Whether the Functional Currency Is Local or the Parent Company's

question 82

Multiple Choice

Whether the functional currency is local or the parent company's currency, owner's equity is always translated at:

• A) the rate in effect when the stock was issued.
• B) the rate in effect the day of the consolidation.
• C) the rate in effect the day of the journal entry.
• D) the method of the company's choice, but consistency is required.

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Definitions:

Merchandise Inventory

The total value of a retailer's goods that are available for sale to customers, including items purchased from suppliers and items ready for sale.

Sales Discount

A reduction in the price of goods or services offered to customers, usually to prompt early payment or bulk purchases.

FOB Shipping Point

A shipping term indicating that the buyer takes responsibility for loss or damage once the goods are shipped, and pays the shipping cost.

Terms

Conditions that are agreed upon in a financial or business arrangement.