The Source of Translation Exposure

question 43

Multiple Choice

The source of translation exposure

• A)is a mismatch of net assets and net liabilities denominated in the same currency.
• B)is a mismatch of net assets and net liabilities denominated in the different currencies.
• C)is a mismatch of current assets and current liabilities denominated in different currencies.
• D)none of the above

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Definitions:

Period Costs

Expenses that are not directly tied to production activity and are expensed in the period in which they occur.

Prepaids Insurance

Expenses paid in advance for insurance coverage, recognized as assets until the coverage period lapses.

Fixed Manufacturing

Costs that do not vary with the volume of production, including rent, salaries of permanent staff, and equipment depreciation.

Average Costs

Calculated by dividing total costs by the total number of units produced, indicating the cost on a per-unit basis.