Because countries have different financial regulations and customs, it is common for MNEs to apply their domestic rules and regulations when doing financial business in a foreign countrya) trueb) false

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Business

Darrell Barrett

23 January, 19:07

Because countries have different financial regulations and customs, it is common for MNEs to apply their domestic rules and regulations when doing financial business in a foreign countrya) trueb) false

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Roberto Werner · Answer 1

B) False

Explanation:

Any multinational corporation must follow the laws that apply on the countries that they operate in. Regarding accounting practices, this is fairly simple, since most countries accept International Financial Reporting Standards (IFRS) rules. If the multinational corporation's headquarters are located in the US, the subsidiary will probably have to elaborate two different sets of financial records, one following the US GAAP and the other one following the IFRS guidelines. But that is optional, since the SEC is currently accepting financial statements using IFRS from American multinational corporations. Corporations that only do business in the US cannot use IFRS standards and must use GAAP, the option of using IFRS applies only to multinationals.