Which of the Following Statements Is Correct with Respect to the Translation

question 16

Multiple Choice

Which of the following statements is correct with respect to the translation of cost of sales in a foreign operation where the functional currency of the foreign operation is the same as the parent's functional currency?

• A) Opening inventory is translated using an average rate.
• B) Opening inventory is translated using closing rates.
• C) Ending inventory is translated using an average rate.
• D) Ending inventory is translated using the rate in effect when the inventory was acquired.

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Definitions:

Interest Accrued

Interest that has been incurred but not yet paid, representing a liability on the balance sheet until it is paid.

Accrued Interest

The interest that has accumulated on a bond or loan but has not yet been paid out to the lender or bondholder.

Note Payable

A written promise to pay a specific amount of money, with or without interest, at a future date.