Which of the Following Statements Concerning Lumpy Assets Is Correct

question 12

Multiple Choice

Which of the following statements concerning lumpy assets is correct?

• A)Purchasing lumpy assets generally does not have a significant effect on the amount of fixed assets a firm holds.
• B)Lumpy assets normally are extremely liquid.
• C)If it can only purchase lumpy assets, it is possible that a firm will be required to invest a substantial amount in plant and equipment to attain a small projected increase in sales.
• D)Lumpy assets can be acquired in small increments.
• E)Lumpy assets generally have lives that are less than 12 months.

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Definitions:

Historical Rate

An exchange rate used to convert foreign currency amounts involved in a transaction to the functional currency at the date the transaction occurred.

Temporal Methods

An accounting technique used to convert the financial statements of a subsidiary into the parent company's presentation currency, applying exchange rates based on the timing of the underlying transactions.

Translating

The process of converting financial data from one currency to another currency in financial reporting.

Accounting Standards

Regulations and guidelines for financial reporting and accounting practices that ensure consistency, transparency, and comparability of financial statements.