Accounting Quiz1

10 Questions  I  By Baybayev
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Accounting Quizzes & Trivia

  
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  • 1. 
    In accounting, the term translation refers to
    • A. 

      A procedure to prepare a foreign subsidiary’s financial statements for consolidation.

    • B. 

      The calculation of gains or losses from all transactions for the year

    • C. 

      The calculation of exchange rate gains or losses on individual transactions in foreign currencies.

    • D. 

      The calculation of gains or losses from hedging transactions.

    • E. 

      The procedure required to identify a company's functional currency.


  • 2. 
    For a foreign subsidiary that uses the U.S. dollar as its functional currency, what method is required to ready the financial statements for consolidation?
    • A. 

      Indirect Method.

    • B. 

      Current Rate Method.

    • C. 

      Current/Noncurrent Method.

    • D. 

      Monetary/Nonmonetary Method.

    • E. 

      Remeasurement Method.


  • 3. 
    What is a company's functional currency?
    • A. 

      The currency in which it prepares its financial statements.

    • B. 

      The currency it chooses to designate as such.

    • C. 

      The currency of the primary economic environment in which it operates.

    • D. 

      The currency of the country where it has its headquarters.

    • E. 

      The reporting currency of its parent for a subsidiary.


  • 4. 
    A net asset balance sheet exposure exists and the foreign currency depreciates. Which of the following statements is true?
    • A. 

      There is a positive translation adjustment.

    • B. 

      There is no translation adjustment.

    • C. 

      There is a negative translation adjustment.

    • D. 

      There is a transaction gain.

    • E. 

      There is a transaction loss.


  • 5. 
    A net asset balance sheet exposure exists and the foreign currency appreciates. Which of the following statements is true?
    • A. 

      There is a positive translation adjustment.

    • B. 

      There is no translation adjustment.

    • C. 

      There is a negative translation adjustment.

    • D. 

      There is a transaction gain.

    • E. 

      There is a transaction loss.


  • 6. 
    A net liability balance sheet exposure exists and the foreign currency appreciates. Which of the following statements is true?
    • A. 

      There is a transaction loss.

    • B. 

      There is a transaction gain.

    • C. 

      There is no translation adjustment.

    • D. 

      There is a negative translation adjustment.

    • E. 

      There is a positive translation adjustment.


  • 7. 
    A net liability balance sheet exposure exists and the foreign currency depreciates. Which of the following statements is true?
    • A. 

      There is a transaction loss.

    • B. 

      There is a transaction gain.

    • C. 

      There is no translation adjustment.

    • D. 

      There is a negative translation adjustment.

    • E. 

      There is a positive translation adjustment.


  • 8. 
    A highly inflationary economy is defined as
    • A. 

      Cumulative 3-year inflation in excess of 90%.

    • B. 

      Any country designated as a company operating in a third-world economy.

    • C. 

      Cumulative 5-year inflation in excess of 100%.

    • D. 

      Cumulative 5-year inflation in excess of 90%.

    • E. 

      Cumulative 3-year inflation in excess of 100%.


  • 9. 
    A historical exchange rate for common stock of a foreign subsidiary is best described as
    • A. 

      The rate when the common stock was originally issued for the acquisition transaction.

    • B. 

      The average rate from date of acquisition to the date of the balance sheet.

    • C. 

      The rate from the prior year's balances.

    • D. 

      The rate at date of the acquisition business combination.

    • E. 

      The January 1 exchange rate.


  • 10. 
    Which method of translating a foreign subsidiary's financial statements is correct?
    • A. 

      Working capital method.

    • B. 

      Temporal method.

    • C. 

      Historical rate method.

    • D. 

      Current rate method.

    • E. 

      Remeasurement.


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