When the Functional Currency of a Foreign Operation Is a Foreign

question 5

Multiple Choice

When the functional currency of a foreign operation is a foreign currency,translation of financial statements is done using:

• A) current rate method
• B) temporal method
• C) either current rate or temporal method
• D) none of the above

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Definitions:

Average-Fixed-Cost

The fixed costs of production divided by the quantity of output produced; it decreases as production increases.

Average-Variable-Cost

The total variable cost divided by the quantity of output produced.

Marginal Costs

The investment required to manufacture an incremental unit of a product or service.

Variable Costs

Costs that change in proportion to the level of activity or production volume.