Question 1

Which of the following is true concerning transfer pricing practices?

Accepted Answer

A)  The U.S. is a relatively rigorous country in terms of transfer pricing, but British are relatively lax. 
B)  U.S. tax law does not allow U.S. firms to use arms-length prices. 
C)  U.S. companies can apply for an Advanced Determination Ruling on their transfer pricing policies, except for transfers to developing countries. 
D)  The United States is not the only country to use Advanced Determination Rulings. 
A)  The U.S. is a relatively rigorous country in terms of transfer pricing, but British are relatively lax. 
B)  U.S. tax law does not allow U.S. firms to use arms-length prices. 
C)  U.S. companies can apply for an Advanced Determination Ruling on their transfer pricing policies, except for transfers to developing countries. 
D)  The United States is not the only country to use Advanced Determination Rulings.

Question 2

A strategic control process in a MNE should include

Accepted Answer

A)  personal rewards 
B)  central intervention 
C)  periodic reviews 
D)  all of the above. 
A)  personal rewards 
B)  central intervention 
C)  periodic reviews 
D)  all of the above.

Question 3

If the Brazilian subsidiary of a U.S. company ships components to its U.S. parent at an arbitrarily high transfer price,

Accepted Answer

A)  the U.S. parent will show a higher pre-tax profit. 
B)  the Brazilian government will collect relatively lower income taxes. 
C)  U.S. Customs will collect higher tariffs. 
D)  the Brazilian subsidiary will show relatively lower profits. 
A)  the U.S. parent will show a higher pre-tax profit. 
B)  the Brazilian government will collect relatively lower income taxes. 
C)  U.S. Customs will collect higher tariffs. 
D)  the Brazilian subsidiary will show relatively lower profits.

Question 4

National tax authorities have adopted the arm's length standard.

Accepted Answer

A) True 
 B)False

Question 5

According to the Robbins and Stobaugh study of performance evaluation systems of MNEs,

Accepted Answer

A)  intangible assets considered in the investment decision are usually covered in performance evaluation systems. 
B)  foreign and domestic subsidiaries are judged on different bases. 
C)  ROI is the most utilized evaluation measure. 
D)  all of the companies used local currency rather than dollar budgets. 
A)  intangible assets considered in the investment decision are usually covered in performance evaluation systems. 
B)  foreign and domestic subsidiaries are judged on different bases. 
C)  ROI is the most utilized evaluation measure. 
D)  all of the companies used local currency rather than dollar budgets.

Question 6

For U.S. MNEs, ROI is one of the most often used measures of performance.

Accepted Answer

A) True 
 B)False

Question 7

If a U.S. parent is shipping inventory to its Chinese subsidiary at an arbitrarily high transfer price,

Accepted Answer

A)  the U.S. parent will show a lower pre-tax profit. 
B)  the Chinese government will collect relatively higher income taxes. 
C)  the U.S. government will collect relatively high import tariffs. 
D)  the Chinese subsidiary will show relatively lower profits. 
A)  the U.S. parent will show a lower pre-tax profit. 
B)  the Chinese government will collect relatively higher income taxes. 
C)  the U.S. government will collect relatively high import tariffs. 
D)  the Chinese subsidiary will show relatively lower profits.

Question 8

Which of the following Lessard/Lorange translation approaches forces management to predict the future?

Accepted Answer

A)  A-1 
B)  A-3 
C)  P-3 
D)  E-3 
A)  A-1 
B)  A-3 
C)  P-3 
D)  E-3

Question 9

Based on most surveys of U.S.-based MNE performance evaluation systems,

Accepted Answer

A)  completely separate performance evaluation systems are used for foreign operations. 
B)  return on investment is the most widely utilized performance evaluation measure. 
C)  capital and operating budgets are not very useful due to currency differences. 
D)  very few companies use local currency information for performance evaluation. 
A)  completely separate performance evaluation systems are used for foreign operations. 
B)  return on investment is the most widely utilized performance evaluation measure. 
C)  capital and operating budgets are not very useful due to currency differences. 
D)  very few companies use local currency information for performance evaluation.

Question 10

Global innovators and integrated players tend to rely more on outcome controls than on behavioral controls.

