The Basic Advantage of the ________ Method of Foreign Currency

question 18

Multiple Choice

The basic advantage of the ________ method of foreign currency translation is that foreign nonmonetary assets are carried at their original cost in the parent's consolidated statement while the most important advantage of the ________ method is that the gain or loss from translation does not pass through the income statement.

• A) monetary; current rate
• B) temporal; current rate
• C) temporal; monetary
• D) current rate; temporal

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Definitions:

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency of its inventory management.

COGS

Cost of Goods Sold; the direct costs attributable to the production of the goods sold in a company.

Investing Activities

Refers to the portion of a company's cash flow statement that reflects the amount of money spent on or generated from investments in long-term assets, such as property, plant, equipment, or securities.

Free Cash Flow

A measure of financial performance calculated as operating cash flow minus capital expenditures, reflecting the amount of cash a company can generate after maintaining or expanding its asset base.