国际商务课本自带题库Chap20

Chapter20AccountingandFinanceintheInternationalBusiness

True/FalseQuestions

1.Accountinginformationisthemeansbywhichfirmscommunicatetheirfinancialpositiontotheprovidersofcapital.

True

False

2.Accountingisshapedbytheenvironmentinwhichitoperates.

True

False

3.BanksarethemostimportantsourceofexternalcapitalforbusinessenterprisesintheUnitedStates.

True

False

4.Accountingstandardsarerulesforpreparingfinancialstatements.

True

False

5.Auditingstandardsarerulesthatdefinetheaccountingprinciplesandmonetarypolicyofanation.

True

False

6.IASBisamajorproponentofinternationalaccountingstandards.

True

False

7.CompliancetoIASBstandardsismandatoryforcountriestoengageininternationaltrade.

True

False

8.ThestandardsofU.S.FinancialAccountingStandardsBoardandIASBarevastlydifferent.

True

False

9.Thebudgetisthemaininstrumentoffinancialcontrolinanorganization.

True

False

10.Mostinternationalbusinessesrequireallbudgetsandperformancedatawithinthefirmtobeexpressedinthecurrenciesofthecountrieswhereitssubunitsarelocated.

True

False

11.AEuropeansubsidiaryofaU.S.firmwillusuallyprepareitsbudgetsinEuro.

True

False

12.Theinitialrate,intheLessard-LorangeModel,referstothespotexchangeratewhenthebudgetisadopted.

True

False

13.TheendingratereferstothespotexchangerateforecastfortheendofthebudgetperiodintheLessard-LorangeModel.

True

False

14.UsingtheendingratetotranslatethebudgetisavalidpracticeaccordingtotheLessard-LorangeModel.

True

False

15.LessardandLorangerecommendthatfirmsusetheprojectedspotexchangeratetotranslateboththebudgetandperformancefiguresintothecorporatecurrency.

True

False

16.Theprojectedratewilltypicallybetheforwardexchangerateasdeterminedbytheforeignexchangemarketwhenfirmsusetheprojectedspotexchangeratetotranslateboththebudgetandperformancefiguresintothecorporatecurrency.

True

False

17.Thepriceatwhichgoodsandservicesaretransferredbetweensubsidiarycompaniesinamulti-nationalfirmisreferredtoasminimumretailprice.

True

False

18.Performanceofinternationalsubsidiariesdependsonthetransferpriceset-upbythecorporate.

True

False

19.Mostsubsidiariesofaninternationalbusinessoperateinuniformenvironments.

True

False

20.Evaluationofasubsidiaryshouldnotbeseparatefromtheevaluationofitsmanager.

True

False

21.Capitalbudgetingisthetechniquefinancialmanagersusetotrytoquantifythebenefits,costs,andrisksofaninvestment.

True

False

22.Thetheoreticalframeworkforperformingcapitalbudgetingforaforeignprojectisvastlydifferentfromdomesticcapitalbudgeting.

True

False

23.Theconnectionbetweencashflowstotheparentandthesourceoffinancingmustberecognizedwhenperformingcapitalbudgetingforaninternationalbusiness.

True

False

24.Politicalrisktendstobegreaterincountriesexperiencingsocialunrestordisorder.

True

False

25.Studieshaveshownthatacountry'srelativeinflationratesandchangesinexchangeratesarenotrelatedtoeachother.

True

False

26.Thegovernmentsofsomecountriesrequireorpreferforeignmultinationalstofinanceprojectsintheircountrybylocaldebtfinancingorlocalsalesofequity.

True

False

27.Moneymanagementdecisionsattempttomanagethefirm'sworkingcapitalmostefficiently.

True

False

28.Poolingthecashofallthesubsidiariesreducestheearningpotentialforfirms.

True

False

29.Thetotalsizeofafirm'scashpoolincreaseswhenitpoolscashreservesofsubsidiaries.

