Exam 20: Accounting and Finance in the International Business

What are the criticisms against adjusting discount rates to reflect a location's riskiness?

Explain the impact of transaction costs in international business.

Which of the following is a disadvantage of pursuing a transfer pricing policy?

Lessard and Lorange recommend that firms use the projected spot exchange rate to translate both the budget and performance figures into the corporate currency.

Most subsidiaries of an international business operate in uniform environments.

Identify a key accounting problem that international businesses are confronted with but that does not confront purely domestic businesses.Substantiate with a suitable example.

Using the ending rate to translate the budget is a valid practice according to the Lessard-Lorange Model.

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.

According to Lessard-Lorange model,ending rate is the spot exchange rate:

Accounting information is the means by which firms communicate their financial position to the providers of capital.

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

A _____ represents the remuneration paid to the owners of technology,patents,or trade names for the use of that technology or the right to manufacture and/or sell products under those patents or trade names.

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

According to Lessard-Lorange model,_____ rate refers to the spot exchange rate when the budget is adopted.

A _____ between two countries is an agreement specifying what items of income will be taxed by the authorities of the country where the income is earned.

Studies have shown that a country's relative inflation rates and changes in exchange rates are not related to each other.

A firm's ability to establish a centralized depository that can serve short-term cash needs might be limited by government-imposed restrictions on capital flows across borders.

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

Which of the following is a valid observation of the cost of capital?

Explain the three types of decisions in international business.