Assume That the Japanese Yen Is Expected to Depreciate Substantially

question 10

Multiple Choice

Assume that the Japanese yen is expected to depreciate substantially over the next year. A U.S.-based MNC has a subsidiary in Japan, where its costs exceed revenues. The overall value of the MNC will ____ because of the yen's depreciation.

• A) decrease
• B) increase
• C) remain unchanged
• D) decrease OR remain unchanged

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Definitions:

Allowance

In accounting, a reduction from the gross amount of receivables to reflect the estimated uncollectible amounts; in budgeting, an allocated amount for specific expenses.

Doubtful Accounts

Accounts receivable that a company does not expect to collect in full, often leading to an allowance for doubtful accounts as a contra asset on the balance sheet.

Allowance Method

An accounting technique used to manage accounts receivable and bad debt expense by estimating uncollectible accounts at the end of each period.

Net Income

The total revenue of a business minus total expenses, representing the profit made during a specific period.