When a Company Buys Shares in a Foreign Firm Without

question 73

Multiple Choice

When a company buys shares in a foreign firm without wishing to participate in that firm's management, it is recorded in the balance of payments as a:

• A) Portfolio investment
• B) Capital investment
• C) Direct investment
• D) All of the above

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Definitions:

Activity-based Costing

An accounting method where overhead and indirect costs are allocated to the corresponding products and services based on the required activities.

Floral Bouquets

Arrangements of flowers, typically designed and prepared by florists, that are sold for various occasions such as weddings, celebrations, or as gifts.

Plantwide Overhead Rate

A single rate used to allocate all of a plant's manufacturing overhead costs to its products or cost objects, regardless of the department in which the costs were incurred.

Activity-based Costing

A costing method that first assigns costs to activities and then to products based on each product’s use of activities.