Question 1

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):

Accepted Answer

A)  forward contract.
B)  absolute return.
C)  forward exchange rate.
D)  Swap agreement.
E)  internal forward rate. A

Question 2

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

Accepted Answer

A)  It refers to a set of accounting standards issued by theInternational Public Sector Accounting Standards (IPSAS) Board for use by public sector entities throughout the world to prepare their financial statements.
B)  It refers to the standards developed by the International Accounting Standards Board (IAS
B)  for reporting company financial results and that are followed by over one hundred nations throughout the world.
C)  It refers to the set of standards that are developed by the European Union for reporting any discrepancies in financial reporting by non-EU firms.
D)  It refers to the standards that are developed by the International Monetary Fund to assess the financial strength and credit worthiness of countries throughout the world.
E)  It refers to the standards that are developed by the US Financial Accounting Standards Board (FAS
B)  for reporting company financial results and that all US companies or companies operating in the US must follow. E

Question 3

The _____ is the major entity proposing international standards of accounting and was formerly known as the International Accounting Standards Committee (IASC).

Accepted Answer

A)  International Public Sector Accounting Standards (IPSAS) Board
B)  US Financial Accounting Standards Board (FAS
B)  
C)  International Accounting Standards Board (IAS
B)  
D)  Federal Reserve Bank (FRB
A)  of America
E)  Australian Accounting Standards Board (AAS
B)   C

Question 4

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

Accepted Answer

The answer of _____ refers to the ways in which...

Question 5

What are the disadvantages of transfer pricing?

Accepted Answer

The answer of What are the disadvantages of transfer pricing?...

Question 6

Which of the following statements holds true for transnational investment?

Accepted Answer

A)  It refers to the process of financing major projects such as plant expansion in different countries, entry into new countries, or research and development in new countries by taking loans from banks in the home country.
B)  It refers to investing capital in foreign markets.
C)  It refers to the organized trading of securities through exchanges.
D)  It refers to seeking capital from foreign sources.
E)  It refers to a technique that companies use to reduce the costs of cross-border payments between subsidiaries.

Question 7

Which of the following statements holds true for equity financing?

Accepted Answer

A)  It refers to the process of financing major projects such as plant expansion, entry into new markets, or research and development by taking loans from private banks.
B)  It refers to the process of raising capital by borrowing the money and agreeing to repay the entire amount plus agreed-upon interest at a specific date in the future.
C)  It refers to raising capital by selling shares of stock.
D)  It refers to a set of procedures used to estimate the economic value of an owner's interest in a business.
E)  It refers to a technique that companies use to reduce the costs of cross-border payments between subsidiaries.

Question 8

The United States doesn't mandate using the IFRS.Instead, the United States has the _____, which issues standards known as generally accepted accounting principles (GAAP).

Accepted Answer

The answer of The United States doesn't mandate using the...

Question 9

An Indonesian importer needs U.S.dollars to pay for the shipment that he has just received.He will have to purchase the dollars to pay for the shipment.He exchanges rupiah for U.S.dollars which he pays to the foreign exporter.The rate at which he buys US dollars in the market is known as the _____.

Accepted Answer

A)  forward exchange rate
B)  effective interest rate
C)  spot exchange rate
D)  internal forward rate
E)  temporal rate

Question 10

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

Accepted Answer

A)  It refers to a set of accounting standards issued by theInternational Public Sector Accounting Standards (IPSAS) Board for use by public sector entities throughout the world to prepare their financial statements.
B)  It refers to the standards that are developed by the International Accounting Standards Board (IAS
B)  for reporting company financial results and that are followed by over one hundred nations throughout the world.
C)  It refers to the set of standards developed by the European Union for reporting any discrepancies in financial reporting by non-EU firms.
D)  It refers to the standards that are developed by the International Monetary Fund to assess the financial strength and credit worthiness of countries throughout the world.
E)  It refers to the standards that are developed by the US Financial Accounting Standards Board (FAS
B)  for reporting company financial results and that all US companies or companies operating in the US must follow.

Question 11

Despite the costs associated with a forward contract, companies often prefer it to protect themselves against a potential larger downside loss.

Accepted Answer

A) True 
 B)False

Question 12

One alternative investment strategy approved by the Sharia is _____ that allows profit and loss sharing.

Accepted Answer

The answer of One alternative investment strategy approved by the...

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

_____ 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.

Accepted Answer

A)  Competition-based pricing
B)  Limit pricing
C)  Penetration pricing
D)  Premium pricing
E)  Transfer pricing

Question 15

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.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  It refers to a partnership in which one partner takes part in financial practices like charging interest on money, speculation, insurance, and derivatives.
B)  It refers to a partnership that allows a special partner whose name does not appear in that of the firm, to invest a limited amount of capital and to receive a corresponding share of the profits and to bear any corresponding losses.
C)  It refers to a partnership in which the profits are shared on an agreed-upon ratio but the loss of investment is borne only by the investor.
D)  It refers to a partnership whereby the individuals agree to share the profits and losses together without fixing any limitations or conditions.
E)  It refers to a partnership wherein profits are shared according to an agreed-upon ratio and losses are shared in proportion to the capital or investment of each partner.

Question 17

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.

Accepted Answer

The answer of The downsides of a(n)_____ financial organization structure...

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

McDonald's was the first foreign company to issue yuan-denominated bonds.

Accepted Answer

A) True 
 B)False

Question 20

_____ 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.

Accepted Answer

A)  Hedging process
B)  Current-rate method
C)  Monte Carlo method
D)  Temporal method
E)  Markov process

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) ?

The _____ is the major entity proposing international standards of accounting and was formerly known as the International Accounting Standards Committee (IASC) .

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

What are the disadvantages of transfer pricing?

Which of the following statements holds true for transnational investment?

Which of the following statements holds true for equity financing?

The United States doesn't mandate using the IFRS.Instead, the United States has the _____, which issues standards known as generally accepted accounting principles (GAAP).

An Indonesian importer needs U.S.dollars to pay for the shipment that he has just received.He will have to purchase the dollars to pay for the shipment.He exchanges rupiah for U.S.dollars which he pays to the foreign exporter.The rate at which he buys US dollars in the market is known as the _____.

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

Despite the costs associated with a forward contract, companies often prefer it to protect themselves against a potential larger downside loss.

One alternative investment strategy approved by the Sharia is _____ that allows profit and loss sharing.

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

_____ 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.

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 "mudarabah," an investment partnership approved by the Sharia?

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.

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

McDonald's was the first foreign company to issue yuan-denominated bonds.

_____ 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.