Under the Current Rate Method of Translating Foreign Currency Financial

question 28

Multiple Choice

Under the current rate method of translating foreign currency financial statements, what exchange rate should be used for cost of goods sold?

• A) Spot rate at the end of the year
• B) Average rate during the year
• C) Spot rate mid-year
• D) There is no single rate because beginning and ending inventory must be converted at different exchange rates than purchases.

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Definitions:

Small Lot Sizes

Manufacturing or purchasing strategy characterized by producing or acquiring goods in small quantities, which can reduce inventory costs and improve flexibility.

Material Handling

The movement, protection, storage, and control of materials and products throughout manufacturing, warehousing, distribution, consumption, and disposal processes.

JIT

Just-In-Time; an inventory management strategy that aims to increase efficiency and decrease waste by receiving goods only as they are needed in the production process.

Quality

The degree to which a set of inherent characteristics of a product, service, or process fulfills requirements.