Reference: Ref 20-3 (Table: Exchange Rates) Using the Hypothetical Exchange

question 45

Multiple Choice

Reference: Ref 20-3 (Table: Exchange Rates) Using the hypothetical exchange rate information in the table, which of the following statements is correct?

• A) In 2004, the U.S. dollar had not changed relative to all of the other currencies.
• B) In 2004, the Japanese yen had depreciated relative to the U.S. dollar.
• C) In 2004, the Japanese yen had appreciated relative to the European euro.
• D) In 2004, the European euro had appreciated relative to the British pound.

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Definitions:

Indirect Method

A method of reporting cash flows from operating activities by adjusting net income for changes in non-cash accounts.

Direct Method

A way of preparing the cash flow statement where actual cash flow information from the company's operations is used.

Operating Activities

Transactions and events that affect net income, primarily related to the core operations of a business.

Direct Method

An approach to cash flow statement preparation that lists major classes of gross cash receipts and payments.