While Conducting Trend Analysis, Financial Statement Amounts Should Be Translated

question 45

Multiple Choice

While conducting trend analysis, financial statement amounts should be translated using:

• A)current exchange rate to avoid translation adjustment.
• B)historical exchange rate to ensure compliance with IFRS.
• C)average exchange rate avoid translation adjustment.
• D)current rate at the end of each year.

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Definitions:

Statement of Cash Flows

A financial report that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.

Indirect Method

A way of calculating cash flows for operating activities in the cash flow statement by adjusting net income for changes in non-cash items.

Operating Activities

Operating activities involve the day-to-day functions of a business directly related to its provision of goods and services.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.