A Foreign Subsidiary Uses the First-In First-Out Inventory Method

question 35

Multiple Choice

A foreign subsidiary uses the first-in first-out inventory method. The following inventory balances are given at December 31, 2013 in local currency units (LCU) : Compute the December 31, 2013, inventory balance using the current rate method.

• A) $454,400.
• B) $457,600.
• C) $596,400.
• D) $568,000.
• E) $426,000.

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Definitions:

Cash Sales

Transactions where payment is made in cash (or equivalent) at the time of sale, with no delay in payment.

Internal Control

Processes and procedures implemented by an organization to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Cash Remittances

Money transfers from one party to another, often sent by individuals working abroad to their family back home.

Bank Reconciliation

The process of matching and comparing figures from accounting records against those presented on a bank statement to ensure they are consistent and accurate.