How Does the Lack of Global Accounting Standards Affect U

question 6

Multiple Choice

How does the lack of global accounting standards affect U.S.-based companies?

• A) Unethical U.S. companies will use whichever standard creates the most benefit for them.
• B) Using standards in countries where they do business allows for greater opportunity in the international market.
• C) Reporting performance in a variety of consolidated statements for global affiliates will minimize understanding, thereby minimizing attempted leveraged buyouts.
• D) There may be inconsistent and conflicting information that creates confusion for stakeholders.
• E) Assets can be values according to one standard, revenue and debt according to other standards, in an overall goal of presenting positive performance levels.

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Definitions:

Exchange Rate Risk

The potential for loss due to fluctuations in the exchange rates between currencies, affecting companies that engage in international business.

International Operations

Business activities conducted in more than one country, involving cross-border transactions of goods, services, or capital.

International Fisher Effect

An economic theory stating that the difference in nominal interest rates between two countries is proportional to the expected change in the exchange rate between their currencies.

Expected Changes

Expected changes refer to anticipated modifications in conditions or variables, often used in forecasting scenarios in finance or economics.