The Underlying Principle of the Temporal Method Is

question 75

Multiple Choice

The underlying principle of the temporal method is

• A)assets and liabilities should be translated based on their maturity.
• B)monetary accounts have a similarity because their value represents a sum of money whose currency equivalent after translation changes each time the exchange rate changes.
• C)monetary accounts are translated at the current exchange rate; other accounts are translated at the current exchange rate if they are carried on the books at current value; items carried at historical cost are translated at historic exchange rates.
• D)all balance sheet accounts are translated at the current exchange rate,except for stockholders' equity.A "plug" equity account,named cumulative translation adjustment (CTA),is used to make the balance sheet balance,since translation gains or losses do not go through the income statement according to this method.

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Definitions:

Disproportionate Burden

A situation where the costs, impacts, or benefits of a decision, policy, or action fall more heavily on a particular group or sector.

Poverty

A condition where individuals or communities lack the financial resources to meet a minimum standard of living, including basic necessities such as food, clothing, and shelter.

Poverty Rate

The percentage of a population living below the national poverty line, indicating the proportion of individuals or households with income levels insufficient for basic living standards.

Equality-Efficiency Trade-Off

The decrease in economic efficiency that may accompany a decrease in income inequality; the presumption that some income inequality is required to achieve economic efficiency.