Question 1

According to Lessard and Lorange, the ending rate is the spot exchange rate

Accepted Answer

A)  forecast for the end of the budget period. 
B)  when the budget is adopted. 
C)  when no formal exchange rate exists. 
D)  when the budget and performance are being compared. 
A)  forecast for the end of the budget period. 
B)  when the budget is adopted. 
C)  when no formal exchange rate exists. 
D)  when the budget and performance are being compared.

Question 2

Accounting standards are

Accepted Answer

A)  rules for preparing financial statements. 
B)  the levels of tax payments needed. 
C)  the rules for performing an audit. 
D)  the technical process of balancing accounts. 
A)  rules for preparing financial statements. 
B)  the levels of tax payments needed. 
C)  the rules for performing an audit. 
D)  the technical process of balancing accounts.

Question 3

The connection between cash flows to the parent and the source of financing must be recognized when performing capital budgeting for an international business.

Accepted Answer

A) True 
 B)False

Question 4

Define tax credit and tax treaty.

Accepted Answer

A tax credit allows an entity to reduce

Question 5

By pooling its cash reserves, the firm can increase the total size of the cash pool it must hold in highly liquid accounts.

Accepted Answer

A) True 
 B)False

Question 6

________ costs are incurred every time a firm changes cash from one currency into another currency.

Accepted Answer

A)  Dividend 
B)  Capital 
C)  Fixed 
D)  Transaction 
A)  Dividend 
B)  Capital 
C)  Fixed 
D)  Transaction

Question 7

Which of the following is one of the gains derived by adjusting transfer prices?

Accepted Answer

A)  The firm can reduce its tax liabilities by using transfer prices to shift earnings from a low-tax country to a high-tax one. 
B)  The firm can use transfer prices to move funds out of a country where a significant currency appreciation is expected. 
C)  The firm can use transfer prices to move funds from a parent company to the subsidiary (or a tax haven) when financial transfers in the form of dividends are restricted or blocked by host-country government policies. 
D)  The firm can use transfer prices to reduce the import duties it must pay when an ad valorem tariff is in force-a tariff assessed as a percentage of value. 
A)  The firm can reduce its tax liabilities by using transfer prices to shift earnings from a low-tax country to a high-tax one. 
B)  The firm can use transfer prices to move funds out of a country where a significant currency appreciation is expected. 
C)  The firm can use transfer prices to move funds from a parent company to the subsidiary (or a tax haven) when financial transfers in the form of dividends are restricted or blocked by host-country government policies. 
D)  The firm can use transfer prices to reduce the import duties it must pay when an ad valorem tariff is in force-a tariff assessed as a percentage of value.

Question 8

A tax treaty between two countries is formed to fix the exchange rates between the two countries.

Accepted Answer

A) True 
 B)False

Question 9

It is common for a parent company to charge its foreign subsidiaries ________ for the technology, patents, or trade names it has transferred to them.

Accepted Answer

A)  transfer fees 
B)  royalties 
C)  an internal forward rate 
D)  usage fees 
A)  transfer fees 
B)  royalties 
C)  an internal forward rate 
D)  usage fees

Question 10

________ is the technique financial managers use to try to quantify the benefits, costs, and risks of an investment.

Accepted Answer

A)  Capital budgeting 
B)  External audit 
C)  Transfer pricing 
D)  Control system analysis 
A)  Capital budgeting 
B)  External audit 
C)  Transfer pricing 
D)  Control system analysis

Question 11

The governments of some countries require or prefer foreign multinationals to finance projects in their country by local debt financing or local sales of equity.

Accepted Answer

A) True 
 B)False

Question 12

A fee is compensation for professional services or expertise supplied to a foreign subsidiary by the parent company or another subsidiary.

Accepted Answer

A) True 
 B)False

Question 13

Money management decisions attempt to manage a firm's

Accepted Answer

A)  equity capital. 
B)  fixed costs. 
C)  working capital. 
D)  equipment costs. 
A)  equity capital. 
B)  fixed costs. 
C)  working capital. 
D)  equipment costs.

Question 14

The ending rate, in the Lessard-Lorange model, refers to the spot exchange rate forecast for the end of the budget period.

Accepted Answer

A) True 
 B)False

Question 15

A deferral principle specifies that parent companies are not taxed on foreign source income until

Accepted Answer

A)  the subsidiary providing income makes some profit. 
B)  they actually receive a dividend. 
C)  they acquire a majority stake in the subsidiary. 
D)  the subsidiary providing income is listed in the United States. 
A)  the subsidiary providing income makes some profit. 
B)  they actually receive a dividend. 
C)  they acquire a majority stake in the subsidiary. 
D)  the subsidiary providing income is listed in the United States.

Question 16

The ________ has 16 members who are responsible for the formulation of new international financial reporting standards.

Accepted Answer

A)  U.S. Securities and Exchange Commission 
B)  International Accounting Standards Board 
C)  Office of Economic Analysis 
D)  Financial Accounting Standards Board 
A)  U.S. Securities and Exchange Commission 
B)  International Accounting Standards Board 
C)  Office of Economic Analysis 
D)  Financial Accounting Standards Board

Question 17

Money management decisions attempt to manage the firm's ________ most efficiently.

