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

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

Which of the following statements is true about bilateral netting?

Which of the following statements holds true for debt financing?

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:

In countries where companies tend to rely more on banks for funding, accounting rules are framed such that assets are valued conservatively to protect a bank's investment.

Which of the following statements holds true for "musharakah," an investment partnership approved by the Sharia?

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

On January 1, 2009, Company X signs an agreement to import 100 pounds of coffee from Company Y on April 1, 2009 at a price of $5.00 per pound.On April 1, 2009, the market price of coffee is $6.00 a pound.Instead of having to pay $6.00 a pound for coffee, the importer needs to pay $5.00.However, the importer's gain is the exporter's loss.The exporter must now sell 100 pounds of coffee at only $5.00 per pound even though it could have sold it in the open market for $6.00 per pound if it had not signed the agreement.The above is an example of a(n):

_____ 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.

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

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

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

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.

The disadvantage of raising capital in equity markets is that the firm has to repay the money at a specific time and at a specific interest rate.

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:

Some large Chinese companies report results in both Chinese accounting standards and the IASB's standards to facilitate the financial assessment of the companies by the investors.

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

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

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