Accounting Quiz3

10 Questions | Total Attempts: 216

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Accounting Quizzes & Trivia

Questions and Answers
  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.