Accounting Quiz3
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Under the remeasurement method, inventory at market would be remeasured at what rate?
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Beginning of the year rate.
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Current rate.
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Average rate.
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Composite amount.
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Historical rate.
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- 2.
Under the remeasurement method, common stock would be remeasured at what rate?
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Beginning of the year rate.
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Current rate.
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Average rate.
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Composite amount.
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Historical rate.
Correct Answer
A. Historical rate. -
- 3.
Under the remeasurement method, property, plant & equipment would be remeasured at what rate?
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Beginning of the year rate.
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Current rate.
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Average rate.
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Composite amount.
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Historical rate.
Correct Answer
A. Historical rate. -
- 4.
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?
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Dilty's functional currency is the dollar and Dilty is the parent.
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Dilty is located in the U.S.
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Dilty's other subsidiaries all had the dollar as their functional currency.
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Generally accepted accounting principles require that the subsidiary's functional currency must be the dollar if consolidated financial statements are to be prepared.
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Most of the subsidiary's sales and purchases were with companies in the U.S.
Correct Answer
A. Most of the subsidiary's sales and purchases were with companies in the U.S. -
- 5.
If a subsidiary is operating in a highly inflationary economy, how are the financial statements to be restated?
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Remeasurement.
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Translation.
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Working capital rate.
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Historical rate.
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Current rate.
Correct Answer
A. Remeasurement. -
- 6.
Where is translation loss (current method) reported in the parent company's financial statements?
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Accumulated other comprehensive income.
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Cumulative translation adjustment as a deferred liability.
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Retained earnings.
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Cumulative translation adjustment as a deferred asset.
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Net loss in the income statement.
Correct Answer
A. Accumulated other comprehensive income. -
- 7.
Where is the disposition of a remeasurement gain or loss reported in the parent company's financial statements?
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Net income/loss in the income statement.
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Other comprehensive income.
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Cumulative translation adjustment as a deferred asset.
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Retained earnings.
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Cumulative translation adjustment as a deferred liability.
Correct Answer
A. Net income/loss in the income statement. -
- 8.
When consolidating a foreign subsidiary, which of the following statements is true?
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Subsidiary's income/loss is carried forward to the consolidated balance sheet.
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All foreign currency gains/losses are eliminated in the consolidated income statement and balance sheet.
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Parent reports a gain or loss in net income from adjusting its investment account under the equity method.
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Subsidiary's cumulative translation adjustment is carried forward to the consolidated balance sheet.
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Parent reports a cumulative translation adjustment from adjusting its investment account under the equity method.
Correct Answer
A. Subsidiary's cumulative translation adjustment is carried forward to the consolidated balance sheet. -
- 9.
Under the remeasurement method, how would cost of goods sold be remeasured?
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Beginning of the year rate.
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Current rate.
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Average rate.
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Composite amount (based on original cost of inventory sold).
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Historical rate.
Correct Answer
A. Composite amount (based on original cost of inventory sold). -
- 10.
When preparing a consolidating statement of cash flows, which of the following statements is false?
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A change in long-term debt is translated using the historical rate at the date of the change.
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A change in accounts receivable is translated using the current rate.
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All operating activity items are translated at an average exchange rate for the period.
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Dividends paid are translated using the historical rate at the date of the payment.
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All items follow translation rates used for the balance sheet and the income statement.
Correct Answer
A. A change in accounts receivable is translated using the current rate. -
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Current Version
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Feb 15, 2013Quiz Edited by
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