True

False

30.Afirm'sabilitytoestablishacentralizeddepositorythatcanserveshort-termcashneedsmightbelimitedbygovernment-imposedrestrictionsoncapitalflowsacrossborders.

True

False

31.Everytimeafirmchangescashfromonecurrencyintoanothercurrencyitmustbearatransactioncost.

True

False

32.Theprinciplesofmultilateralnettingandbilateralnettingaredifferent.

True

False

33.Ataxcreditallowsanentitytoreducethetaxespaidtothehomegovernmentbytheamountoftaxespaidtotheforeigngovernment.

True

False

34.Ataxtreatybetweentwocountriesisformedtofixtheexchangeratesbetweenthetwocountries.

True

False

35.Adeferralprinciplespecifiesthatparentcompaniesarenottaxedonforeignsourceincomeuntiltheyactuallyreceiveadividend.

True

False

36.Ataxheavenisacountrythatgivesincometaxexemptionstofirmsthatexportallorpartofitsproducts.

True

False

37.Paymentofdividendsisanuncommonmethodoftransferringfundsfromforeignsubsidiariestotheparentcompany.

True

False

38.Royaltiesrepresenttheremunerationpaidtotheownersfortheuseoftechnologyortherighttomanufactureand/orsellproductsunderpatentsortradenames.

True

False

39.Afeeiscompensationforprofessionalservicesorexpertisesuppliedtoaforeignsubsidiarybytheparentcompanyoranothersubsidiary.

True

False

40.Firmscannotusetransferpricestomovefundsfromasubsidiarytotheparentcompanywhenfinancialtransfersintheformofdividendsareblockedbyhost-countrygovernmentpolicies.

True

False

MultipleChoiceQuestions

41.Whichofthefollowingisanaccountingproblemthatonlyinternationalbusinessesface?

A.

LackofconsistencyintheaccountingstandardsB.

Inaccuratefilingofprofit-and-lossstatementsC.

FalsereportingofincometothegovernmentD.

Lackofadedicatedaccountingfunctionwithinthefirm

42.IncountriessuchastheUnitedStatesandBritain,firmstypicallyraisedcapitalby_____.

A.

obtainingfundingfromthegovernmentB.

borrowingmoneyfromnationalbanksC.

issuingstockorbondstoinvestorsD.

borrowingmoneyfrominternationalbanks

43.Historically,financialreportspreparedbyfirmsinGermany_____.

A.

reveallessinformationthanreportsofBritishorU.S.firmsB.

containdetailedinformationrequiredbyindividualinvestorsC.

overvaluedassetsandundervaluedliabilitiesD.

mademorepublicdisclosurescomparedtofirmsinothercountries

44.Whichofthefollowingisacountryinwhichbanksemergedasthemainprovidersofcapitaltoenterprises?

A.

UnitedStatesB.

BritainC.

PhilippinesD.

Switzerland

45.Accountingstandards_____.

A.

arerulesforpreparingfinancialstatementsB.

definethelevelsoftax-paymentsneededC.

specifytherulesforperforminganauditD.

refertothetechnicalprocessofbalancingaccounts

46.Thetechnicalprocessbywhichanindependentpersongathersevidencefordeterminingiffinancialaccountsconformtorequiredaccountingstandardsisknownas_____.

A.

standardizationB.

anauditC.

reportingD.

abenchmark

47.Transnationalfinancingoccurswhenafirmbasedinonecountryentersanothercountrytoraisecapital_____.

A.

byborrowingfromfinancialinstitutionsB.

fromthesaleofstocksorbondsC.

byborrowingfrombanksD.

throughexchangepoliciesofgovernments

48.AGermanfirmraisingcapitalbysellingstockthroughtheLondonStockExchangeisanexampleof_____.

A.

transnationalfinancingB.

serviceexportC.

indirectfinancingD.

transnationalinvestment

49.TheInternationalAccountingStandardsBoard_____.

