Question 1

What is cultural proximity?

Accepted Answer

A) The extent to which the host cultural ethos permits adoption of the parent company's organizational culture. 
B) Countries located on the same continent. 
C) Relative importance of individual differences among units of a multinational corporation. 
D) A short geographic distance between the host country of one subsidiary and the host country of another subsidiary. 
A) The extent to which the host cultural ethos permits adoption of the parent company's organizational culture. 
B) Countries located on the same continent. 
C) Relative importance of individual differences among units of a multinational corporation. 
D) A short geographic distance between the host country of one subsidiary and the host country of another subsidiary. A

Question 2

What discount rate should be used for calculating net present values of capital investment alternatives?

Accepted Answer

A) Corporate borrowing rate 
B) Desired rate of return 
C) Internal rate of return 
D) Corporation's return on investment 
A) Corporate borrowing rate 
B) Desired rate of return 
C) Internal rate of return 
D) Corporation's return on investment B

Question 3

Implementing multinational corporate strategy to influence human behavior in a positive way should include:

Accepted Answer

A) a target for managers that is possible under ideal conditions. 
B) consideration of cultural differences across units. 
C) all exchange rate gains and losses. 
D) measures of profit, residual income, and return on investment for all units. 
A) a target for managers that is possible under ideal conditions. 
B) consideration of cultural differences across units. 
C) all exchange rate gains and losses. 
D) measures of profit, residual income, and return on investment for all units. B

Question 4

Which of the following statements is a reason for using operating income or EBIT as a measure of performance in a profit center of a multinational corporation?

Accepted Answer

A) It is much easier to calculate than other measures. 
B) It is the only measure available to the senior management of the parent company. 
C) It excludes interest and taxes, which are beyond the manager's control. 
D) Divisional managers will maximize output if this measure is used for management control. 
A) It is much easier to calculate than other measures. 
B) It is the only measure available to the senior management of the parent company. 
C) It excludes interest and taxes, which are beyond the manager's control. 
D) Divisional managers will maximize output if this measure is used for management control.

Question 5

In a 2002 PriceWaterhouseCoopers survey, which factor did CFOs consider most important in contributing to long-term shareholder return?

Accepted Answer

A) Current financial results 
B) Operating efficiency 
C) Product and service quality 
D) Innovation 
A) Current financial results 
B) Operating efficiency 
C) Product and service quality 
D) Innovation

Question 6

Influencing subordinates to behave in accordance with the goals and objectives of the organization is referred to as:

Accepted Answer

A) performance evaluation. 
B) management control. 
C) strategic planning. 
D) goal congruence. 
A) performance evaluation. 
B) management control. 
C) strategic planning. 
D) goal congruence.

Question 7

Hyperinflation causes what kind of risk for a multinational corporation?

Accepted Answer

A) Economic risk 
B) Physical risk 
C) Financial risk 
D) Political risk 
A) Economic risk 
B) Physical risk 
C) Financial risk 
D) Political risk

Question 8

How should multinational corporations reduce economic exposure?

Accepted Answer

A) Hedging foreign currency using a call option 
B) Hedging foreign currency using put options 
C) Competitive strategic and operational decisions 
D) Forward contracts on the foreign currency 
A) Hedging foreign currency using a call option 
B) Hedging foreign currency using put options 
C) Competitive strategic and operational decisions 
D) Forward contracts on the foreign currency

Question 9

A _____ combines financial measures of past performance with nonfinancial measures of the drivers of future performance to provide management with a road map for creating shareholder value.

Accepted Answer

A) profit center 
B) balanced scorecard 
C) cost driver 
D) operating budget 
A) profit center 
B) balanced scorecard 
C) cost driver 
D) operating budget

Question 10

When a unit of a multinational corporation creates knowledge in specific areas that can be used by other units within the organization, that unit is called a(n):

Accepted Answer

A) implementer. 
B) global innovator. 
C) local innovator. 
D) integrated player. 
A) implementer. 
B) global innovator. 
C) local innovator. 
D) integrated player.

Question 11

According to surveys in the U.S.and the United Kingdom, what are the most frequently used financial measures to evaluate subsidiary performance by MNCs?

