When Preparing a Foreign Affiliate's Financial Statements for Consolidation, the First

question 58

Multiple Choice

When preparing a foreign affiliate's financial statements for consolidation, the first step is to:

• A)​review the regulations of the country in which the affiliate is located to determine if consolidation is legal.
• B)​adjust the financial statements to conform to generally accepted accounting principles.
• C)​determine the affiliate's functional currency.
• D)​translate the financial statements into the parent's currency.

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Definitions:

Investment Goods

Goods that are purchased not for immediate consumption but for producing other goods or services in the future.

Classical Economists

Economists from the late 18th and 19th centuries who believed in the principles of free markets, limited government, and self-regulating behavior of the economy.

Monetarists

Economists advocating that transformations in the money supply drive significant impacts on the national output in the immediate term and on the pricing scale over the long term.

Fiscal Policy

Government policies regarding taxation and spending that are intended to influence economic conditions, including levels of employment, inflation, and economic growth.