A.

canissueanewaccountingstandardifmajorityoftheboardmembersagreeB.

wasformedtoreplacetheFinancialAccountingStandardsBoardC.

proposesstandardsbuthasnopowertoenforcethestandardsD.

wasformedtosupervisetheaccountingpracticesthatU.S.firmsfollow

50.The_____writesthegenerallyacceptedaccountingprinciples(GAAP)thatgovernthefinancialstatementsofU.S.firms.

A.

USSecuritiesandExchangeCommissionB.

OfficeofEconomicAnalysisC.

InternationalAccountingStandardsBoardD.

FinancialAccountingStandardsBoard

51.Mostinternationalbusinessesrequireallbudgetsandperformancedatawithinthefirmtobeexpressedinthe"corporatecurrency,"whichisnormally_____.

A.

acommoncurrencysuchastheU.S.dollarB.

thehomecurrencyC.

aforeigncurrencyD.

thecurrencyofthecountrywhereproductsaresold

52.AccordingtoLessard-Lorangemodel,_____ratereferstothespotexchangeratewhenthebudgetisadopted.

A.

endingB.

initialC.

idealD.

projected

53.AccordingtoLessard-Lorangemodel,_____isthespotexchangerateforecastfortheendofthebudgetperiod.

A.

projectedB.

initialC.

idealD.

ending

54.AccordingtoLessard-Lorangemodel,endingrateisthespotexchangerate:

A.

forecastfortheendofthebudgetperiod.B.

whenthebudgetisadopted.C.

whennoformalexchangerateexists.D.

whenthebudgetandperformancearebeingcompared.

55.WhichofthefollowingcombinationsofexchangerateswasruledoutbyLessardandLorangeasillogicalandunreasonable?

A.

TranslatingbudgetusingendingrateandtranslatingactualperformanceusinginitialrateB.

TranslatingbothactualperformanceandbudgetusingprojectedrateC.

TranslatingbothactualperformanceandbudgetusinginitialrateD.

Translatingbudgetusingprojectedrateandtranslatingactualperformanceusingendingrate

56.Ofthefivecombinations,LessardandLorangerecommendthatfirmsusethe_____spotexchangeratetotranslateboththebudgetandperformancefiguresintothecorporatecurrency.

A.

endingB.

initialC.

finalD.

projected

57.Whenusingtheprojectedspotexchangeratetotranslateboththebudgetandperformancefiguresintothecorporatecurrency,theprojectedrateinsuchcaseswilltypicallybethe_____.

A.

forwardexchangerateasdeterminedbytheforeignexchangemarketB.

exchangeratethatexistsatthestartofaprojectC.

exchangeratewhenthebudgetwaspreparedD.

transferpricethatafirmwilloffertooneormoreofitssubsidiaries

58.LessardandLorangerefercompany-generatedforecastoffuturespotratesas_____rate.

A.

forwardexchangerateB.

internalforwardrateC.

initialexchangerateD.

endingexchangerate

59.Transferpricereferstothe_____.

A.

priceatwhichgoodsandservicesaretransferredtoasubsidiaryB.

priceatwhichthetitleofproductsistransferredtoacustomerC.

priceatwhichasupplierprovidesrawmaterialstoafirmD.

costincurredwhengoodsorservicesaretransferredfromoneplacetoanother

60.Whichofthefollowingisadisadvantageofcomparingmanagersindifferentcountriesonlyonthebasisofreturnoninvestment?

A.

ThemanagersarenotresponsibleforincreasingtheROIofanorganization.B.

Managerialactionsdonothaveasignificantimpactonfirms'profitability.C.

Returnoninvestmentisnotavalidindicatoroforganizationalprofitability.D.

EnvironmentalfactorsalsocontributetoROIoffirmsandthesefactorsdiffer.

61._____isthetechniquefinancialmanagersusetotrytoquantifythebenefits,costs,andrisksofaninvestment.