Accepted Answer

A) Stock price, return on investment, profit 
B) Budgeted profit vs.actual profit, stock price, sales 
C) Budgeted profit vs.actual profit, return on investment, profit 
D) Internal rate of return, profit, return on investment 
A) Stock price, return on investment, profit 
B) Budgeted profit vs.actual profit, stock price, sales 
C) Budgeted profit vs.actual profit, return on investment, profit 
D) Internal rate of return, profit, return on investment

Question 12

If only one currency is used for evaluating subsidiary performance in a multinational corporation, what currency is it most likely to be?

Accepted Answer

A) Euros 
B) Local currency of the subsidiary 
C) Currency of the parent company's home country 
D) None of the above 
A) Euros 
B) Local currency of the subsidiary 
C) Currency of the parent company's home country 
D) None of the above

Question 13

Holding managers accountable only for the factors over which they have control is called:

Accepted Answer

A) management control systems. 
B) responsibility accounting. 
C) decentralization. 
D) centralization. 
A) management control systems. 
B) responsibility accounting. 
C) decentralization. 
D) centralization.

Question 14

Which of the following is a true statement about the use of the payback period technique in capital budgeting?

Accepted Answer

A) It is simple to use and understand. 
B) It considers the time value of money. 
C) It is not possible to appraise risk with this technique. 
D) It is mainly used to measure profitability of a project. 
A) It is simple to use and understand. 
B) It considers the time value of money. 
C) It is not possible to appraise risk with this technique. 
D) It is mainly used to measure profitability of a project.

Question 15

Novo Limited uses the same management control system in all of its 100 facilities throughout the world on the assumption that the culture at the home office is applicable to all other locations.What principle underlies Novo's control system?

Accepted Answer

A) Polycentrism 
B) Ethnocentrism 
C) Geocentrism 
D) Egocentrism 
A) Polycentrism 
B) Ethnocentrism 
C) Geocentrism 
D) Egocentrism

Question 16

How can a multinational enterprise incorporate its perception of high level of risk into its capital budgeting process?

Accepted Answer

A) Conservative estimates of cash inflows 
B) Liberal estimates of expected cash outflows 
C) High discount rate 
D) All of the above 
A) Conservative estimates of cash inflows 
B) Liberal estimates of expected cash outflows 
C) High discount rate 
D) All of the above

Question 17

The Squeaky Division of Household Products Corporation showed a net loss of £5,000,000 last year, but Squeaky's manager received a bonus for outstanding performance.Why would Household Products' management control system appropriately allow for this apparent inconsistency?

Accepted Answer

A) Economic factors outside the manager's control caused the loss. 
B) Household Products' management control system is ineffective. 
C) The bonus represents a payoff to Squeaky's manager to keep her quiet about the loss. 
D) The loss was due to controllable factors. 
A) Economic factors outside the manager's control caused the loss. 
B) Household Products' management control system is ineffective. 
C) The bonus represents a payoff to Squeaky's manager to keep her quiet about the loss. 
D) The loss was due to controllable factors.

Question 18

Which of the following should NOT be included in implementing performance evaluation systems?

Accepted Answer

A) Feedback and review 
B) Fair and achievable measures 
C) Understandability 
D) Changing systems annually 
A) Feedback and review 
B) Fair and achievable measures 
C) Understandability 
D) Changing systems annually

Question 19

Which of the following is a major limitation of using the internal rate of return as a tool in capital budgeting?

Accepted Answer

A) Ignores the time value of money 
B) Does not consider cash flows 
C) Does not use accounting numbers 
D) Assumes unrealistic reinvestment rate 
A) Ignores the time value of money 
B) Does not consider cash flows 
C) Does not use accounting numbers 
D) Assumes unrealistic reinvestment rate

Question 20

Under what condition should the gain or loss from translating foreign currency profit of subsidiary into the parent's home currency be included in the subsidiary's measure of performance?

Accepted Answer

A) If the subsidiary manager is authorized to hedge the translation exposure 
B) If there is a translation gain, but not if there is a translation loss 
C) If the multinational corporation is using the same method of translation for performance evaluation as it does for financial reporting 
D) If the impact on cash flows from foreign exchange is minimal 
A) If the subsidiary manager is authorized to hedge the translation exposure 
B) If there is a translation gain, but not if there is a translation loss 
C) If the multinational corporation is using the same method of translation for performance evaluation as it does for financial reporting 
D) If the impact on cash flows from foreign exchange is minimal

What is cultural proximity?

What discount rate should be used for calculating net present values of capital investment alternatives?

