Question 1

If the exchange rate for Canadian and U.S.dollars is 0.7382 to $1,this implies that 2 Canadian dollars can be purchased for $1.48 U.S.dollars.

Accepted Answer

A) True 
 B)False  True

Question 2

Marshall Company sold supplies in the amount of € 25,000 (euros)to a French company when the exchange rate was $1.21 per euro.At the time of payment,the exchange rate decreased to $0.82.Marshall must record a:

Accepted Answer

A)  gain of $9,750.
B)  gain of $20,500.
C)  loss of $9,750.
D)  loss of $20,500.
E)  neither a gain nor loss. C

Question 3

All of the following statements relating to accounting for international operations are true except:

Accepted Answer

A)  Foreign exchange gains or losses can occur when accounting for international sales transactions.
B)  Gains and losses from foreign exchange transactions are accumulated in the Fair Value Adjustment Account and are reported on the balance sheet.
C)  Gains and losses from foreign exchange transactions are accumulated in the Foreign Exchange Gain (or Loss) account.
D)  The balance in the Foreign Exchange Gain (or Loss) account is reported on the income statement.
E)  Foreign exchange gains or losses can occur when accounting for international purchases transactions. B

Question 4

The price of one currency stated in terms of another currency is called a(n):

Accepted Answer

A)  Foreign exchange rate
B)  Currency transaction
C)  Historical exchange rate
D)  International conversion rate
E)  Currency rate

Question 5

Explain how transactions (both sales and purchases)in a foreign currency are recorded and reported.

Accepted Answer

The answer of Explain how transactions (both sales and purchases)in...

Question 6

When a U.S.company makes a credit sale to an international customer and the sale terms are for payment in a foreign currency,the foreign exchange rate used to record the sale is the exchange rate:

Accepted Answer

A)  Thirty days from the date of sale.
B)  At the end of the seller's fiscal year.
C)  At the end of the buyer's fiscal year.
D)  On the date final payment is made.
E)  On the date of the sale.

Question 7

If a U.S.company's credit sale to an international customer allows payment to be made in a foreign currency,the sale transaction is recorded using the exchange rate on the date of sale.

Accepted Answer

A) True 
 B)False

Question 8

Kim Manufacturing purchased on credit £20,000 worth of parts from a British company when the exchange rate was $1.66 per British pound.At the year-end balance sheet date,the exchange rate increased to $1.69.Kim must record a gain of $600.

Accepted Answer

A) True 
 B)False

Question 9

On November 12,Higgins,Inc.,a U.S.Company,sold merchandise on credit to Kagome of Japan at a price of 1,500,000 yen.The exchange rate was $0.00837 on the date of sale.On December 31,when Higgins prepared its financial statements,the exchange rate was $0.00843.Kagome paid in full on January 12,when the exchange rate was $0.00861.On January 12,Higgins should prepare the following journal entry:

Accepted Answer

A)  Debit Cash $12,915; credit Accounts Receivable-Kagome $12,555; credit Foreign Exchange Gain $360.
B)  Debit Cash $12,555; debit Foreign Exchange Loss $360; credit Accounts Receivable-Kagome $12,915.
C)  Debit Cash $12,915; credit Accounts Receivable-Kagome $12,645; credit Foreign Exchange Gain $90.
D)  Debit Cash $12,645; debit Foreign Exchange Loss $90; credit Accounts Receivable-Kagome $12,915.
E)  Debit Cash $12,915; credit Accounts Receivable-Kagome $12,645; credit Foreign Exchange Gain $270.

Question 10

Define the foreign exchange rate between two currencies.Explain its effect on business transactions conducted in a foreign currency.

Accepted Answer

The answer of Define the foreign exchange rate between two...

Question 11

If the exchange rate for Canadian and U.S.dollars is 0.82777 to 1,this implies that 3 Canadian dollars will buy ________ worth of U.S.dollars.