A.

CapitalbudgetingB.

ExternalauditC.

TransferpricingD.

Controlsystemanalysis

62.Whichofthefollowingstatementsistrueofthecapitalbudgetingusedininternationalbusinesses?

A.

Capitalbudgetingdoesnotprovideconnectionbetweencashflowstotheparentandsubsidiaries.B.

Itsbasicframeworkisvastlydifferentfromtheframeworkofdomesticcapitalbudgeting.C.

Capitalbudgetingdoesnotconsiderthecashflowsbetweensubsidiariesofafirm.D.

Itenablestopmanagerstocomparedifferentinvestmentalternativesinanobjectivefashion.

63.Theproblemofblockedearningsisnotasseriousnowasitoncewasbecause_____.

A.

fixedexchangerateshavebecomemorecommonnowB.

governmentalinterventioninearningsismorefrequentnowC.

thereisgreateracceptanceoffreemarketeconomicsnowD.

politicalriskwithintheeconomyisverylowinmoderntimes

64.Whichofthefollowingisavalidobservationofthecostofcapital?

A.

Thecostofcapitalistypicallyhigherintheglobalcapitalmarket.B.

Domesticcapitalmarketshavemoreliquiditythanglobalmarkets.C.

Localdebtfinancingraisesthecostofcapitalifliquidityislimited.D.

Alocalsaleofequityispreferredtoglobalsalebyinternationalfirms.

65.Moneymanagementdecisionsattempttomanageafirm's_____.

A.

equitycapitalB.

fixedcostsC.

workingcapitalD.

equipmentcosts

66.Bypoolingcashresourcescentrallyfirmscan_____.

A.

betterhandleshort-termcashneedsofsubsidiariesB.

increaseliquidityofindependentsubsidiariesC.

reducethetotalsizeofthecashpoolitmustholdD.

avoidgovernment-imposedrestrictionsoncapitalflows

67._____costsareincurredeverytimeafirmchangescashfromonecurrencyintoanothercurrency.

A.

DividendB.

CapitalC.

FixedD.

Transaction

68.Multilateralnettingisusedmajorlyto_____.

A.

reducethenumberoftransactionsbetweensubsidiariesB.

availtaxcreditfromgovernmentsC.

establishataxtreatyamongstmultiplecountriesD.

toreducethefixedcostsofestablishingasubsidiary

69.A(n)_____allowsanentitytoreducethetaxespaidtothehomegovernmentbytheamountoftaxespaidtotheforeigngovernment.

A.

indirecttaxB.

taxhavenC.

taxcreditD.

internaltax

70.A_____betweentwocountriesisanagreementspecifyingwhatitemsofincomewillbetaxedbytheauthoritiesofthecountrywheretheincomeisearned.

A.

taxdeferralagreementB.

fixed-ratetreatyC.

taxtreatyD.

freetradeagreement

71.Adeferralprinciplespecifiesthatparentcompaniesarenottaxedonforeignsourceincomeuntil_____.

A.

thesubsidiaryprovidingincomemakessomeprofitB.

theyactuallyreceiveadividendC.

theyacquiremajoritystakeinthesubsidiaryD.

thesubsidiaryprovidingincomeislistedintheU.S.

72.Whichofthefollowingstatementsistrueoftaxhavens?

A.

Firmsthatexporttotaxhavensgetspecialtaxconcessionsfromhomegovernments.B.

Firmswouldrequirehugecapitalinvestmentstostartbusinessintaxhavens.C.

NationssuchasUnitedStatesarewidelyregardedastaxhavens.D.

Firmscansavetaxbyestablishinganon-operatingsubsidiaryinthetaxhaven.

73._____isthemostcommonmethodbywhichfirmstransferfundsfromforeignsubsidiariestotheparentcompany.

A.

Issueoflong-termloansB.

PaymentofannualfeeC.

IssueofbondsD.

