Question

*2) Which of the following statements is true in the case of budgeting for multinational companies?*

A) While budgeting for multinational companies managers consider difference in tax statutes as an uncontrollable factor.
B) While budgeting for multinational companies, managers do not account for foreign exchange fluctuations as the operating profits are reported in different currencies.
C) While budgeting for multinational companies, managers must be aware that budgets will not be used for evaluating performance.
D) While budgeting for multinational companies, managers are not concerned about the domestic factors of the different countries in which they operate.
Objective 6.7

Answer 1

Managers consider tax statutes, account for foreign exchange fluctuations, and budgets are used for evaluating performance.

Step-by-step explanation:

In the case of budgeting for multinational companies, managers consider difference in tax statutes as an uncontrollable factor. This is because tax laws and regulations vary from one country to another, and managers must take this into account when creating their budgets.

Managers for multinational companies do account for foreign exchange fluctuations while budgeting. As these companies operate in different countries with different currencies, the fluctuation in exchange rates can impact their operating profits.

Managers must be aware that budgets will be used for evaluating performance. Budgets serve as a benchmark for tracking and evaluating the financial performance of a company and its various divisions or departments.