When Translating Foreign Subsidiary Income Statements Using the Current Rate

question 11

Multiple Choice

When translating foreign subsidiary income statements using the current rate method,why are some accounts translated at an average rate?

• A)This approach improves matching.
• B)This approach accentuates the conservatism principle.
• C)This approach smoothes out highly volatile exchange rate fluctuations.
• D)This approach approximates the effect of transactions which occur continuously during the period.

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Definitions:

Ardipithecus Ramidus

An early hominin species known for its significant contributions to the understanding of human evolution, dating back to approximately 4.4 million years ago.

Awash River Basin

A geographical area in Ethiopia that is drained by the Awash River, significant for its agricultural and cultural importance.

Central Africa

A region located at the center of the African continent, characterized by its diverse cultures, languages, and ecological systems, including the Congo Basin's rainforests.