Paymentofdividends

74.A_____iscompensationforprofessionalservicesorexpertisesuppliedtoaforeignsubsidiarybytheparentcompanyoranothersubsidiary.

A.

frontingloanB.

feeC.

royaltyD.

transferprice

75.A_____representstheremunerationpaidtotheownersoftechnology,patents,ortradenamesfortheuseofthattechnologyortherighttomanufactureand/orsellproductsunderthosepatentsortradenames.

A.

frontingloanB.

feeC.

royaltyD.

transferprice

76.Partofthebenefitthataparentcompanyreceivesbyreceivingpaymentthroughroyaltiescanbelostifthesubsidiary's_____.

A.

combinedtaxrateishigherthantheparent'sB.

localgovernmentviewsroyaltiesasanexpenseC.

localtaxratesonprofitsareextremelyhighD.

managersarecontrolleddirectlybytheparent

77.Fundscanbemovedoutofaparticularcountryinwhichaparentcountryhassetupasubsidiaryby_____.

A.

settinghightransferpricesforthegoodssuppliedB.

removingroyaltiesimposedonthesubsidiesC.

chargingadiscountedfeeonthesubsidiaryD.

issuingloanstothesubsidiaryatdiscountedrate

78.Whichofthefollowingisadisadvantageofpursuingatransferpricingpolicy?

A.

Itisnotusefulinshiftingearningsfromahigh-taxcountrytoalow-taxone.B.

Transferpricingdoesnottreateachsubsidiaryasaprofitcenter.C.

Itisnoteffectivewhensignificantcurrencydevaluationisexpected.D.

Atransferpricepolicycannotbeusedtomovefundswhendividendsarerestricted.

79.A_____isaloanbetweenaparentanditssubsidiarychanneledthroughafinancialintermediary,usuallyalargeinternationalbank.

A.

frontingloanB.

equityloanC.

directloanD.

securityloan

80.Firmsusefrontingloansto_____.

A.

avoidhost-countryrestrictionsontheremittanceoffundsfromaforeignsubsidiaryB.

implementacost-basedandfairpricingpolicyacrossaninternationalbusinessC.

increasetheprofitcenterrevenueofasubsidiaryfunctioninginanothercountryD.

implementamarket-drivenandfairpricingpolicyacrossaninternationalbusiness

EssayQuestions

81.Describeimportanceofaccountinginformationinbusiness.

82.Identifyakeyaccountingproblemthatinternationalbusinessesareconfrontedwithbutthatdoesnotconfrontpurelydomesticbusinesses.Substantiatewithasuitableexample.

83.Explainthethreetypesofdecisionsininternationalbusiness.

84.Howisacountry'saccountingsystemaffectedbytheprovidersofcapital?Explainwiththehelpofsuitableexamples.

85.Brieflydifferentiateaccountingstandardsandauditingstandards.

86.DescribethestructureoftheInternationalAccountingStandardsBoard(IASB).

87.WhataretheshortcomingsofIASB?

88.Whatarethemainstepsinthecontrolprocessofatypicalfirm?

89.DescribethethreeexchangeratesthatLessardandLorangepointedout.

90.WhataretheninepossiblecombinationsofthethreeexchangeratesproposedbyLessardandLorangeinthecontrolprocess?

91.Explaintheconceptoftransferpricing.

92.Explainwhytheevaluationofasubsidiaryshouldbekeptseparatefromtheevaluationofitsmanager.

93.Whatiscapitalbudgeting?

94.Describethreefactorsthatcomplicatetheprocessofaninternationalbusiness.

95.Describetheproblemofblockedearnings.

96.Whatarethecriticismsagainstadjustingdiscountratestoreflectalocation'sriskiness?

97.Whataretheconsiderationswhenseekingexternalfinancingforinternationalbusiness?

98.Explaintheimpactoftransactioncostsininternationalbusiness.

99.Definetaxcreditandtaxtreaty.

