Accounting Quiz3

10 Questions | By Baybayev | Updated: Feb 15, 2013 | Attempts: 217

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1.

Under the remeasurement method, common stock would be remeasured at what rate?
- A.
  
  Beginning of the year rate.
- B.
  
  Current rate.
- C.
  
  Average rate.
- D.
  
  Composite amount.
- E.
  
  Historical rate.
Correct Answer
E. Historical rate.
2.

Under the remeasurement method, property, plant & equipment would be remeasured at what rate?
- A.
  
  Beginning of the year rate.
- B.
  
  Current rate.
- C.
  
  Average rate.
- D.
  
  Composite amount.
- E.
  
  Historical rate.
Correct Answer
E. Historical rate.
3.

Under the remeasurement method, how would cost of goods sold be remeasured?
- A.
  
  Beginning of the year rate.
- B.
  
  Current rate.
- C.
  
  Average rate.
- D.
  
  Composite amount (based on original cost of inventory sold).
- E.
  
  Historical rate.
Correct Answer
D. Composite amount (based on original cost of inventory sold).
4.

Under the remeasurement method, inventory at market would be remeasured at what rate?
- A.
  
  Beginning of the year rate.
- B.
  
  Current rate.
- C.
  
  Average rate.
- D.
  
  Composite amount.
- E.
  
  Historical rate.
Correct Answer
B. Current rate.
5.

Where is translation loss (current method) reported in the parent company's financial statements?
- A.
  
  Accumulated other comprehensive income.
- B.
  
  Cumulative translation adjustment as a deferred liability.
- C.
  
  Retained earnings.
- D.
  
  Cumulative translation adjustment as a deferred asset.
- E.
  
  Net loss in the income statement.
Correct Answer
A. Accumulated other comprehensive income.
6.

Where is the disposition of a remeasurement gain or loss reported in the parent company's financial statements?
- A.
  
  Net income/loss in the income statement.
- B.
  
  Other comprehensive income.
- C.
  
  Cumulative translation adjustment as a deferred asset.
- D.
  
  Retained earnings.
- E.
  
  Cumulative translation adjustment as a deferred liability.
Correct Answer
A. Net income/loss in the income statement.
7.

If a subsidiary is operating in a highly inflationary economy, how are the financial statements to be restated?
- A.
  
  Remeasurement.
- B.
  
  Translation.
- C.
  
  Working capital rate.
- D.
  
  Historical rate.
- E.
  
  Current rate.
Correct Answer
A. Remeasurement.
8.

When preparing a consolidating statement of cash flows, which of the following statements is false?
- A.
  
  A change in long-term debt is translated using the historical rate at the date of the change.
- B.
  
  A change in accounts receivable is translated using the current rate.
- C.
  
  All operating activity items are translated at an average exchange rate for the period.
- D.
  
  Dividends paid are translated using the historical rate at the date of the payment.
- E.
  
  All items follow translation rates used for the balance sheet and the income statement.
Correct Answer
B. A change in accounts receivable is translated using the current rate.
9.

When consolidating a foreign subsidiary, which of the following statements is true?
- A.
  
  Subsidiary's income/loss is carried forward to the consolidated balance sheet.
- B.
  
  All foreign currency gains/losses are eliminated in the consolidated income statement and balance sheet.
- C.
  
  Parent reports a gain or loss in net income from adjusting its investment account under the equity method.
- D.
  
  Subsidiary's cumulative translation adjustment is carried forward to the consolidated balance sheet.
- E.
  
  Parent reports a cumulative translation adjustment from adjusting its investment account under the equity method.
Correct Answer
D. Subsidiary's cumulative translation adjustment is carried forward to the consolidated balance sheet.
10.

Dilty Corp. owned a subsidiary in France. Dilty concluded that the subsidiary's functional currency was the U.S. dollar. Which one of the following statements would justify this conclusion?
- A.
  
  Dilty's functional currency is the dollar and Dilty is the parent.
- B.
  
  Dilty is located in the U.S.
- C.
  
  Dilty's other subsidiaries all had the dollar as their functional currency.
- D.
  
  Generally accepted accounting principles require that the subsidiary's functional currency must be the dollar if consolidated financial statements are to be prepared.
- E.
  
  Most of the subsidiary's sales and purchases were with companies in the U.S.
Correct Answer
E. Most of the subsidiary's sales and purchases were with companies in the U.S.

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Current Version
Feb 15, 2013

Quiz Edited by
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Apr 24, 2012

Quiz Created by
Baybayev

Accounting Quiz3

Under the remeasurement method, common stock would be remeasured at what rate?

Under the remeasurement method, property, plant & equipment would be remeasured at what rate?

Under the remeasurement method, how would cost of goods sold be remeasured?

Under the remeasurement method, inventory at market would be remeasured at what rate?

Where is translation loss (current method) reported in the parent company's financial statements?

Where is the disposition of a remeasurement gain or loss reported in the parent company's financial statements?

If a subsidiary is operating in a highly inflationary economy, how are the financial statements to be restated?

When preparing a consolidating statement of cash flows, which of the following statements is false?

When consolidating a foreign subsidiary, which of the following statements is true?

Dilty Corp. owned a subsidiary in France. Dilty concluded that the subsidiary's functional currency was the U.S. dollar. Which one of the following statements would justify this conclusion?