Foreign Currency Accounting Flashcards
What is Foreign currency Transaction?
Transactions with a foreign entity denominated in a foreign currency
What is Foreign Currency Translation?
Conversion of financial statements of a foreign entity into financial statements expressed in domestic currency
What is Exchange Rate?
The price of one unit of a currency in units of another currency
What is Exchange rate expressed the Direct method ?
The domestic price of one unit of another currency
What is Exchange rate expressed the indirect method ?
The Foreign price of one unit of domestic currency
What is current year exchange rate?
The exchange rate at the current date
What is Forward Exchange Rate?
The exchange rate existing now for exchanging two currencies at a specific future date
What is Historical Exchange Rate?
The rate in effect at the date of issuance of stock or acquisition of assets
What is weighted-average rate?
It is calculated to take into account the exchange rate fluctuation for the period
What is forward exchange contract?
An agreement to exchange at a future specified date and rate a fixed amount of currencies
What is reporting currency?
The currency of the entity used for reporting financial results
What is Functional Currency?
The currency of the primary economic environment
What is foreign currency remeasurement?
Restatement of the foreign financial statements from the foreign currency to the functional currency of the entity
