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ACCT 425 Quiz 4.docx
ACCT_425_Quiz_4.docx
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ACCT 425 Quiz 4.docx-Why is the multinational capi...
ACCT_425_Quiz_4.docx-Why is the multinational capital budgeting
ACCT 425 Quiz 4.docx-Why is the mul...
ACCT_425_Quiz_4.docx-Why is the multinational capital budgeting
Page 1
1.
Why is the multinational capital budgeting process more complex than
capital budgeting in a domestic environment?
(10 points)
A)
Cash flows must be predicted.
B)
An appropriate discount rate must be
selected.
C)
There are additional
risks
involved.
D) The payback period is shorter.
2.
Why is management control particularly complex in decentralized multinational
organizations?
(10 points)
A)
Managers abroad are not as well-trained as managers of domestic operations.
B)
Decision-making authority is not delegated to the local managers of
foreign operations.
C)
Managers
of
foreign
operations
may
be
motivated
by
local
goals
rather
than
parent's
goals.
D)
Financial risks are always higher for the local managers of foreign operations
than for managers of domestic operations.
3.
Which of the following statements is true about performance evaluation in
a multinational organization?
(10 points)
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.
4.
Under what condition should the gain or loss from translating foreign currency
profit of subsidiary into the parent's home currency be included in the
subsidiary's measure of performance?
(10 points)
A)
if
the
subsidiary
manager
is
authorized
to
hedge
the
translation
exposure
B)
if there is a translation gain, but not if there is a translation loss
C)
if the multinational corporation is using the same method of translation
for performance evaluation as it does for financial reporting
D)
if the impact on cash flows from foreign exchange is minimal
5.
Which of the following is not measured by the accounting system of
a multinational corporation?
(10 points)
A) translation
exposure
B)
economic
exposure
C)
transaction exposure
D)
None of the above is measured by the accounting system.
Page 2
6.
The Institute of Chartered Accountants in New Zealand (ICANZ) proposed a
policy of proportionate liability to replace the country's existing “joint and
several liability” approach. Why was the proposal denied?
(10 points)
A)
Proportionate responsibility for damages cannot be determined objectively.
B)
Fairness
to
the
defendants
was
not
relevant
to
ensuring
fairness
to
the
injured
party.
C)
Large auditing firms would be paying proportionately higher damage
awards than small firms.
D)
Such a policy is inconsistent with harmonization of international
auditing standards.
7.
In proposed PCAOB Rule 4012, “Inspection of Foreign Registered Public
Accounting Firms” issued for comment in December 2007, which of the
following is NOT one of the broad principles upon which the Board may
place full reliance on the inspection program of qualified non-U.S. auditor
oversight entities?
(10 points)
A)
transparency of the oversight system
B)
adequacy and integrity of the oversight system
C)
rigidity
of
professional
standards
mandated
by
the
oversight
system
D)
independence of the oversight system’s source of funding
8.
Why was the issuance of International Standard on Auditing 13 (ISA 13)
considered so important to harmonization of auditing standards?
(10
points)
A)
It required all multinational corporations to adopt international auditing
standards by 2008.
B)
It specified the form and content of the annual report.
C)
It
provided guidance
on
the form
and
content
of
the audit
report.
D)
It requires the auditor to express an opinion on whether the
statements give a true and fair view of corporate performance.
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