Question 1

Cash flows related to a proposed capital investment project are subject to what kind of risk?

Accepted Answer

A) Economic risk 
B) Financial risk 
C) Political risk 
D) All of the above 
A) Economic risk 
B) Financial risk 
C) Political risk 
D) All of the above

Question 2

What is the major limitation of using the payback period as a tool in capital budgeting?

Accepted Answer

A) It is difficult to calculate without a computer. 
B) It favors large investments. 
C) It ignores the time value of money. 
D) It does not consider cash flows. 
A) It is difficult to calculate without a computer. 
B) It favors large investments. 
C) It ignores the time value of money. 
D) It does not consider cash flows.

Question 3

What result can be expected if a management control system encourages managers to focus on inappropriate measures?

Accepted Answer

A) Managers will work extra hard to achieve the targets set in terms of those measures. 
B) Managers will engage in dysfunctional behaviors. 
C) Profits will go up for the foreign operation and for the corporation as a whole. 
D) None of the above 
A) Managers will work extra hard to achieve the targets set in terms of those measures. 
B) Managers will engage in dysfunctional behaviors. 
C) Profits will go up for the foreign operation and for the corporation as a whole. 
D) None of the above

Question 4

Which of the following is NOT an influence affecting the operating environment of foreign subsidiaries?

Accepted Answer

A) Regulatory controls 
B) Social norms and attitudes 
C) Inflation rates 
D) All of the above are influences. 
A) Regulatory controls 
B) Social norms and attitudes 
C) Inflation rates 
D) All of the above are influences.

Question 5

Which of the following is the role of a performance evaluation system in a multinational corporation?

Accepted Answer

A) Monitor organizational effectiveness 
B) Identify areas that need improvement 
C) Assess how well division managers are doing 
D) All of the above 
A) Monitor organizational effectiveness 
B) Identify areas that need improvement 
C) Assess how well division managers are doing 
D) All of the above

Question 6

Which of the following items are controlled by the parent company?

Accepted Answer

A) Lost production due to labor strikes 
B) Foreign exchange losses 
C) Sales revenue determined by discretionary transfer pricing 
D) Restrictions on foreign exchange spending 
A) Lost production due to labor strikes 
B) Foreign exchange losses 
C) Sales revenue determined by discretionary transfer pricing 
D) Restrictions on foreign exchange spending

Question 7

Which of the following is true of responsibility accounting?

Accepted Answer

A) It suggests that foreign subsidiaries should be held responsible for profitability of the parent companies. 
B) Responsibility accounting suggests that local manager should be held responsible for the translation adjustment. 
C) It suggests that costs, revenues, assets, and liabilities should be traced to the individual manager who is responsible for them. 
D) It suggests that managers should be held accountable for items that are both controllable and uncontrollable. 
A) It suggests that foreign subsidiaries should be held responsible for profitability of the parent companies. 
B) Responsibility accounting suggests that local manager should be held responsible for the translation adjustment. 
C) It suggests that costs, revenues, assets, and liabilities should be traced to the individual manager who is responsible for them. 
D) It suggests that managers should be held accountable for items that are both controllable and uncontrollable.

Question 8

Why is the multinational capital budgeting process more complex than capital budgeting in a domestic environment?

Accepted Answer

A) Cash flows must be predicted. 
B) An appropriate discount rate must be selected. 
C) Involvement of additional risks affecting future cash flows. 
D) The payback period is shorter. 
A) Cash flows must be predicted. 
B) An appropriate discount rate must be selected. 
C) Involvement of additional risks affecting future cash flows. 
D) The payback period is shorter.

Question 9

Which of the following is true of the performance evaluation measures adopted by Japanese and U.S.MNCs?

