Accounting And Finance In The International Business

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Question 1

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

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Question 2

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Accounting is shaped by the environment in which it operates.

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Question 3

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Accounting standards are rules for preparing financial statements.

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Question 4

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Auditing standards are rules that define the accounting principles and monetary policy of a nation.

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Question 5

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The standards of U.S. Financial Accounting Standards Board and IASB are vastly different.

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Question 6

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The IASB is made up of 24 members, and to issue a new standard, 51 percent of them must agree.

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Question 7

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The IASB has the power to enforce its standards, so it has considerable power in the industry.

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Question 8

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Most international businesses require all budgets and performance data within the firm to be expressed in the currencies of the countries where its subunits are located.

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Question 9

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

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Question 10

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

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Question 11

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

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Question 12

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

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Question 13

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Performance of international subsidiaries depends on the transfer price set up by the corporation.

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Question 14

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Most subsidiaries of an international business operate in uniform environments.

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Question 15

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Evaluation of a subsidiary should be separate from the evaluation of its manager.

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Question 16

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

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Question 17

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

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Question 18

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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.

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Question 19

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By pooling its cash reserves, the firm can increase the total size of the cash pool it must hold in highly liquid accounts.

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Question 20

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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.

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