C)  polycentric. 
D)  egocentric. 
A)  geocentric. 
B)  ethnocentric. 
C)  polycentric. 
D)  egocentric.

Question 9

Conceptually, what is the internal rate of return?

Accepted Answer

A)  Number of years required for a project to return the cash invested in it 
B)  Discount rate that equates the present value of cash inflows to present value of cash outflows 
C)  Interest rate a company can generate on its corporate bonds and preferred stock 
D)  Average annual net income divided by initial investment in a project 
A)  Number of years required for a project to return the cash invested in it 
B)  Discount rate that equates the present value of cash inflows to present value of cash outflows 
C)  Interest rate a company can generate on its corporate bonds and preferred stock 
D)  Average annual net income divided by initial investment in a project

Question 10

What is the likely outcome of using performance measures that subsidiary managers perceive to be unachievable?

Accepted Answer

A)  Frustrated managers 
B)  Diligent attention to operational efficiency 
C)  Success 
D)  Optimal decision-making 
A)  Frustrated managers 
B)  Diligent attention to operational efficiency 
C)  Success 
D)  Optimal decision-making

Question 11

Which of the following calculations will yield return on investment (ROI)?

Accepted Answer

A)  Annual net income/book value of investment 
B)  Average annual net income/book value of investment 
C)  Average annual net income/present value of investment 
D)  Book value of investment/annual net income 
A)  Annual net income/book value of investment 
B)  Average annual net income/book value of investment 
C)  Average annual net income/present value of investment 
D)  Book value of investment/annual net income

Question 12

What result can be expected if a management control system encourages managers to focus on inappropriate measures?

Accepted Answer

A)  Managers may work extra hard to achieve the targets set in terms of those measures. 
B)  Managers may engage in dysfunctional behaviors. 
C)  Profits may go up for the foreign operation and for the corporation as a whole. 
D)  None of the above 
A)  Managers may work extra hard to achieve the targets set in terms of those measures. 
B)  Managers may engage in dysfunctional behaviors. 
C)  Profits may go up for the foreign operation and for the corporation as a whole. 
D)  None of the above

Question 13

What is a capital investment?

Accepted Answer

A)  Using money to buy goods or services 
B)  Issuing shares of stock of the corporation 
C)  Authorizing and issuing shares of common stock by a multinational corporation 
D)  Committing resources to projects that have long period costs and benefits 
A)  Using money to buy goods or services 
B)  Issuing shares of stock of the corporation 
C)  Authorizing and issuing shares of common stock by a multinational corporation 
D)  Committing resources to projects that have long period costs and benefits

Question 14

Which of the following is a major limitation of using the internal rate of return as a tool in capital budgeting?

Accepted Answer

A)  Ignores the time value of money 
B)  Does not consider cash flows 
C)  Does not use accounting numbers 
D)  Assumes unrealistic reinvestment rate 
A)  Ignores the time value of money 
B)  Does not consider cash flows 
C)  Does not use accounting numbers 
D)  Assumes unrealistic reinvestment rate

Question 15

Which of the following would be characteristic of a bureaucratic control system?

Accepted Answer

A)  Goals are more likely to be achieved by local managers 
B)  Financial targets are more explicitly specified throughout an organization 
C)  Meetings between parent and subsidiary managers are scheduled when needed rather than on a specific schedule 
D)  Budgets play a minor role in the management control system 
A)  Goals are more likely to be achieved by local managers 
B)  Financial targets are more explicitly specified throughout an organization 
C)  Meetings between parent and subsidiary managers are scheduled when needed rather than on a specific schedule 
D)  Budgets play a minor role in the management control system

Question 16

The possibility of loss due to unexpected changes in currency values or interest rates is called:

Accepted Answer

A)  economic risk. 
B)  business risk. 
C)  financial risk. 
D)  political risk. 
A)  economic risk. 
B)  business risk. 
C)  financial risk. 
D)  political risk.

Question 17

Why is management control particularly complex in decentralized multinational organizations?

Accepted Answer

A)  Managers abroad are not as well-trained as managers of domestic operations. 
B)  Decision-making authority is not delegated to the local managers of foreign operations. 
C)  Managers of foreign operations may be motivated by local goals rather than parent's goals. 
D)  Financial risks are always higher for the local managers of foreign operations than for managers of domestic operations. 
A)  Managers abroad are not as well-trained as managers of domestic operations. 
B)  Decision-making authority is not delegated to the local managers of foreign operations. 
C)  Managers of foreign operations may be motivated by local goals rather than parent's goals. 
D)  Financial risks are always higher for the local managers of foreign operations than for managers of domestic operations.