Accepted Answer

A) The performance evaluation measures adopted by Japanese and U.S.MNCs are very similar in nature. 
B) Unlike U.S.MNCs that assign responsibilities to the individual, Japanese companies assign responsibility to the group. 
C) Japanese companies use balanced scorecard for performance evaluations, whereas U.S.companies don't. 
D) Budget variances are used for evaluating performance in Japanese MNCs, whereas U.S.managers view these variances as providing information that can be used to improve performance. 
A) The performance evaluation measures adopted by Japanese and U.S.MNCs are very similar in nature. 
B) Unlike U.S.MNCs that assign responsibilities to the individual, Japanese companies assign responsibility to the group. 
C) Japanese companies use balanced scorecard for performance evaluations, whereas U.S.companies don't. 
D) Budget variances are used for evaluating performance in Japanese MNCs, whereas U.S.managers view these variances as providing information that can be used to improve performance.

Question 10

Which of the following statements is true about performance evaluation in a multinational organization?

Accepted Answer

A) A division that is performing poorly indicates that the manager of that division has performed poorly. 
B) Good performance by a division indicates that its manager has been performing to expectations. 
C) Divisional performance is the same as managerial performance. 
D) None of the above is true. 
A) A division that is performing poorly indicates that the manager of that division has performed poorly. 
B) Good performance by a division indicates that its manager has been performing to expectations. 
C) Divisional performance is the same as managerial performance. 
D) None of the above is true.

Question 11

Why is depreciation added to net income to determine cash flow from operations?

Accepted Answer

A) To compensate for financial risk. 
B) Depreciation is an expense but not a cash outflow. 
C) It is standard procedure when capital budgeting for a multinational corporation. 
D) Net income is understated due to excessive depreciation. 
A) To compensate for financial risk. 
B) Depreciation is an expense but not a cash outflow. 
C) It is standard procedure when capital budgeting for a multinational corporation. 
D) Net income is understated due to excessive depreciation.

Question 12

What is the effect of conducting a sensitivity analysis in capital budgeting?

Accepted Answer

A) It helps analysts to determine if results are particularly affected by specific estimates. 
B) It complicates the process of making a decision when there are conflicting signals. 
C) Preferences for one capital investment alternative over another will change. 
D) All of the above 
A) It helps analysts to determine if results are particularly affected by specific estimates. 
B) It complicates the process of making a decision when there are conflicting signals. 
C) Preferences for one capital investment alternative over another will change. 
D) All of the above

Question 13

Which of the following calculations will yield return on investment (ROI)?

Accepted Answer

A) Annual net income/book value of investment 
B) Average annual net income/book value of investment 
C) Average annual net income/present value of investment 
D) Book value of investment/annual net income 
A) Annual net income/book value of investment 
B) Average annual net income/book value of investment 
C) Average annual net income/present value of investment 
D) Book value of investment/annual net income

Question 14

Which of the following is NOT measured by the accounting system of a multinational corporation?

Accepted Answer

A) Translation exposure 
B) Economic exposure 
C) Transaction exposure 
D) None of the above is measured by the accounting system. 
A) Translation exposure 
B) Economic exposure 
C) Transaction exposure 
D) None of the above is measured by the accounting system.

Question 15

Which capital budgeting technique recognizes the time value of money?

Accepted Answer

A) Payback period 
B) Internal rate of return 
C) Book rate of return 
D) Return on investment 
A) Payback period 
B) Internal rate of return 
C) Book rate of return 
D) Return on investment

Question 16

Which of the following is NOT part of the capital budgeting process?

Accepted Answer

A) Project identification 
B) Project evaluation 
C) Project monitoring 
D) All of the above are parts of the capital budgeting process. 
A) Project identification 
B) Project evaluation 
C) Project monitoring 
D) All of the above are parts of the capital budgeting process.

Question 17

Johnson Ltd.determined that the net present value of an investment in technological improvements at its plant in France would be €10,000,000 if pending litigation was resolved in the company's favor and would be €2,000,000 if the courts ruled against the company.Johnson's attorneys in France assessed the probability of a favorable ruling at 70%.What is the expected net present value of the project?

