Exchange Gains and Losses on a Forward Exchange Contract That

question 31

Multiple Choice

Exchange gains and losses on a forward exchange contract that covers the same time period as the transaction which it provides a fair value hedge for should be recognized as

• A)​an extraordinary item.
• B)​part of the original sales transaction.
• C)​income from continuing operations.
• D)​other comprehensive income.

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Definitions:

Process Costing System

A method of costing used where identical or similar items are produced in mass, costs are accumulated for a fixed period and assigned to all units produced.

FIFO Method

"First In, First Out" inventory valuation method where goods purchased or produced first are sold or used first.

Inventory Costing

A method used to assign costs to inventory items, which affects the cost of goods sold reported and the inventory's valuation on the balance sheet.

General Journal Entries

Accounting records that document all the financial transactions of a company, used to transfer information to the master ledger.