Accounting Trivia Quiz: Test Your Basics!

10 Questions | By Baybayev | Last updated: Mar 19, 2022 | Total Attempts: 223

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Accounting Trivia Quiz: Test Your Basics! - Quiz

Questions and Answers

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 the 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.