Accepted Answer

A) €10,000,000 
B) €2,000,000 
C) €6,000,000 
D) €7,600,000 
A) €10,000,000 
B) €2,000,000 
C) €6,000,000 
D) €7,600,000

Question 18

Which capital budgeting technique is preferred in all major industrialized countries?

Accepted Answer

A) Net present value 
B) Internal rate of return 
C) Payback period 
D) There is no particular preferred capital budgeting technique across countries 
A) Net present value 
B) Internal rate of return 
C) Payback period 
D) There is no particular preferred capital budgeting technique across countries

Question 19

In designing an effective management control system for a multinational corporation, the accountant should measure factors appropriate for each unit's level of responsibility.Which of the following measures would be appropriate for evaluating the performance of a cost center?

Accepted Answer

A) Return on investment 
B) EBIT 
C) Output volume 
D) Residual income 
A) Return on investment 
B) EBIT 
C) Output volume 
D) Residual income

Question 20

Estimating the expected cash inflows and outflows from proposed projects is performed in what step of the capital budgeting process?

Accepted Answer

A) Project identification 
B) Project evaluation 
C) Project monitoring 
D) Project review 
A) Project identification 
B) Project evaluation 
C) Project monitoring 
D) Project review

Cash flows related to a proposed capital investment project are subject to what kind of risk?

What is the major limitation of using the payback period as a tool in capital budgeting?

What result can be expected if a management control system encourages managers to focus on inappropriate measures?

Which of the following is NOT an influence affecting the operating environment of foreign subsidiaries?

Which of the following is the role of a performance evaluation system in a multinational corporation?

Which of the following items are controlled by the parent company?

Which of the following is true of responsibility accounting?

Why is the multinational capital budgeting process more complex than capital budgeting in a domestic environment?

Which of the following is true of the performance evaluation measures adopted by Japanese and U.S.MNCs?

Which of the following statements is true about performance evaluation in a multinational organization?

Why is depreciation added to net income to determine cash flow from operations?

What is the effect of conducting a sensitivity analysis in capital budgeting?

Which of the following calculations will yield return on investment (ROI)?

Which of the following is NOT measured by the accounting system of a multinational corporation?

Which capital budgeting technique recognizes the time value of money?

Which of the following is NOT part of the capital budgeting process?

Which capital budgeting technique is preferred in all major industrialized countries?

In designing an effective management control system for a multinational corporation, the accountant should measure factors appropriate for each unit's level of responsibility.Which of the following measures would be appropriate for evaluating the performance of a cost center?

Estimating the expected cash inflows and outflows from proposed projects is performed in what step of the capital budgeting process?

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

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Exam 13: Strategic Accounting Issues in Multinational Corporations

Cash flows related to a proposed capital investment project are subject to what kind of risk?

What is the major limitation of using the payback period as a tool in capital budgeting?

What result can be expected if a management control system encourages managers to focus on inappropriate measures?

Which of the following is NOT an influence affecting the operating environment of foreign subsidiaries?

Which of the following is the role of a performance evaluation system in a multinational corporation?

Which of the following items are controlled by the parent company?

Which of the following is true of responsibility accounting?

Why is the multinational capital budgeting process more complex than capital budgeting in a domestic environment?

Which of the following is true of the performance evaluation measures adopted by Japanese and U.S.MNCs?

Which of the following statements is true about performance evaluation in a multinational organization?

Why is depreciation added to net income to determine cash flow from operations?

What is the effect of conducting a sensitivity analysis in capital budgeting?

Which of the following calculations will yield return on investment (ROI)?

Which of the following is NOT measured by the accounting system of a multinational corporation?

Which capital budgeting technique recognizes the time value of money?

Which of the following is NOT part of the capital budgeting process?

Which capital budgeting technique is preferred in all major industrialized countries?

In designing an effective management control system for a multinational corporation, the accountant should measure factors appropriate for each unit's level of responsibility.Which of the following measures would be appropriate for evaluating the performance of a cost center?

Estimating the expected cash inflows and outflows from proposed projects is performed in what step of the capital budgeting process?

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