Foreign Exchange (ForEx) Flashcards

1
Q

What is a company’s functional currency?

A

The currency of the primary economic environment in which it operates

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

In accounting, the term translation refers to

A

A procedure to prepare a foreign subsidiary’s financial statements for consolidation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

For a foreign subsidiary that uses the US dollar as its functional currency, what translation method is required?

A

Current Rate Method

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

According to PAS 21, which method is usually required for translating a foreign subsidiary’s financial statements into the parent’s reporting currency?

A

The current rate method

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Which accounts are remeasured using current exchange rates?

a. All revenues and expenses
c. All monetary assets and liabilities
b. All assets and liabilities
d. All current assets and liabilities

A

Current Exchange Rates means reporting date rates or end of date rates

All monetary assets and liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

The translation adjustment from translating a foreign subsidiary’s financial statements should be shown as

A

A component of stockholders’ equity on the consolidated balance sheet

How well did you know this?
1
Not at all
2
3
4
5
Perfectly