Financial accounting is shaped to a significant extent, by the environment, andin particular all of the following, exceptSelect the correct response:The means of measuring economic activityThe overall organization of economic activity in societyThe many uses and users which it servesThe characteristics and limitations of financial accounting andfinancial statementsStatement 1 - A foreign currency transaction is initially recognized bytranslating the foreign currency amount into the functional currency using thespot exchange rate at the date of the transaction.Statement 2- An entity is required to present its financial statements using itspresentation currency (i.e., Philippine pesos). However, whenever needed, theentity may translate its financial statements into any functional currency.Select the correct response:Both statements are incorrectOnly statement 1 is correctOnly statement 2 is correctBoth statements are correct

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

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

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter24: Recording International And Internet Sales

Section: Chapter Questions

Problem 1CP

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Similar questions

The system of using a monetary unit, such as the US dollar, to value the transaction is known as which of the following? A. separate entity concept B. monetary measurement concept C. going concern assumption D. time period assumption
Summarize the impact of foreign exchange rates on the company’s financial statements. What risks do foreign exchange rates pose? Provide academically supported example(s) in your response. What are the two methods used to translate financial statements and how does the functional currency play a role in determining which method is used? Provide academic support in your response. Compose a hypothetical example to demonstrate the translation process using the two methods. Ensure all information is entered accurately.
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.
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…
Explain the rule for translating the Financial Statements of Foreign Operations from Local Currency to Functional Currency. Explain the rule for translating the Financial Statements of Foreign Operations from Functional Currency to Presentation Currency
Explain the rule for translating the Financial Statements of Foreign Operations from Local Currency to Functional Currency.
In presenting foreign currency denominated transactions to the functional currency of the entity, which of the following statements is correct? a. When nonmonetary items are translated from foreign currency to functional currency in the financial statements, foreign currency gain of loss will be recognized. b. Monetary items shall be initially recognized and measured at the exchange rate prevailing at the end of the reporting period. c. Foreign currency gain or loss arising from translation of the foreign currency denominated items to functional currency shall be presented in other comprehensive income with reclassification adjustment to profit or loss if realized. d. Foreign currency denominated income statement accounts shall be translated using the exchange rate at the date of transaction.
Which foreign exchange risk relates to the value of assets held in foreign currency on the statement of financial position of financial institutions which trades? a. Economic risk b. Transaction type risk c. Currency risk d. Translation risk
Which of the following items is a "debit" item in a country's balance-of payments accounts? a. exports of services b. increased holdings of domestic bonds by foreigners c. exports of merchandise d. an increase in a domestic citizen's bank aaccount in a foreign bank
If the foreign operations reports in the currency of hyperinflationary economy, assets and liabilities are translated at Group of answer choices Average rate Exchange rate on date of transaction Forward rate Closing rate
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