A Fronting Loan Disguises the Identity of a Parent Multinational

question 30

True/False

A fronting loan disguises the identity of a parent multinational corporation that infuses money into a foreign subsidiary. This technique is intended to reduce the political risk of operating a subsidiary in a foreign country.

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Definitions:

Petty Cash Fund

A minimal sum of money maintained for the purpose of covering various minor expenditures on the spot.

Journal Entry

A record in accounting that represents a transaction and its impact on various accounts, used to track financial activities.

Cash Short and Over

An account that records the discrepancies between the actual amount of cash received and the expected amount as per records.

Money Market Accounts

Financial accounts that typically offer higher interest rates than savings accounts, while providing the account holder with limited check-writing ability.