Question 18

Which of the following statements is a reason for using operating income or EBIT as a measure of performance in a profit center of a multinational corporation?

Accepted Answer

A)  It is much easier to calculate than other measures. 
B)  It is the only measure available to the senior management of the parent company. 
C)  It excludes interest and taxes, which are beyond the manager's control. 
D)  Divisional managers will maximize output if this measure is used for management control. 
A)  It is much easier to calculate than other measures. 
B)  It is the only measure available to the senior management of the parent company. 
C)  It excludes interest and taxes, which are beyond the manager's control. 
D)  Divisional managers will maximize output if this measure is used for management control.

Question 19

Which of the following is the role of a performance evaluation system in a multinational corporation?

Accepted Answer

A)  Monitor organizational effectiveness 
B)  Identify areas that need improvement 
C)  Assess how well division managers are doing 
D)  All of the above 
A)  Monitor organizational effectiveness 
B)  Identify areas that need improvement 
C)  Assess how well division managers are doing 
D)  All of the above

Question 20

Which of the following is NOT measured by the accounting system of a multinational corporation?

Accepted Answer

A)  Translation exposure 
B)  Economic exposure 
C)  Transaction exposure 
D)  None of the above is measured by the accounting system. 
A)  Translation exposure 
B)  Economic exposure 
C)  Transaction exposure 
D)  None of the above is measured by the accounting system.

Which of the following is a non-financial measure of performance?

What discount rate should be used for calculating net present values of capital investment alternatives?

Why is it believed that Japanese companies prefer the payback period over the discounted cash flow methods for evaluating capital investment alternatives?

Which of the following items are controlled by the parent company?

A ________ combines financial measures of past performance with nonfinancial measures of the drivers of future performance to provide management with a road map for creating shareholder value.

When a unit of a multinational corporation creates knowledge in specific areas that can be used by other units within the organization, that unit is called a(n):

The process of identifying, evaluating, and selecting projects that require substantial amounts of resources and are expected to generate benefits for many years into the future is called:

A company that recognizes and adapts its business practices to differences across cultures in which it operates is referred to as being:

Conceptually, what is the internal rate of return?

What is the likely outcome of using performance measures that subsidiary managers perceive to be unachievable?

Which of the following calculations will yield return on investment (ROI)?

What result can be expected if a management control system encourages managers to focus on inappropriate measures?

What is a capital investment?

Which of the following is a major limitation of using the internal rate of return as a tool in capital budgeting?

Which of the following would be characteristic of a bureaucratic control system?

The possibility of loss due to unexpected changes in currency values or interest rates is called:

Why is management control particularly complex in decentralized multinational organizations?

Which of the following statements is a reason for using operating income or EBIT as a measure of performance in a profit center of a multinational corporation?

Which of the following is the role of a performance evaluation system in a multinational corporation?

Which of the following is NOT measured by the accounting system of a multinational corporation?

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 a non-financial measure of performance?

What discount rate should be used for calculating net present values of capital investment alternatives?

Why is it believed that Japanese companies prefer the payback period over the discounted cash flow methods for evaluating capital investment alternatives?

Which of the following items are controlled by the parent company?

A ________ combines financial measures of past performance with nonfinancial measures of the drivers of future performance to provide management with a road map for creating shareholder value.

When a unit of a multinational corporation creates knowledge in specific areas that can be used by other units within the organization, that unit is called a(n):

The process of identifying, evaluating, and selecting projects that require substantial amounts of resources and are expected to generate benefits for many years into the future is called:

A company that recognizes and adapts its business practices to differences across cultures in which it operates is referred to as being:

Conceptually, what is the internal rate of return?

What is the likely outcome of using performance measures that subsidiary managers perceive to be unachievable?

Which of the following calculations will yield return on investment (ROI)?

What result can be expected if a management control system encourages managers to focus on inappropriate measures?

What is a capital investment?

Which of the following is a major limitation of using the internal rate of return as a tool in capital budgeting?

Which of the following would be characteristic of a bureaucratic control system?

The possibility of loss due to unexpected changes in currency values or interest rates is called:

Why is management control particularly complex in decentralized multinational organizations?

Which of the following statements is a reason for using operating income or EBIT as a measure of performance in a profit center of a multinational corporation?

Which of the following is the role of a performance evaluation system in a multinational corporation?

Which of the following is NOT measured by the accounting system of a multinational corporation?

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