Question 1

What are the considerations when seeking external financing for international business?

Accepted Answer

If external financing is required, the f...

Question 2

Transnational financing occurs when a firm based in one country enters another country to raise capital

Accepted Answer

A)   by borrowing from financial institutions.
B)   from the sale of stocks or bonds.
C)   by borrowing from banks.
D)   through exchange policies of governments.

Question 3

Most international businesses require all budgets and performance data within the firm to be expressed in the "corporate currency," which is normally

Accepted Answer

A)   a common currency such as the U.S. dollar.
B)   the home currency.
C)   a foreign currency.
D)   the currency of the country where products are sold.

Question 4

Financial management in an international business includes three sets of related decisions. Which of these involves making decisions about what activities to finance?

Accepted Answer

A)   investment decisions
B)   money management decisions
C)   multilateral decisions
D)   financing decisions

Question 5

Accounting is shaped by the environment in which it operates.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Describe the importance of accounting information in business.

Accepted Answer

Accounting has often been referred to as...

Question 8

Which of the following is a disadvantage of comparing managers in different countries only on the basis of return on investment (ROI) ?

Accepted Answer

A)   The managers are not responsible for increasing the ROI of an organization.
B)   Managerial actions do not have a significant impact on firms' profitability.
C)   Return on investment is not a valid indicator of organizational profitability.
D)   Environmental factors also contribute to ROI of firms and these factors differ.

Question 9

Describe the problem of blocked earnings.

Accepted Answer

When evaluating a foreign investment opp...

Question 10

Political risk tends to be

Accepted Answer

A)   greater in countries experiencing social unrest or disorder.
B)   negligible for large multinational companies.
C)   less in countries experiencing social unrest or disorder.
D)   a consideration only for companies operating in third world countries.

Question 11

Which of the following statements is true of tax havens?

Accepted Answer

A)   Firms that export to tax havens get special tax concessions from home governments.
B)   Firms would require huge capital investments to start business in tax havens.
C)   Nations such as the United States are widely regarded as tax havens.
D)   Firms can save taxes by establishing a nonoperating subsidiary in the tax haven.

Question 12

Lessard and Lorange refer to the company-generated forecast of future spot rates as the ________ rate.

Accepted Answer

A)   forward exchange
B)   internal forward
C)   initial exchange
D)   ending exchange

Question 13

Royalties and fees have certain tax advantages over ________, particularly when the corporate tax rate is higher in the host country than in the parent's home country.

Accepted Answer

A)   transaction costs
B)   deferrals
C)   dividends
D)   transfer fees

Question 14

________ are the most important source of external capital for business enterprises in the United States.

Accepted Answer

A)   Stocks or bonds
B)   World Bank loans
C)   Banks
D)   Venture capitalists

Question 15

The ________ is the main instrument of financial control in an organization.

Accepted Answer

A)   chief financial officer
B)   corporate accounting
C)   audit
D)   budget

Question 16

The initial rate, in the Lessard-Lorange model, refers to the spot exchange rate when the budget is adopted.

Accepted Answer

A) True 
 B)False

Question 17

What are the shortcomings of IASB?

Accepted Answer

To issue a new standard, 75 percent of t...

Question 18

A tax haven is a country

Accepted Answer

A)   where companies benefit from establishing fully operating subsidiaries.
B)   that does not charge local companies for importing products from other countries.
C)   that does not charge taxes on the purchase or sale of any items.
D)   with an exceptionally low, or even no, income tax.

Question 19

The International Accounting Standards Board

Accepted Answer

A)   can issue a new accounting standard if the majority of the board members agree.
B)   was formed to replace the Financial Accounting Standards Board.
C)   develops standards but has no power to enforce the standards.
D)   was formed to supervise the accounting practices that U.S. firms follow.

Question 20

What is an accounting problem that only international businesses face?

Accepted Answer

A)   lack of consistency in the accounting standards
B)   inaccurate filing of profit-and-loss statements
C)   false reporting of income to the government
D)   lack of a dedicated accounting function within the firm

Exam 20: Accounting and Finance in the International Business

What are the shortcomings of IASB?

Correct AnswerverifiedTo issue a new standard, 75 percent of t...View AnswerShow Answer

What are the considerations when seeking external financing for international business?

Correct AnswerverifiedIf external financing is required, the f...View AnswerShow Answer

Transnational financing occurs when a firm based in one country enters another country to raise capital

Correct AnswerverifiedShow Answer

Describe the problem of blocked earnings.

Correct AnswerverifiedWhen evaluating a foreign investment opp...View AnswerShow Answer

________ are the most important source of external capital for business enterprises in the United States.

Correct AnswerverifiedShow Answer

Which of the following statements is true of tax havens?

Correct AnswerverifiedShow Answer

The International Accounting Standards Board

Correct AnswerverifiedShow Answer

Political risk tends to be

Correct AnswerverifiedShow Answer

Royalties and fees have certain tax advantages over ________, particularly when the corporate tax rate is higher in the host country than in the parent's home country.

Correct AnswerverifiedShow Answer

Lessard and Lorange refer to the company-generated forecast of future spot rates as the ________ rate.

Correct AnswerverifiedShow Answer

A tax haven is a country

Correct AnswerverifiedShow Answer

Which of the following is a disadvantage of comparing managers in different countries only on the basis of return on investment (ROI) ?

Correct AnswerverifiedShow Answer

Most international businesses require all budgets and performance data within the firm to be expressed in the "corporate currency," which is normally

Correct AnswerverifiedShow Answer

The initial rate, in the Lessard-Lorange model, refers to the spot exchange rate when the budget is adopted.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The ________ is the main instrument of financial control in an organization.

Correct AnswerverifiedShow Answer

Describe the importance of accounting information in business.

Correct AnswerverifiedAccounting has often been referred to as...View AnswerShow Answer

Financial management in an international business includes three sets of related decisions. Which of these involves making decisions about what activities to finance?

Correct AnswerverifiedShow Answer

Accounting is shaped by the environment in which it operates.

Correct AnswerverifiedShow Answer

What is an accounting problem that only international businesses face?

Correct AnswerverifiedShow Answer

Correct Answer
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To issue a new standard, 75 percent of t...
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If external financing is required, the f...
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When evaluating a foreign investment opp...
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Accounting has often been referred to as...
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Correct Answer
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