Accounting Quiz1
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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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