Implementing multinational corporate strategy to influence human behavior in a positive way should include:

Which of the following statements is a reason for using operating income or EBIT as a measure of performance in a profit center of a multinational corporation?

In a 2002 PriceWaterhouseCoopers survey, which factor did CFOs consider most important in contributing to long-term shareholder return?

Influencing subordinates to behave in accordance with the goals and objectives of the organization is referred to as:

Hyperinflation causes what kind of risk for a multinational corporation?

How should multinational corporations reduce economic exposure?

A _____ combines financial measures of past performance with nonfinancial measures of the drivers of future performance to provide management with a road map for creating shareholder value.

When a unit of a multinational corporation creates knowledge in specific areas that can be used by other units within the organization, that unit is called a(n):

According to surveys in the U.S.and the United Kingdom, what are the most frequently used financial measures to evaluate subsidiary performance by MNCs?

If only one currency is used for evaluating subsidiary performance in a multinational corporation, what currency is it most likely to be?

Holding managers accountable only for the factors over which they have control is called:

Which of the following is a true statement about the use of the payback period technique in capital budgeting?

Novo Limited uses the same management control system in all of its 100 facilities throughout the world on the assumption that the culture at the home office is applicable to all other locations.What principle underlies Novo's control system?

How can a multinational enterprise incorporate its perception of high level of risk into its capital budgeting process?

The Squeaky Division of Household Products Corporation showed a net loss of £5,000,000 last year, but Squeaky's manager received a bonus for outstanding performance.Why would Household Products' management control system appropriately allow for this apparent inconsistency?

Which of the following should NOT be included in implementing performance evaluation systems?

Which of the following is a major limitation of using the internal rate of return as a tool in capital budgeting?

Under what condition should the gain or loss from translating foreign currency profit of subsidiary into the parent's home currency be included in the subsidiary's measure of performance?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Comparative Accounting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Additional Financial Reporting Issues

Analysis of Foreign Financial Statements

International Taxation

International Transfer Pricing

Comparative International Auditing and Corporate Governance

International Corporate Social Reporting

Filters

Exam 13: Strategic Accounting Issues in Multinational Corporations

What is cultural proximity?

What discount rate should be used for calculating net present values of capital investment alternatives?

Implementing multinational corporate strategy to influence human behavior in a positive way should include:

Which of the following statements is a reason for using operating income or EBIT as a measure of performance in a profit center of a multinational corporation?

In a 2002 PriceWaterhouseCoopers survey, which factor did CFOs consider most important in contributing to long-term shareholder return?

Influencing subordinates to behave in accordance with the goals and objectives of the organization is referred to as:

Hyperinflation causes what kind of risk for a multinational corporation?

How should multinational corporations reduce economic exposure?

A _____ combines financial measures of past performance with nonfinancial measures of the drivers of future performance to provide management with a road map for creating shareholder value.

When a unit of a multinational corporation creates knowledge in specific areas that can be used by other units within the organization, that unit is called a(n):

According to surveys in the U.S.and the United Kingdom, what are the most frequently used financial measures to evaluate subsidiary performance by MNCs?

If only one currency is used for evaluating subsidiary performance in a multinational corporation, what currency is it most likely to be?

Holding managers accountable only for the factors over which they have control is called:

Which of the following is a true statement about the use of the payback period technique in capital budgeting?

Novo Limited uses the same management control system in all of its 100 facilities throughout the world on the assumption that the culture at the home office is applicable to all other locations.What principle underlies Novo's control system?

How can a multinational enterprise incorporate its perception of high level of risk into its capital budgeting process?

The Squeaky Division of Household Products Corporation showed a net loss of £5,000,000 last year, but Squeaky's manager received a bonus for outstanding performance.Why would Household Products' management control system appropriately allow for this apparent inconsistency?

Which of the following should NOT be included in implementing performance evaluation systems?

Which of the following is a major limitation of using the internal rate of return as a tool in capital budgeting?

Under what condition should the gain or loss from translating foreign currency profit of subsidiary into the parent's home currency be included in the subsidiary's measure of performance?

Introduction to International Accounting

Worldwide Accounting Diversity

International Convergence of Financial Reporting

International Financial Reporting Standards: Part I

International Financial Reporting Standards: Part II

Comparative Accounting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Additional Financial Reporting Issues

Analysis of Foreign Financial Statements

International Taxation

International Transfer Pricing

Comparative International Auditing and Corporate Governance

International Corporate Social Reporting

Filters