100.Whataretheadvantagesofusingroyaltiesandfeestomovemoneyacrossborders?

Chapter20AccountingandFinanceintheInternationalBusinessAnswerKey

True/FalseQuestions

1.Accountinginformationisthemeansbywhichfirmscommunicatetheirfinancialpositiontotheprovidersofcapital.

TRUEAccountinginformationisthemeansbywhichfirmscommunicatetheirfinancialpositiontotheprovidersofcapital,enablingthemtoassessthevalueoftheirinvestmentsandmakedecisionsaboutfutureresourceallocations.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-01Discussthenationaldifferencesinaccountingstandards.

Topic:Introduction

2.Accountingisshapedbytheenvironmentinwhichitoperates.

TRUEAccountingisshapedbytheenvironmentinwhichitoperates.Justasdifferentcountrieshavedifferentpoliticalsystems,economicsystems,andcultures,historicallytheyhavealsohaddifferentaccountingsystems.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-01Discussthenationaldifferencesinaccountingstandards.

Topic:NationalDifferencesinAccountingStandards

3.BanksarethemostimportantsourceofexternalcapitalforbusinessenterprisesintheUnitedStates.

FALSEIncountrieswheretherearewell-developedcapitalmarkets,suchastheUnitedStatesandBritain,firmstypicallyraisecapitalbyissuingstockorbondstoinvestors.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-01Discussthenationaldifferencesinaccountingstandards.

Topic:NationalDifferencesinAccountingStandards

4.Accountingstandardsarerulesforpreparingfinancialstatements.

TRUEAccountingstandardsarerulesforpreparingfinancialstatements.Theydefinewhatisusefulaccountinginformation.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-01Discussthenationaldifferencesinaccountingstandards.

Topic:NationalDifferencesinAccountingStandards

5.Auditingstandardsarerulesthatdefinetheaccountingprinciplesandmonetarypolicyofanation.

FALSEAuditingstandardsspecifytherulesforperforminganaudit—thetechnicalprocessbywhichanindependentperson(theauditor)gathersevidencefordeterminingiffinancialaccountsconformtorequiredaccountingstandardsandiftheyarealsoreliable.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-01Discussthenationaldifferencesinaccountingstandards.

Topic:NationalDifferencesinAccountingStandards

6.IASBisamajorproponentofinternationalaccountingstandards.

TRUETheInternationalAccountingStandardsBoard(IASB)hasemergedasamajorproponentofstandardization.TheIASBhas15memberswhoareresponsiblefortheformulationofnewinternationalfinancialreportingstandards.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-02Explaintheimplicationsoftheriseofinternationalaccountingstandards.

Topic:InternationalAccountingStandards

7.CompliancetoIASBstandardsismandatoryforcountriestoengageininternationaltrade.

FALSEAnotherhindrancetothedevelopmentofinternationalaccountingstandardsisthatcomplianceisvoluntary;theIASBhasnopowertoenforceitsstandards.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-02Explaintheimplicationsoftheriseofinternationalaccountingstandards.

Topic:InternationalAccountingStandards

8.ThestandardsofU.S.FinancialAccountingStandardsBoardandIASBarevastlydifferent.

FALSETodate,theimpactoftheIASBstandardshasprobablybeenleastnoticeableintheUnitedStatesbecausemostofthestandardsissuedbytheIASBhavebeenconsistentwithopinionsalreadyarticulatedbytheU.S.FinancialAccountingStandardsBoard(FASB).

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-02Explaintheimplicationsoftheriseofinternationalaccountingstandards.

Topic:InternationalAccountingStandards

9.Thebudgetisthemaininstrumentoffinancialcontrolinanorganization.

TRUEThebudgetisthemaininstrumentoffinancialcontrol.Thebudgetistypicallypreparedbythesubunit,butitmustbeapprovedbyheadquartersmanagement.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-03Explainhowaccountingsystemsaffectcontrolsystemswithinthemultinationalenterprise.

