Chapter 8 Questions

Accounting for Foreign Currency Transactions:   Accounting for foreign currency transactions involves recording and reporting financial transactions denominated in a currency other than the entity's functional currency. Here are the key steps involved in handling such transactions:   **1. Identifying Foreign Currency Transactions:   Definition: Foreign currency transactions occur when a business entity conducts financial transactions, such as sales, purchases, or investments, in a currency different from its functional currency.   Examples: Buying goods from a foreign supplier, selling products to overseas customers, or borrowing funds in a foreign currency.   **2. Determining the Functional Currency:   Primary Currency: Each business entity designates a functional currency, which is the primary currency used in its day-to-day operations and financial reporting.   Factors Considered: Factors such as the location of the entity's primary economic activities, the currency in…

Please answer it if is TRUE or FALSE.

A6

MCQs An entity's functional currency is  the currency of the primary economic environment in which the entity operates the currency on which the financial statements have been prepared the currency in the domicile country of the entity all of these According to PAS 21, a reporting entity  shall have only one functional currency shall have only one presentation currency may present its financial statements using any presentation currency it wishes a and c The following are ways of conducting foreign activities  Engaging in foreign currency-denominated transactions having foreign operations sending personnel abroad for training and conferences a and b   According to PAS 21, a reporting entity is  required to identify its functional currency encouraged to identify its fuctional currency required to identify its presentation currency a and c

1. Explain the rule for translating the Financial Statements of Foreign Operations from Local Currency to Functional Currency. 2. Explain the rule for translating the Financial Statements of Foreign Operations from Functional Currency to Presentation Currency

A) Explain the concepts of Local Currency, Functional Currency and Presentation Currency with suitable examples.  B) Explain the rule for translating the Financial Statements of Foreign Operations from Local Currency to Functional Currency.  C) Explain the rule for translating the Financial Statements of Foreign Operations from Functional Currency to Presentation Currency.

2 - Which account can a business use to monitor foreign currency transactions in foreign currency?I. Off-balance sheet account,II. Foreign currency deposit accounts,III. Foreign Currency SafeA) II-IIIB) Solo IIC) I-IID) I-II-IIIE) Only I

Financial accounting is shaped to a significant extent, by the environment, and in particular all of the following, except Select the correct response: The means of measuring economic activity The overall organization of economic activity in society The many uses and users which it serves The characteristics and limitations of financial accounting and financial statements Statement 1 - A foreign currency transaction is initially recognized by translating the foreign currency amount into the functional currency using the spot exchange rate at the date of the transaction. Statement 2- An entity is required to present its financial statements using its presentation currency (i.e., Philippine pesos). However, whenever needed, the entity may translate its financial statements into any functional currency. Select the correct response: Both statements are incorrect Only statement 1 is correct Only statement 2 is correct Both statements are correct

Please solve all questions

47. The entry in the books of a government agency with foreign service post to record the receipt of disbursement authority called the Cash Disbursement Ceiling (CDC) includes Debit to Cash-Modified Disbursement System (MDS) Credit to Subsidy from National Government Credit to Cash-Constructive Income Remittance Debit to Subsidy from National Government

28. A government entity pays an accounts payable. The entry to record the payment will most likely include a Debit to “Cash-Modified Disbursement System (MDS), Regular Account. Credit to “Due to BIR” account Credit to the “Cash-Treasury/Agency Deposit, Regular’ account None of these. The event is recorded only in the registries and the obligation request and status.

Statement 1 - A foreign currency transaction is initially recognized by translating the foreign currency amount into the functional currency using the spot exchange rate at the date of the transaction. Statement 2- An entity is required to present its financial statements using its presentation currency (i.e.,Philippine pesos). However, whenever needed, the entity may translate its financial statements into any functional currency. Select the correct response: Both statements are incorrect Only statement 1 is correct Only statement 2 is correct Both statements are correct

which shall be recognized for each item when foreign currency gain or loss that arises from translation of foreign currency denominated transaction to functional currency? a. inventiry b. interest expense c. accounts receivable d. unearned revenue

1. For reporting purposes, currencies are defined as   Operating, International and presentation   Domestic and international   Foreign, functional and presentation   International and functional   2. The functional currency is   Currency in which the entity reports earnings.   The currency in which the entity primarily operates.   The currency in which the entity presents the financial statements.   The currency in which the entity primarily conducts banking activities     3. Which consideration would not be relevant in determining the entity's functional currency?   The currency in which receipts from operating activities are retained.   The currency in which finance or fund is generated   The currency that influences the cost of the entity.   The currency that the most internationally acceptable for trading   4. Under IFRS, how is presentation currency defined?   The currency in which the financial statements are presented.   The currency that uses the current rate   The currency of…

3 - CODE AND NAME OF THE ACCOUNT WILL BE DEBT 121 02 Foreign Currency Receivables XXX120 02 Foreign Buyer XXXWhich transaction belongs to the journal entry made above?A) Submission of the policy for collection B) Refund record of the policyC) Acceptance record of the policyD) Guarantee record of the policyE) Registration of collection from foreign buyer

(c) Explain the rule for translating the Financial Statements of Foreign Operations from Functional Currency to Presentation Currency

In SFAS No. 52 (see FASB ASC 830), the FASB adopted standards for financial reporting of foreign currency exchanges. This release adopts the functional currency approach to foreign currency translation.   Required: A. Discuss the functional currency approach to foreign currency translation. B. Discuss the terms translation and remeasurement as they relate to foreign currency translation.

What is the amount of total assets?

A). Why do we need to translate the financial statement of foreign operations? B). Explain the concepts of local currency, functional currency and presentation, orrency with example. K C). How is the profit or loss from translating foreign operations' financial statements from local currency to functional currency treated? D) How are the profit and loss from translating foreign ope ions' financial statements from functional currency to presentation currency treated?

Companies such as Sime Darby, Maxis and Nestle carry out many transactions in foreign currencies and have foreign operations. The entities are required to apply MFRS 121 The Effects of Changes in Foreign Exchange Rates in translating the financial statements of foreign operations to include in the consolidated financial statements.   Discuss the THREE (3) primary indicators/factors in determining the functional currency of a company in order to records its transactions and prepare the financial statements.

Which group in the federal goverment is responsible for counting M1 and M2 money amounts?   A. Internal Revenue Service   B. Department of the Treasury   C. Federal Reserve   D. US Mint   Which problem associated with barter transactions is reduced when people conduct these transactions with money?   A. Deflation   B. Local sales taxes   C. Inflation   D. Transaction costs