Question 1

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

Accepted Answer

The answer of _____ refers to a central location where...

Question 2

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

Accepted Answer

A) South Africa 
B) Turkey 
C) Germany 
D) France 
E) United States of America

Question 3

The purpose of accounting is to communicate the organization's financial position to company managers, investors, banks, and the government.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

The answer of What are the advantages of a centralized...

Question 5

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

Accepted Answer

A) The government of the host country in which the subsidiary is located makes financing or investment decisions for the organization, taking advantage of local knowledge and moving quickly to respond to opportunities or uncertainties. 
B) A decentralized financial organization structure enables the firm to gain economies of scale for investment and borrowing activities that can reduce transaction costs and provide the firm with the most competitive pricing. 
C) Subsidiaries or regions make financing or investment decisions for their region, taking advantage of local knowledge and moving quickly to respond to opportunities or uncertainties. 
D) The financial institutions which fund the organization set guidelines for the headquarters as well as the subsidiaries to follow, pool funds, leverage the benefits of scale for investment and borrowing, and hire knowledgeable staff to make the most effective, firm-wide decisions. 
E) All finance decisions are performed at headquarters, which sets guidelines for subsidiaries to follow, pools funds, leverages the benefits of scale for investment and borrowing, and hires knowledgeable staff to make the most effective, firm-wide decisions.

Question 6

What are the advantages of centralized depositories?

Accepted Answer

The answer of What are the advantages of centralized depositories?...

Question 7

The _____ is the most widely used currency-translation method.

Accepted Answer

A) Hedging process 
B) current-rate method 
C) Monte Carlo method 
D) temporal method 
E) Markov process

Question 8

Multinational firms often organize as separate legal entities (i.e., companies)in different countries to gain advantages, such as limiting liability or taking advantage of local corporate tax regulations.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements holds true for trade credit?

Accepted Answer

A) It refers to the process of financing long-term outlays for major projects such as plant expansion, entry into new markets, or research and development. 
B) It refers to 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 a process that lets the customer buying the goods or services defer payment on the good or services for a specified period of time, typically thirty or ninety days. 
D) It refers to the process and a set of procedures used to estimate the economic value of an owner's interest in a business. 
E) It refers to the rate of return that a company could earn if it chose a different investment of equivalent risk.

Question 10

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:

Accepted Answer

A) debt financing. 
B) capital budgeting. 
C) equity financing. 
D) transfer pricing. 
E) multilateral netting.

Question 11

Most IASB statements provide three acceptable alternatives since it is difficult to get an agreement while formulating the international reporting standards.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements holds true for accounting standards?

Accepted Answer

A) It refers to a statement that contains details of all a country's economic transactions with the rest of the world, for a given time period, usually one year. 
B) It refers to the sale of securities under a negotiated agreement between an issuer and the investing institution, as an alternative to a public issue. 
C) It refers to the rate of interest charged by the Federal Reserve Bank on financial accommodation extended to banks and financial institutions. 
D) It refers to a system of rules and principles that prescribe the format and content of financial statements. 
E) It refers to government securities that have the highest degree of reliability.

Question 13

An American aircraft manufacturer has a subsidiary in Indonesia.The subsidiary needs funding to expand its operations.The parent company deposits the required funds in a London based international bank.The money is then transferred to the subsidiary by the bank.The above serves as an example of:

Accepted Answer

A) debt financing. 
B) transfer pricing. 
C) equity financing. 
D) trade credit. 
E) fronting loan.

Question 14

Which of the following statements holds true for forward exchange rates?

Accepted Answer

A) It refers to the weighted average of a basket of foreign currencies. 
B) It refers to the rate at which two parties agree to exchange currency and execute a deal that takes place immediately. 
C) It refers to the rate that determines pay-offs in a financial contract and that is outside the control of the parties to the contract. 
D) It refers to the rate at which two parties agree to exchange currency and execute a deal at some specific point in the future, usually 30 days, 60 days, 90 days, or 180 days in the future. 
E) It refers to a form of exchange traded derivative whose underlying value is the rate on various financial interest rates, including treasury bills and bonds.

Question 15

Sharia prohibits "gharar" which means "_____" and includes conventional practices like short selling.

Accepted Answer

A) interest rate 
B) uncertainty 
C) gambling 
D) lease 
E) partnership

Question 16

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

Accepted Answer

The answer of What facts must be considered by an...

Question 17

What repercussions did the US CFOs anticipate when the Chinese government decided to allow the Yuan to float more freely in relation to other international currencies in 2006?

Accepted Answer

The answer of What repercussions did the US CFOs anticipate...

Question 18

Which of the following statements holds true for fronting loan?

Accepted Answer

A) It refers to the process of financing long-term outlays for major projects such as plant expansion, entry into new markets, or research and development. 
B) It refers to 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 a process which in which the parent company directly gives a loan to its subsidiary. 
D) It refers to the funding of the subsidiary by the parent company through a financial intermediary such as a bank. 
E) It refers to the loan on which the bank charges companies a slightly lower rate of interest for expanding operations in developing countries.

Question 19

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

Accepted Answer

The answer of What are the reasons for adopting one...

Question 20

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

Accepted Answer

The answer of The regional CFOs play an important role...

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

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

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

The purpose of accounting is to communicate the organization's financial position to company managers, investors, banks, and the government.

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

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

What are the advantages of centralized depositories?

The _____ is the most widely used currency-translation method.

Multinational firms often organize as separate legal entities (i.e., companies)in different countries to gain advantages, such as limiting liability or taking advantage of local corporate tax regulations.

Which of the following statements holds true for trade credit?

Most IASB statements provide three acceptable alternatives since it is difficult to get an agreement while formulating the international reporting standards.

Which of the following statements holds true for accounting standards?

An American aircraft manufacturer has a subsidiary in Indonesia.The subsidiary needs funding to expand its operations.The parent company deposits the required funds in a London based international bank.The money is then transferred to the subsidiary by the bank.The above serves as an example of:

Which of the following statements holds true for forward exchange rates?

Sharia prohibits "gharar" which means "_____" and includes conventional practices like short selling.

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

What repercussions did the US CFOs anticipate when the Chinese government decided to allow the Yuan to float more freely in relation to other international currencies in 2006?

Which of the following statements holds true for fronting loan?

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

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