Topic:AccountingAspectsofControlSystems

10.Mostinternationalbusinessesrequireallbudgetsandperformancedatawithinthefirmtobeexpressedinthecurrenciesofthecountrieswhereitssubunitsarelocated.

FALSEMostinternationalbusinessesrequireallbudgetsandperformancedatawithinthefirmtobeexpressedinthe"corporatecurrency,"whichisnormallythehomecurrency.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-03Explainhowaccountingsystemsaffectcontrolsystemswithinthemultinationalenterprise.

Topic:AccountingAspectsofControlSystems

11.AEuropeansubsidiaryofaU.S.firmwillusuallyprepareitsbudgetsinEuro.

FALSEMostinternationalbusinessesrequireallbudgetsandperformancedatawithinthefirmtobeexpressedinthe"corporatecurrency,"whichisnormallythehomecurrency.HerethefirmwouldtypicallypreparebudgetinU.S.dollars.

AACSB:Analytic

Blooms:Apply

Difficulty:3Hard

LearningObjective:20-03Explainhowaccountingsystemsaffectcontrolsystemswithinthemultinationalenterprise.

Topic:AccountingAspectsofControlSystems

12.Theinitialrate,intheLessard-LorangeModel,referstothespotexchangeratewhenthebudgetisadopted.

TRUEIntheLessard-LorangeModel,theinitialrateisthespotexchangeratewhenthebudgetisadopted.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-03Explainhowaccountingsystemsaffectcontrolsystemswithinthemultinationalenterprise.

Topic:AccountingAspectsofControlSystems

13.TheendingratereferstothespotexchangerateforecastfortheendofthebudgetperiodintheLessard-LorangeModel.

FALSETheendingratereferstothespotexchangeratewhenthebudgetandperformancearebeingcomparedintheLessard-LorangeModel.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-03Explainhowaccountingsystemsaffectcontrolsystemswithinthemultinationalenterprise.

Topic:AccountingAspectsofControlSystems

14.UsingtheendingratetotranslatethebudgetisavalidpracticeaccordingtotheLessard-LorangeModel.

FALSELessardandLorangeruledoutfouroftheninecombinationstheyproposedasillogicalandunreasonable.Forexample,itwouldmakenosensetousetheendingratetotranslatethebudgetandtheinitialratetotranslateactualperformancedata.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-03Explainhowaccountingsystemsaffectcontrolsystemswithinthemultinationalenterprise.

Topic:AccountingAspectsofControlSystems

15.LessardandLorangerecommendthatfirmsusetheprojectedspotexchangeratetotranslateboththebudgetandperformancefiguresintothecorporatecurrency.

TRUEOfthefivevalidcombinationstheyidentified,LessardandLorangerecommendthatfirmsusetheprojectedspotexchangeratetotranslateboththebudgetandperformancefiguresintothecorporatecurrency.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-03Explainhowaccountingsystemsaffectcontrolsystemswithinthemultinationalenterprise.

Topic:AccountingAspectsofControlSystems

16.Theprojectedratewilltypicallybetheforwardexchangerateasdeterminedbytheforeignexchangemarketwhenfirmsusetheprojectedspotexchangeratetotranslateboththebudgetandperformancefiguresintothecorporatecurrency.

TRUEOfthefivevalidcombinationstheyidentified,LessardandLorangerecommendthatfirmsusetheprojectedspotexchangeratetotranslateboththebudgetandperformancefiguresintothecorporatecurrency.Theprojectedrateinsuchcaseswilltypicallybetheforwardexchangerateasdeterminedbytheforeignexchangemarket.

AACSB:Analytic

Blooms:Remember

Difficulty:1Easy

LearningObjective:20-03Explainhowaccountingsystemsaffectcontrolsystemswithinthemultinationalenterprise.

Topic:AccountingAspectsofControlSystems

17.Thepriceatwhichgoodsandservicesaretransferredbetweensubsidia