Accounting Quiz3
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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.
- 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.
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