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Q:
Like Christianity and Judaism, Islam is a monotheistic religion. TRUE
Q:
In a currency option hedge, the firm covers its downside risk but, because the contract is an option, can also benefit from any upside.
Q:
Max Weber argued that the Catholic promise of salvation in the next world, rather than this world fostered "a spirit of capitalism."
Q:
In a forward market hedge, the firm sells forward its foreign currency receivables for its home currency, matching the time forward to the foreign currency receivable's due date.
Q:
According to Max Weber, Protestant ethics discouraged the development of capitalism.
Q:
In exposure netting, a risk management technique similar to multilateral netting, the firm runs a centralized clearing account that matches and nets out FX exposure across currencies or currency families.
Q:
Buddhism has the highest number of adherents in the world today.
Q:
There are four main types of FX risk: transaction, translation, economic, and arbitrage exposure.
Q:
Confucianism and Confucian ethics influence behavior and shape culture in parts of Asia, hence it is correct to characterize Confucianism as a religion.
Q:
Unanticipated shifts in exchange rates present risk to the international firm.
Q:
It is easier for companies based in countries with a high degree of class consciousness to establish a competitive advantage in the global economy.
Q:
Multilateral netting reduces foreign exchange transaction costs.
Q:
In American society, the high degree of social mobility and the extreme emphasis on individualism have resulted in the emergence of class consciousness.
Q:
Multilateral netting is an approach to debt management in which subsidiaries aggregate their debt service.
Q:
Class membership in the United States is determined to a much greater degree by individual background and schooling, as opposed to economic achievements.
Q:
The number of FX markets, along with floating exchange rates, varying country inflation rates, advances in technology for the management of cash, and the growth of the derivatives market are among the conditions that have led to the growth of international finance centers.
Q:
Although upward social mobility was possible in Britain, it could not normally be achieved in one generation.
Q:
Finance is best left decentralized in international firms so that local efficiencies and opportunities can be accessed.
Q:
In a class system, individuals born into a class at the bottom of the social hierarchy can work their way up.
Q:
The OECD and the U.S. Internal Revenue Service have issued guidelines on transfer pricing because it has such critical tax implications.
Q:
A caste system is a closed system of stratification in which social position is determined by the family into which a person is born.
Q:
Transfer pricing is what the company charges for transfers within the company. It is a bookkeeping cost of goods transferred across national borders.
Q:
The least rigid system of social stratification is a caste system.
Q:
A fronting loan is used when the firm does not have the collateral or reputation to borrow in a foreign environment.
Q:
Individuals become a member of the social category to which their parents belong.
Q:
Moving funds can reduce tax exposure in high-tax locales and can be used as a way to address limitations placed by foreign governments on the repatriation of profits.
Q:
Strong identification with the group tends to create pressures for mutual self-help and collective action.
Q:
For the conservative international firm, there is no reason to move money other than the repatriation of profits.
Q:
(p. 99) The primacy of the value of group identification encourages managers and workers to move from company to company.
Q:
The overall goal of cash flow management is to reduce risk and position the firm so that it can benefit from opportunities.
Q:
The emphasis on individualism has led to the widespread diffusion of self-managing work teams within Japanese organizations.
Q:
The emphasis on individualism may make it difficult to build teams within an organization to perform collective tasks.
Q:
Operating in more than five local currencies is unusual for the international firm.
Q:
The emphasis on individualism results in a low degree of managerial mobility between companies.
Q:
The decision of whether to finance by debt or equity may be influenced by the practices of the local environment, that is, culture.
Q:
Offshore financial centers operate in low-tax and low-regulation markets such as New York City and Milan.
Q:
In general, Western societies tend to emphasize the primacy of the individual.
Q:
The trend in the debt financing of foreign subsidiaries is to tap the local markets first, so Toyota in the United States would tend to tap into U.S. debt markets and Pepsi in Japan would tend to go to the Japanese debt markets first.
Q:
There is a strict one-to-one correspondence between a society and a nation-state.
Q:
Although the international airline segment is competitive, British Air as it is today could not legally take over Delta or United.
