Question 1

In a 2002 PriceWaterhouseCoopers survey, which factor did CFOs consider most important in contributing to long-term shareholder return?

Accepted Answer

Product and service quality was considered the most important factor by CFOs in contributing to long-term shareholder return according to the 2002 PriceWaterhouseCoopers survey.

Question 2

What is the likely outcome of using performance measures that subsidiary managers perceive to be unachievable?

Accepted Answer

If subsidiary managers perceive performance measures as unachievable, they may become frustrated and demotivated. This could lead to a decrease in productivity and quality of work.

Question 3

Which of the following is true of responsibility accounting?

Accepted Answer

Responsibility accounting is a management accounting system that assigns responsibility for costs, revenues, assets, and liabilities to the individual manager who is responsible for them. By doing so, it ensures that each manager is accountable for their performance and provides a basis for measuring and evaluating their effectiveness in achieving organizational goals. Option A is incorrect because responsibility accounting is typically used for internal management purposes rather than for evaluating the performance of foreign subsidiaries. Option B is incorrect because translation adjustment is a non-operating item that does not directly affect a local manager's performance. Option D is partially correct but incomplete because managers should be held accountable only for those items that are controllable, not uncontrollable.

Question 4

Which of the following is true of the performance evaluation measures adopted by Japanese and U.S.MNCs?

Accepted Answer

Unlike U.S.MNCs that focus on individual performance evaluation, Japanese companies emphasize group performance evaluation. In Japanese companies, performance is measured based on the achievement of group goals rather than individual goals. This is reflected in the way responsibilities are assigned and rewards are given. Hence, option B is the correct answer. Options A, C, and D are incorrect as they make false statements.

Question 5

Which of the following is NOT an influence affecting the operating environment of foreign subsidiaries?

Accepted Answer

All of the options listed (regulatory controls, social norms and attitudes, and inflation rates) are indeed influences that affect the operating environment of foreign subsidiaries.

Question 6

Implementing multinational corporate strategy to influence human behavior in a positive way should include:

Accepted Answer

Multinational corporate strategy to influence human behavior in a positive way should consider cultural differences across units to be effective. Cultural differences can significantly impact employee behavior and how they respond to certain management techniques. Therefore, it is essential to take into account cultural nuances when implementing a multinational corporate strategy to promote positive human behavior across units. Options A, C, and D are irrelevant to the topic.

Question 7

Assume that the Chinese government allowed the yuan to float relative to the U.S.dollar.Appreciation in the yuan could have an adverse affect on sales of Chinese goods to the U.S.This possible impact on Chinese exports is referred to as:

Accepted Answer

Economic exposure refers to the impact of exchange rate fluctuations on a company's overall competitiveness and ability to conduct business. A stronger yuan could make Chinese goods more expensive for U.S. consumers, leading to a decrease in sales and potentially harming the Chinese economy. Translation exposure refers to accounting effects of exchange rate changes on financial statements, transaction exposure refers to the impact of exchange rate fluctuations on individual transactions, and accounting exposure refers to the difficulty of accurately accounting for exchange rate changes in financial statements.

Question 8

A _____ combines financial measures of past performance with nonfinancial measures of the drivers of future performance to provide management with a road map for creating shareholder value.

Accepted Answer

The balanced scorecard combines financial and nonfinancial measures to provide management with a comprehensive understanding of the factors driving future performance. Profit centers are unit-level reporting structures used to measure financial performance, cost drivers are specific factors that influence costs, and operating budgets are financial plans that allocate resources for a specific period.

Question 9

Which of the following is NOT a perspective under the balanced scorecard approach?

Accepted Answer

The balanced scorecard approach consists of four perspectives: financial, customer, internal business, and learning and growth. There is no parent company perspective.

Question 10

Which of the following items are controlled by the parent company?

Accepted Answer

Sales revenue determined by discretionary transfer pricing is controlled by the parent company because it involves setting prices for transactions between the parent company and its subsidiaries, which can be adjusted to optimize overall tax liabilities and financial performance.

Question 11

Which of the following should NOT be included in implementing performance evaluation systems?

Accepted Answer

Changing systems annually can actually hinder the effectiveness of the performance evaluation system as employees may not have enough time to adapt and improve. It is better to have a consistent system that can be reviewed and improved over time. A, B, and C should all be included in implementing a performance evaluation system. Feedback and review help employees understand their strengths and weaknesses, fair and achievable measures ensure that employees are evaluated on equitable criteria, and understandability ensures that the system is clear and easy to follow.

Quiz 13: Strategic Accounting Issues in Multinational Corporations