Transaction Gains and Losses That Result from Adjusting Assets and Liabilities

question 21

Multiple Choice

Transaction gains and losses that result from adjusting assets and liabilities denominated in a currency other than the functional currency must appear on the foreign unit's income statement unless the gains or losses are attributable to

• A)foreign currency transactions that are designated as an economic hedge of a net investment in a foreign entity
• B)intercompany foreign-currency transactions that are of a short- term nature
• C)foreign-currency transactions that involve currency speculation
• D)the prospect of government intervention using currency controls

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Definitions:

Supplies Account

An account used to track the cost of consumable items and minor equipment used within a business operation.

Adjustment

An alteration made to financial records or statements to correct errors or account for changes.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns to ensure that a company's financial transactions are correctly recorded.

Worksheet

A paper or digital document used to organize information, perform calculations, and prepare for the creation of financial statements.