Which of the following statements is true in the case of budgeting for multinational companies?
A) While budgeting for multinational companies, managers consider difference in tax statutes as an uncontrollable factor.
B) While budgeting for multinational companies, managers do not account for foreign exchange fluctuations as the operating profits are reported in different currencies.
C) While budgeting for multinational companies, managers must be aware that budgets will not be used for evaluating performance.
D) While budgeting for multinational companies, managers are not concerned about the domestic factors of the different countries in which they operate.

Question

Quizplus · Accepted Answer

In the case of budgeting for multinational companies, managers must be aware that budgets will not be used for evaluating performance because there are several uncontrollable factors such as tax statutes, foreign exchange fluctuations, and domestic factors of different countries that can impact the budgeted figures. Thus, budgets are used as a planning tool rather than for performance evaluation in multinational companies. Option A is incorrect because tax statutes are considered as controllable factors while budgeting. Option B is incorrect because foreign exchange fluctuations are a significant factor that can impact the budgeted figures, and managers must account for them. Option D is incorrect because managers must consider domestic factors of various countries while budgeting to ensure the accuracy of budgeted figures.

Which of the Following Statements Is True in the Case