When a Foreign Entity Has the U

question 38

Multiple Choice

When a foreign entity has the U.S.dollar as its functional currency,it uses which exchange rate to translate monetary assets and liabilities?

• A) the average exchange rate during the period
• B) the end of the period exchange rate
• C) the historical exchange rate
• D) the exchange rate on the date the asset or liability was obtained

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Definitions:

Perpetual Inventory System

An inventory management system where updates to inventory records are made immediately following each transaction, giving a continuous, real-time account of stock levels.

Average Cost Method

An inventory costing method where the cost of goods sold and ending inventory is determined by averaging the cost of all similar items available.

Periodic System

A method of inventory tracking where updates are made on a periodic basis rather than continuously, typically at the end of an accounting period.

Cost of Goods Sold

Direct expenses involved in producing the goods that a company sells, including costs of materials and labor.