Which of the Following Is True of a Firm That

question 91

Multiple Choice

Which of the following is true of a firm that tries to coordinate and control the worldwide operations of its subsidiaries?

• A)The management personnel of its subsidiaries need to be fluent only in English.
• B)The subsidiaries based in different countries never face any constraints on the transfer of corporate resources.
• C)Cash flows in different subsidiaries are denominated in different currencies.
• D)The terms of trade determined after negotiation with the host government and the multinational corporation are always well aligned to the firm's policies.
• E)All the subsidiaries are based only in countries that have homogeneous cultural heritages.

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Definitions:

Non-Cash Items

Expenses charged against revenues that do not directly affect cash flow, such as depreciation.

Generally Accepted Accounting Principles (GAAP)

A framework for a common set of principles, rules, and procedures of accounting.

Historical Cost

The original monetary value of an asset or transaction, based on the actual amount paid or incurred at the time of acquisition, without adjusting for inflation or changes in market value.

Carrying Value

The book value of assets and liabilities as represented on the balance sheet, considering factors like depreciation or amortization.