Accepted Answer

A)  cash flow 
B)  corporate expenses 
C)  working capital 
D)  corporate revenues 
A)  cash flow 
B)  corporate expenses 
C)  working capital 
D)  corporate revenues

Question 18

Part of the tax credit benefit that a parent company receives can be lost if the subsidiary's

Accepted Answer

A)  combined tax rate is higher than the parent's. 
B)  local government views royalties as an expense. 
C)  local tax rates on profits are extremely high. 
D)  managers are controlled directly by the parent. 
A)  combined tax rate is higher than the parent's. 
B)  local government views royalties as an expense. 
C)  local tax rates on profits are extremely high. 
D)  managers are controlled directly by the parent.

Question 19

A European subsidiary of a U.S. firm will usually prepare its budgets in

Accepted Answer

A)  U.S. dollars. 
B)  euros. 
C)  a third- party currency. 
D)  Eurocurrency. 
A)  U.S. dollars. 
B)  euros. 
C)  a third- party currency. 
D)  Eurocurrency.

Question 20

When using the projected spot exchange rate to translate both the budget and performance figures into the corporate currency, the projected rate in such cases will typically be the

Accepted Answer

A)  forward exchange rate as determined by the foreign exchange market. 
B)  exchange rate that exists at the start of a project. 
C)  exchange rate when the budget was prepared. 
D)  transfer price that a firm will offer to one or more of its subsidiaries. 
A)  forward exchange rate as determined by the foreign exchange market. 
B)  exchange rate that exists at the start of a project. 
C)  exchange rate when the budget was prepared. 
D)  transfer price that a firm will offer to one or more of its subsidiaries.

According to Lessard and Lorange, the ending rate is the spot exchange rate

Accounting standards are

The connection between cash flows to the parent and the source of financing must be recognized when performing capital budgeting for an international business.

Define tax credit and tax treaty.

By pooling its cash reserves, the firm can increase the total size of the cash pool it must hold in highly liquid accounts.

________ costs are incurred every time a firm changes cash from one currency into another currency.

Which of the following is one of the gains derived by adjusting transfer prices?

A tax treaty between two countries is formed to fix the exchange rates between the two countries.

It is common for a parent company to charge its foreign subsidiaries ________ for the technology, patents, or trade names it has transferred to them.

________ is the technique financial managers use to try to quantify the benefits, costs, and risks of an investment.

The governments of some countries require or prefer foreign multinationals to finance projects in their country by local debt financing or local sales of equity.

A fee is compensation for professional services or expertise supplied to a foreign subsidiary by the parent company or another subsidiary.

Money management decisions attempt to manage a firm's

The ending rate, in the Lessard-Lorange model, refers to the spot exchange rate forecast for the end of the budget period.

A deferral principle specifies that parent companies are not taxed on foreign source income until

The ________ has 16 members who are responsible for the formulation of new international financial reporting standards.

Money management decisions attempt to manage the firm's ________ most efficiently.

Part of the tax credit benefit that a parent company receives can be lost if the subsidiary's

A European subsidiary of a U.S. firm will usually prepare its budgets in

When using the projected spot exchange rate to translate both the budget and performance figures into the corporate currency, the projected rate in such cases will typically be the

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

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Exam 20: Accounting and Finance in the International Business

According to Lessard and Lorange, the ending rate is the spot exchange rate

Accounting standards are

The connection between cash flows to the parent and the source of financing must be recognized when performing capital budgeting for an international business.

Define tax credit and tax treaty.

By pooling its cash reserves, the firm can increase the total size of the cash pool it must hold in highly liquid accounts.

________ costs are incurred every time a firm changes cash from one currency into another currency.

Which of the following is one of the gains derived by adjusting transfer prices?

A tax treaty between two countries is formed to fix the exchange rates between the two countries.

It is common for a parent company to charge its foreign subsidiaries ________ for the technology, patents, or trade names it has transferred to them.

________ is the technique financial managers use to try to quantify the benefits, costs, and risks of an investment.

The governments of some countries require or prefer foreign multinationals to finance projects in their country by local debt financing or local sales of equity.

A fee is compensation for professional services or expertise supplied to a foreign subsidiary by the parent company or another subsidiary.

Money management decisions attempt to manage a firm's

The ending rate, in the Lessard-Lorange model, refers to the spot exchange rate forecast for the end of the budget period.

A deferral principle specifies that parent companies are not taxed on foreign source income until

The ________ has 16 members who are responsible for the formulation of new international financial reporting standards.

Money management decisions attempt to manage the firm's ________ most efficiently.

Part of the tax credit benefit that a parent company receives can be lost if the subsidiary's

A European subsidiary of a U.S. firm will usually prepare its budgets in

When using the projected spot exchange rate to translate both the budget and performance figures into the corporate currency, the projected rate in such cases will typically be the

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The International Monetary System

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and R&D

Global Human Resource Management

Filters