Q:
Rituals and symbols are the most visible manifestations of a culture and constitute the outward expression of deeper values.
Q:
American depository receipts are held by a bank in the stock's home country and these receipts then are traded on the U.S. exchange.
Q:
Values provide the context within which a societys norms are established and justified.
Q:
Firms may choose to issue stock in foreign markets in order to tap into a broader investor pool.
Q:
Society refers to a group of people whose values and norms differ from each other.
Q:
Chief financial officers avoid tapping into international markets because they bring too many unpredictable variables.
Q:
Elaborate on the connection made between Protestant ethics and "the spirit of capitalism."
Q:
The Global Reporting Initiative has made little effort in establishing a framework for global 3BL reporting, despite its UN collaboration.
Q:
What are norms? Briefly describe the two categories of norms.
Q:
The main argument against 3BL is that business is concerned with generating profit, not with social and ecological issues, except where the law requires it to be.
Q:
Which of the following best exemplifies ethnocentrism?
A. Sarah believes that her opinions and interests are superior to that of her siblings.
B. Nicole is highly tolerant toward different cultures and is also keen on learning different languages.
C. Bryan's belief in the superiority of his culture has resulted in conflicts with his colleagues from different countries.
D. Steve is in an ethical dilemma as he has been given the responsibility of deciding whether or not to hire his under-qualified cousin.
E. Galaxy Inc. has been accused of using legal, but unethical ways to gain access into the markets of less developed countries.
Q:
Triple-bottom-line accounting is built on the assumption that capitalism can become humanized.
Q:
Janet believes that the cultural group she belongs to is superior and is hence highly intolerant toward employees from the cultures of other countries. This behavior of Janet is known as:
A. cultural convergence.
B. Confucian dynamism.
C. ethnocentrism.
D. ethnic gloss.
E. class consciousness.
Q:
With convergence of accounting standards, accounting statements will still need to be adjusted to be directly comparable due to varying legal requirements.
Q:
The distinctive culture of Wengiston has been losing its predominance among the citizens of the country. This is due to the fact that the people of Wengiston are extensively adopting certain universally accepted values and norms. This behavior of the people in Wengiston demonstrates _____.
A. ethnocentrism.
B. the convergence hypothesis.
C. egocentrism.
D. Confucian dynamism.
E. social mobility.
Q:
Accounting standard convergence is unlikely, given the complexities of the systems, all of which would require harmonization.
Q:
Survival values typically stress the importance of:
A. diversity in the society.
B. economic and physical security.
C. self-expression.
D. participation in political processes.
E. capitalism.
Q:
Accounting is an objective, fact-based discipline and is not influenced by culture.
Q:
Ceria Republic is a country that has achieved rapid economic growth and prosperity over the last couple of decades as a result of globalization. Hence, the country is most likely to see a cultural shift away from _____ .
A. greater collectivism
B. greater economic freedom
C. well-being values
D. secular rational values
E. cultural convergence
Q:
Whether to use the current or temporal rates depends on the functional currency of the foreign operation.
Q:
A decade ago the government of Weinsland decided to liberalize the country's economy. As a result, today the country is experiencing rapid economic advancement and societal changes that are favorable for international business. Which of the following changes is most likely to occur in Weinsland?
A. The country will exhibit more need for social and material support structures built on collectives.
B. As the country gets richer, there will be a shift in the society from traditional to secular rational values.
C. As the country gets richer, there will be a shift in the society from well-being to survival values.
D. The people in the country will give more importance to collectivism than to individualism.
E. The country, to further facilitate globalization, will commit to authoritarian ideologies.
Q:
The temporal method of translation translates fixed assets at the rates in effect the day the assets were acquired.
Q:
Which of the following statements is true about the cultural dimension "Confucian dynamism"?
A. Confucian dynamism covers the extent to which a nation believes in the supernatural and emphasizes on the concept of a supreme being or an afterlife.
B. Hofstede's fifth dimension, Confucian dynamism, is also called uncertainty avoidance orientation.
C. Hofstede argued that his evidence suggested that nations with higher economic growth rates scored low on Confucian dynamism.
