3/28/2024


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Total Questions 21
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Course # 171034
Accounting For Foreign Currency
based on the electronic .pdf file(s):

Accounting For Foreign Currency
by: Delta CPE, 2014, 44 pages


4 CPE Credit Hours
Accounting

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Chapter 0 - Course Material

1.    The potential for an increase or decrease in the firm's financial statements items caused by a change in exchange rates is called   
Transaction Exposure.
Operating Exposure.
Translation Exposure.
Strategic Exposure.
2.    The currency in which the parent company prepares its financial statements is the   
Functional currency.
Reporting currency.
Historical currency.
Base currency.
3.    The currency of the country where the foreign company is operating is the   
Base currency.
Parent currency.
Local currency.
Third country currency.
4.    The currency of the primary economic environment in which the firm operates is the   
Functional currency.
Reporting currency.
Historical currency.
Base currency.
5.    A change in the functional currency is accounted for   
Retroactively
As a change in estimate
Net of taxes
All of the above
6.    Previously issued financial statements   
Should be restated for a change in functional currency
Are not restated for a change in the functional currency
Should be retroactively revised
None of the above
7.    Gains or losses on foreign exchange contracts typically are recognized   
On the balance sheet in the year the exchange rate changes
In current earnings in the year the exchange rate changes
Immediately
All of the above
8.    If a company's books are not maintained in the functional currency, remeasurement into the functional currency is   
Required
Recommended
Not recommended
Not permitted by GAAP
9.    The translation methodology which assumes that the only assets that should be translated at the historical rate are those carried at past exchange prices is the   
Current-noncurrent method.
Monetary-nonmonetary method.
Temporal method.
Current rate method.
10.    If a foreign entity's functional currency is the US dollar and the parent's currency is also the US dollar,   
Translation adjustment is mandatory
No translation adjustment is required
Translation adjustment is recommended
None of the above
11.    The objective(s) of translation include   
Preserving the operating results and relationships measured in the foreign currency
Providing information in consolidated financial statements about the financial performance of each foreign consolidated entity
Providing information on the anticipated effects of changes in exchange rates on cash flow and equity
All of the above
12.    When the foreign currency is the functional currency, capital accounts are translated using the   
Current exchange rate at the balance sheet date
Historical exchange rate in effect when the entity's stock was issued
Average exchange rate for period being reported
Weighted average exchange rate for the period being reported
13.    When the foreign currency is the functional currency, assets and liabilities are translated at the _______________________ of the foreign entity   
Current exchange rate at the balance sheet date
Weighted average exchange rate for reporting period
Historical exchange rate
Average exchange rate for the reporting period
14.    In the statement of cash flows, cash flows are translated based on the   
Exchange rate in existence at the time of the cash flows
Historical exchange rate in effect at the beginning of the period
Exchange rate in effect at year-end
None of the above
15.    Usually in the absence of high inflation, income statement items are translated at the   
Exchange rate in effect at the balance sheet date
Historical exchange rate
Exchange rate at the dates those items are recognized
None of the above
16.    If a company's functional currency is a foreign currency, adjustments occurring from translating the company's financial statements into the reporting currency are   
Unrealized
Realized
Presented as a liability on the balance sheet
Presented as a deferred asset on the balance sheet
17.    The translation method in which all assets and liabilities are translated at current exchange rates is known as the   
Current-noncurrent method.
Monetary-nonmonetary method.
Temporal method.
Current method.
18.    A highly inflationary environment is one with a cumulative inflation rate of   
100% or more over a three-year period
50% per year over a five-year period
25% per year over a four-year period
None of the above
19.    The functional currency of Nash, Inc.'s subsidiary is the euro. Nash borrowed euros as a partial hedge of its investment in the subsidiary. In preparing consolidated financial statements, Nash's translation loss on its investment in the subsidiary exceeded its transaction gain on the borrowing. How should the effects of the loss and gain be reported in Nash's consolidated financial statements?   
The translation loss minus the transaction gain is reported in other comprehensive income.
The translation loss minus the transaction gain is reported in income from continuing operations.
The translation loss is reported in other comprehensive income, and the transaction gain is reported in income from continuing operations.
The translation loss is reported in income from continuing operations, and the transaction gain is reported in other comprehensive income.
20.    A foreign entity may be excluded from consolidated or combined financial statements if   
Serious political problems exist in the foreign country
Exchange restrictions are extremely restrictive
All of the above
None of the above
21.    The following is NOT required to be footnoted.   
Profits earned from domestic earnings.
Foreign currency transaction gains or losses, including that associated with forward exchange contracts.
The impact on unsettled balances regarding foreign currency transactions.
Cumulative translation adjustments reported in stockholders' equity.

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