ACCT 405 WEEK 6 QUIZ LATEST
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ACCT 405 Week 6 Quiz Latest
ACCT405
ACCT 405 Week 6 Quiz Latest
Question 1 (TCO 4)
A U.S. company sells merchandise to a foreign
company, denominated in U.S. dollars. Which of the following statements is
true?
- If the foreign currency appreciates, a foreign exchange
gain will result.
- If the foreign currency depreciates, a foreign exchange
gain will result.
- No foreign exchange gain or loss will result.
- If the foreign currency appreciates, a foreign exchange
loss will result.
- If the foreign currency depreciates, a foreign exchange
loss will result.
Question 2 (TCO 4)
Which of the following translation methods was
originally mandated by SFAS No. 8?
- Current/noncurrent method
- Monetary/nonmonetary method
- Current rate method
- Temporal method
- Indirect method
Question 3 (TCO 4)
Which is a company’s functional currency?
- The currency of the primary economic environment in
which it operates
- The currency of the country where it has its headquarters
- The currency in which it prepares its financial
statements
- The reporting currency of its parent for a subsidiary
- The currency it chooses to designate as such
Question 4 (TCO 4)
According to SFAS 52, which method is usually
required for translating a foreign subsidiary’s financial statements into the
parent’s reporting currency?
- The temporal method
- The current rate method
- The current/noncurrent method
- The monetary/nonmonetary method
- The noncurrent rate method
Question 5 (TCO 4)
Freddy Co., a U.S. company, contracted to
purchase foreign goods. Payment in foreign currency was due 1 month after the
goods were received at Freddy’s warehouse. Between the receipt of goods and the
time of payment, the exchange rates changed in Freddy’s favor. The resulting
gain should be included in Freddy’s financial statements as a(n)
- component of income from continuing operations.
- extraordinary item.
- deferred credit.
- separate component of other comprehensive income.

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