D. East Asian countries such as Japan, Hong Kong, and Thailand scored lower on Confucian dynamism than the Western nations.
E. In Confucian dynamism, the units of resources required to produce a good are assumed to remain constant no matter where one is on a countrys production possibility frontier.
Q:
The current rate translation method translates current assets at the rate in effect when they were acquired.
Q:
Hofstede's fifth dimension of Confucian dynamism captures:
A. how a society deals with the fact that people are unequal in physical and intellectual capabilities.
B. the relationship between an individual and his or her fellows along with the degree to which individual achievement and freedom are emphasized.
C. the extent to which different cultures socialized their members into accepting ambiguous situations and tolerating uncertainty.
D. attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors.
E. the extent to which sex roles are differentiated and values such as achievement and power are emphasized.
Q:
Consolidation is the process in which a company's various results are aggregated into one report.
Q:
Which of the following is a criticism of Hofstede's four cultural dimensions?
A. Hofstede has ignored the one-to-one correspondence between culture and the nation-state.
B. Most of Hofstede's findings are in direct conflict with standard Western stereotypes.
C. Hofstede assumes that most countries have more than one cultural dimension.
D. Certain social classes were excluded from Hofstede's work sample.
E. Hofstede's informants belonged to several different industries, companies, and countries hence his research lacks standardization.
Q:
FASB 52 requires that companies record foreign currency-based transactions at the spot rate at the time of the transaction.
Q:
Hofstedes _____ dimension focused on how a society deals with the fact that people are unequal in physical and intellectual capabilities.
A. individualism versus collectivism
B. power distance
C. uncertainty avoidance
D. masculinity versus femininity
E. Confucian dynamism
Q:
There are three points at which operating in a foreign currency raises accounting issues: when transactions are made in foreign currencies, when foreign subsidiaries consolidate their results to the parent company, and when debt is acquired in foreign currencies.
Q:
Which of the following statements is true of Geert Hofstede's work on cultural dimensions?
A. Hofstedes power distance dimension looked at the relationship between gender and work roles.
B. Hofstede's work fails to consider that many countries have more than one culture.
C. According to Hofstede, high uncertainty avoidance cultures were less emotionally resistant to change.
D. Hofstedes findings are inconsistent with standard Western stereotypes about cultural differences.
E. Hofstede and his associates argued that being Confucianism is not good for economic growth.
Q:
The purpose of all accounting is to provide internal and external decision makers with the financial data they need to make their decisions.
Q:
A country characterized with low uncertainty avoidance and low masculinity will:
A. place a premium on job security and career progression.
B. support stringent managerial control and competition.
C. be less resistant to change and less distinguishing between men and women in the same job.
D. have a strong need for rules and exertion of power in the society.
E. oppose risk-taking and gender egalitarianism.
Q:
How could an IC benefit from leading and lagging?
Q:
Which of the following is a characteristic of high uncertainty avoidance cultures?
A. They do not place importance on job security, career patterns, retirement benefits, and so on.
B. They allow a manager to tightly control the subordinates initiatives.
C. They demonstrate less emotional resistance to change.
D. They are characterized by a greater readiness to take risks.
E. They oppose the use of rules and regulations to exercise control over individuals.
Q:
Is triple-bottom-line accounting a reasonable approach to encourage businesses to take responsibility for the impact of their actions on social and environmental systems, or does it place an unrealistic burden on businesses to measure what may not be measurable?
Q:
According to Hofstede, in societies where _____ was emphasized, the ties between individuals were tight.
A. individualism
B. collectivism
C. femininity
D. low uncertainty avoidance
E. low power distance
Q:
The natives of The Republic of Coastland are always prepared to take risks and they also demonstrate less emotional resistance to change. Apart from these characteristics, the ties between people are loose, sex roles are less sharply distinguished, and inequalities of power and wealth are discouraged in the country. According to this information, the Republic of Coastland most likely demonstrates _____.
A. collectivism
B. masculinity
C. low uncertainty avoidance
D. high power distance
E. class consciousness
Q:
Discuss the concerns conducting business in a foreign currency raises from an accounting perspective.
Q:
Discuss how culture might impact accounting.