There Are Two Points at Which Operating in a Foreign

question 70

Multiple Choice

There are two points at which operating in a foreign currency raises issues for accounting:

• A) when debt is incurred and when foreign payrolls are run.
• B) when transactions are made in foreign currencies and when foreign subsidiaries consolidate their results back to corporate financial reports.
• C) when the currency fluctuates and when the local inflation rate changes.
• D) when the interest and inflation rates change.

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Definitions:

Perpetually

Continuing forever or for an indefinite period without anticipated termination.

Cash Flow

The total sum of cash and cash-equivalents that flows in and out of a company.

Present Value

The worth at present of a future money amount or cash flow sequences, evaluated using a certain rate of return.

Future Value

The future value of an asset or cash that, on a specific future date, is equal in worth to a given amount today.