Accepted Answer

A) True 
 B)False

Question 11

When comparing Japanese and U.S. firms for budget purposes,

Accepted Answer

A)  Japanese firms take much longer to prepare budgets. 
B)  U.S. managers are less likely to be evaluated by the budgets. 
C)  Japanese managers are more likely to have their salaries and bonuses affected by budgets. 
D)  Japanese managers are more likely to use budget variances to recognize problems on a timely basis. 
A)  Japanese firms take much longer to prepare budgets. 
B)  U.S. managers are less likely to be evaluated by the budgets. 
C)  Japanese managers are more likely to have their salaries and bonuses affected by budgets. 
D)  Japanese managers are more likely to use budget variances to recognize problems on a timely basis.

Question 12

Which of the following describe some of the national practices in performance evaluation techniques.

Accepted Answer

A)  British firms rely more on ROI and sales growth. 
B)  U.S. firms rely more on budgets than do British firms. 
C)  Japanese firms rely more on sales growth and market share than do U.S. firms. 
D)  All of the above. 
A)  British firms rely more on ROI and sales growth. 
B)  U.S. firms rely more on budgets than do British firms. 
C)  Japanese firms rely more on sales growth and market share than do U.S. firms. 
D)  All of the above.

Question 13

In the budgeting process,

Accepted Answer

A)  the local currency should be used to set the budget and monitor performance. 
B)  the local currency budget should be translated into dollars at the projected exchange rate. 
C)  actual results should be translated into dollars at the same rate at which the budget was set. 
D)  translated budgets allow management to look at the same numbers that shareholders use. 
A)  the local currency should be used to set the budget and monitor performance. 
B)  the local currency budget should be translated into dollars at the projected exchange rate. 
C)  actual results should be translated into dollars at the same rate at which the budget was set. 
D)  translated budgets allow management to look at the same numbers that shareholders use.

Question 14

A performance evaluation tool that measures after-tax operating profit minus the total annual cost of capital is

Accepted Answer

A)  return on investment. 
B)  return on assets. 
C)  economic value added. 
D)  residual income. 
A)  return on investment. 
B)  return on assets. 
C)  economic value added. 
D)  residual income.

Question 15

In transferring the domestic performance evaluation system into the international environment, MNEs

Accepted Answer

A)  are creating a more expensive performance evaluation system. 
B)  miss significant foreign events that could affect performance. 
C)  are taking into consideration that there are strategic differences in subsidiaries. 
D)  are sacrificing comparability for understandability. 
A)  are creating a more expensive performance evaluation system. 
B)  miss significant foreign events that could affect performance. 
C)  are taking into consideration that there are strategic differences in subsidiaries. 
D)  are sacrificing comparability for understandability.

Question 16

The right objectives should be based on
I..analysis of the competition
II..strengths of the firm

Accepted Answer

A)  only I 
B)  only II 
C)  either I or II 
D)  I and II 
A)  only I 
B)  only II 
C)  either I or II 
D)  I and II

Question 17

Which of the following is not true concerning the performance evaluation of global innovators.

Accepted Answer

A)  They need relatively flexible performance evaluation systems. 
B) They rely more on behavioral controls. 
C)  The rely on outcome controls. 
D)  They need more autonomy than do implementors. 
A)  They need relatively flexible performance evaluation systems. 
B) They rely more on behavioral controls. 
C)  The rely on outcome controls. 
D)  They need more autonomy than do implementors.

Question 18

If a U.S. parent is shipping inventory to its Mexican subsidiary at an arbitrarily low transfer price,

Accepted Answer

A)  the U.S. parent will show a higher pre-tax profit. 
B)  the Mexican government will collect relatively higher income taxes. 
C)  the Mexican government will collect relatively high import tariffs. 
D)  the Mexican subsidiary will show relatively lower profits. 
A)  the U.S. parent will show a higher pre-tax profit. 
B)  the Mexican government will collect relatively higher income taxes. 
C)  the Mexican government will collect relatively high import tariffs. 
D)  the Mexican subsidiary will show relatively lower profits.

Question 19

Which of the following is true concerning the performance evaluation of implementors.

Accepted Answer

A)  They need relatively flexible performance evaluation systems. 
B)  They rely more on behavioral controls. 
C)  The rely on outcome controls. 
D)  They need more autonomy than do global innovators. 
A)  They need relatively flexible performance evaluation systems. 
B)  They rely more on behavioral controls. 
C)  The rely on outcome controls. 
D)  They need more autonomy than do global innovators.

