A Joint Venture Differs from Direct Investment in That Direct

question 54

Multiple Choice

A joint venture differs from direct investment in that direct investment:

• A)is formed when a domestic firm provides management consulting to a foreign firm.
• B)requires a foreign firm to maintain complete ownership of its facilities in the foreign country.
• C)is formed when a foreign firm contracts with a local firm in the host market to manufacture a product.
• D)is a low-risk method of entering a country's market without setting up operations in the country.
• E)generates returns immediately upon execution of the agreement.

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Definitions:

Accrued Expense

An expense that has been incurred but not yet paid, reflecting in a company's financial statements before the cash changes hands.

Net Income

The total earnings of a company after subtracting all expenses, including taxes and operational costs, from its total revenue.

Adjusting Journal Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Insurance Expense

The cost attributed to procuring insurance for business operations, properties, liability, and other risk management purposes, treated as an expense on the income statement.