30) In countries such as the United States and Britain, firms typically raised capital by
A) obtaining funding from the government.
B) borrowing money from national banks.
C) issuing stock or bonds to investors.
D) borrowing money from international banks.
31) Historically, financial reports prepared by firms in Germany
A) reveal less information than reports of British or U.S. firms.
B) contain detailed information required by individual investors.
C) overvalued assets and undervalued liabilities.
D) made more public disclosures compared to firms in other countries.
32) Which of the following is a country in which banks emerged as the main providers of capital to
enterprises?
A) the United States
B) Britain
C) the Philippines
D) Switzerland
33) Accounting standards are
A) rules for preparing financial statements.
B) the levels of tax payments needed.
C) the rules for performing an audit.
D) the technical process of balancing accounts.
34) The technical process by which an independent person gathers evidence for determining if
financial accounts conform to required accounting standards is known as
A) standardization.
B) an audit.
C) reporting.
D) a benchmark.
35) Transnational financing occurs when a firm based in one country enters another country to
raise capital
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.
36) Three sets of related decisions are involved in financial management in an international
business. Which of these involves making decisions about how to fund the chosen activities?
A) investment decisions
B) financing decisions
C) bilateral decisions
D) money management decisions
37) Financial management in an international business includes three sets of related decisions.
Which of these involves making decisions about how to manage the firm’s financial resources
most efficiently?
A) multilateral decisions
B) financing decisions
C) investment decisions
D) money management decisions
38) A German firm raising capital by selling stock through the London Stock Exchange is an
example of
A) transnational financing.
B) service exporting.
C) indirect financing.
D) transnational investment.
39) Financial management in an international business includes three sets of related decisions.
Which of these involves making decisions about what activities to finance?
A) investment decisions
B) money management decisions
C) multilateral decisions
D) financing decisions
40) Which of the following was formed in March 2001 to replace the International Accounting
Standards Committee (IASC)?
A) U.S. Securities and Exchange Commission
B) International Accounting Standards Board
C) Office of Economic Analysis
D) Financial Accounting Standards Board
41) The ________ has 16 members who are responsible for the formulation of new international
financial reporting standards.
A) U.S. Securities and Exchange Commission
B) International Accounting Standards Board
C) Office of Economic Analysis
D) Financial Accounting Standards Board
42) Compliance to IASB standards is
A) mandatory for countries that want to engage in international trade.
B) enforced through the World Trade Organization.
C) voluntary.
D) enforced through the United Nations.
43) The International Accounting Standards Board
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.
44) The ________ writes the generally accepted accounting principles (GAAP) that govern the
preparation of U.S. firms’ financial statements.
A) U.S. Securities and Exchange Commission
B) Office of Economic Analysis
C) International Accounting Standards Board
D) Financial Accounting Standards Board
45) The ________ is the main instrument of financial control in an organization.
A) chief financial officer
B) corporate accounting
C) audit
D) budget
46) A European subsidiary of a U.S. firm will usually prepare its budgets in
A) U.S. dollars.
B) euros.
C) a third- party currency.
D) Eurocurrency.
47) The projected rate will typically be the ________ as determined by the foreign exchange
market when firms use the projected spot exchange rate to translate both the budget and
performance figures into the corporate currency.
A) transfer price
B) forward exchange rate
C) carrying cost
D) foreign exchange rate
48) The price at which goods and services are transferred between subsidiary companies in a
multinational firm is referred to as
A) minimum retail price.
B) deferral price.
C) transfer price.
D) transaction price.
49) Most international businesses require all budgets and performance data within the firm to be
expressed in the “corporate currency,” which is normally
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.