Question 20

The local currency should be used for performance evaluation purposes if

Accepted Answer

A)  the MNE leaves considerable autonomy to the foreign operation. 
B)  sales are made in the foreign currency. 
C)  the foreign currency is relatively stable. 
D)  the local manager is given authority and responsibility to hedge foreign exchange differences. 
A)  the MNE leaves considerable autonomy to the foreign operation. 
B)  sales are made in the foreign currency. 
C)  the foreign currency is relatively stable. 
D)  the local manager is given authority and responsibility to hedge foreign exchange differences.

Which of the following is true concerning transfer pricing practices?

A strategic control process in a MNE should include

If the Brazilian subsidiary of a U.S. company ships components to its U.S. parent at an arbitrarily high transfer price,

National tax authorities have adopted the arm's length standard.

According to the Robbins and Stobaugh study of performance evaluation systems of MNEs,

For U.S. MNEs, ROI is one of the most often used measures of performance.

If a U.S. parent is shipping inventory to its Chinese subsidiary at an arbitrarily high transfer price,

Which of the following Lessard/Lorange translation approaches forces management to predict the future?

Based on most surveys of U.S.-based MNE performance evaluation systems,

Global innovators and integrated players tend to rely more on outcome controls than on behavioral controls.

When comparing Japanese and U.S. firms for budget purposes,

Which of the following describe some of the national practices in performance evaluation techniques.

In the budgeting process,

A performance evaluation tool that measures after-tax operating profit minus the total annual cost of capital is

In transferring the domestic performance evaluation system into the international environment, MNEs

The right objectives should be based on I..analysis of the competition II..strengths of the firm

Which of the following is not true concerning the performance evaluation of global innovators.

If a U.S. parent is shipping inventory to its Mexican subsidiary at an arbitrarily low transfer price,

Which of the following is true concerning the performance evaluation of implementors.

The local currency should be used for performance evaluation purposes if

International Accounting and International Business

International Accounting Patterns, Culture and Development

Comparative International Financial Accounting I

Comparative International Financial Accounting II

International Financial Statement Analysis

International Transparency and Disclosure

International Accounting Standards and Global Convergence

International Business Combinations, Goodwill and Intangibles

International Segment Reporting

Foreign Currency Transactions and Translation

International Accounting for Price Changes

Corporate Governance and Control of Global Operations

Foreign Exchange Risk Management

International Auditing Issues

International Taxation Issues

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Exam 14: International Budgeting and Performance Evaluation

Which of the following is true concerning transfer pricing practices?

A strategic control process in a MNE should include

If the Brazilian subsidiary of a U.S. company ships components to its U.S. parent at an arbitrarily high transfer price,

National tax authorities have adopted the arm's length standard.

According to the Robbins and Stobaugh study of performance evaluation systems of MNEs,

For U.S. MNEs, ROI is one of the most often used measures of performance.

If a U.S. parent is shipping inventory to its Chinese subsidiary at an arbitrarily high transfer price,

Which of the following Lessard/Lorange translation approaches forces management to predict the future?

Based on most surveys of U.S.-based MNE performance evaluation systems,

Global innovators and integrated players tend to rely more on outcome controls than on behavioral controls.

When comparing Japanese and U.S. firms for budget purposes,

Which of the following describe some of the national practices in performance evaluation techniques.

In the budgeting process,

A performance evaluation tool that measures after-tax operating profit minus the total annual cost of capital is

In transferring the domestic performance evaluation system into the international environment, MNEs

The right objectives should be based on I..analysis of the competition II..strengths of the firm

Which of the following is not true concerning the performance evaluation of global innovators.

If a U.S. parent is shipping inventory to its Mexican subsidiary at an arbitrarily low transfer price,

Which of the following is true concerning the performance evaluation of implementors.

The local currency should be used for performance evaluation purposes if

International Accounting and International Business

International Accounting Patterns, Culture and Development

Comparative International Financial Accounting I

Comparative International Financial Accounting II

International Financial Statement Analysis

International Transparency and Disclosure

International Accounting Standards and Global Convergence

International Business Combinations, Goodwill and Intangibles

International Segment Reporting

Foreign Currency Transactions and Translation

International Accounting for Price Changes

Corporate Governance and Control of Global Operations

Foreign Exchange Risk Management

International Auditing Issues

International Taxation Issues

Filters