Accepted Answer

A)  $0.2759
B)  $0.82777
C)  $1.82777
D)  $2.48
E)  $1.00

Question 12

On June 18,Wyman Company (a U.S.Company)sold merchandise to the Nielsen Company of Denmark for €60,000 (Euros),with a payment due in 60 days.If the exchange rate was $1.35 per euro on the date of sale and $1.14 per euro on the date of payment,Wyman Company should recognize a foreign exchange gain or loss in the amount of:

Accepted Answer

A)  $60,000 gain.
B)  $60,000 loss.
C)  $68,400 loss.
D)  $12,600 gain.
E)  $12,600 loss.

Question 13

Rainier Importers purchases automotive parts from Austria.Prepare journal entries for the following transactions of Rainier.

Accepted Answer

The answer of Rainier Importers purchases automotive parts from Austria.Prepare...

Question 14

The currency in which a company presents its financial statements is known as the:

Accepted Answer

A)  Multinational currency
B)  Price-level-adjusted currency
C)  Specific currency
D)  Reporting currency
E)  Historical cost currency

Question 15

If a U.S.company makes a credit sale to a foreign company,the sales price must be translated into dollars as of the date of ________.

Accepted Answer

The answer of If a U.S.company makes a credit sale...

Question 16

Arkansana Inc.imports inventory from Costa Rica.Prepare the journal entries for Arkansana to record the following transactions.Include any year-end adjustments.

Accepted Answer

The answer of Arkansana Inc.imports inventory from Costa Rica.Prepare the...

Question 17

Multinational corporations can be U.S.companies with operations in other countries.

Accepted Answer

A) True 
 B)False

Question 18

Maroon Company sold supplies in the amount of € 15,000 (euros)to a French company when the exchange rate was $1.15 per euro.At the time of payment,the exchange rate decreased to $1.12.Maroon must record a loss of $450.

Accepted Answer

A) True 
 B)False

Question 19

The price of one currency stated in terms of another currency is called a foreign exchange rate.

Accepted Answer

A) True 
 B)False

Question 20

FreshFoods,Inc.sells American gourmet foods to merchandisers in Singapore.Prepare the journal entries for FreshFoods,to record the following transactions.Include any year-end adjustments.

Accepted Answer

The answer of FreshFoods,Inc.sells American gourmet foods to merchandisers in...

Exam 16: International Operations

If the exchange rate for Canadian and U.S.dollars is 0.7382 to $1,this implies that 2 Canadian dollars can be purchased for $1.48 U.S.dollars.

Marshall Company sold supplies in the amount of € 25,000 (euros) to a French company when the exchange rate was $1.21 per euro.At the time of payment,the exchange rate decreased to $0.82.Marshall must record a:

All of the following statements relating to accounting for international operations are true except:

The price of one currency stated in terms of another currency is called a(n) :

Explain how transactions (both sales and purchases)in a foreign currency are recorded and reported.

When a U.S.company makes a credit sale to an international customer and the sale terms are for payment in a foreign currency,the foreign exchange rate used to record the sale is the exchange rate:

If a U.S.company's credit sale to an international customer allows payment to be made in a foreign currency,the sale transaction is recorded using the exchange rate on the date of sale.

Kim Manufacturing purchased on credit £20,000 worth of parts from a British company when the exchange rate was $1.66 per British pound.At the year-end balance sheet date,the exchange rate increased to $1.69.Kim must record a gain of $600.

Define the foreign exchange rate between two currencies.Explain its effect on business transactions conducted in a foreign currency.

If the exchange rate for Canadian and U.S.dollars is 0.82777 to 1,this implies that 3 Canadian dollars will buy ________ worth of U.S.dollars.

Rainier Importers purchases automotive parts from Austria.Prepare journal entries for the following transactions of Rainier.

The currency in which a company presents its financial statements is known as the:

If a U.S.company makes a credit sale to a foreign company,the sales price must be translated into dollars as of the date of ________.

Arkansana Inc.imports inventory from Costa Rica.Prepare the journal entries for Arkansana to record the following transactions.Include any year-end adjustments.

Multinational corporations can be U.S.companies with operations in other countries.

Maroon Company sold supplies in the amount of € 15,000 (euros)to a French company when the exchange rate was $1.15 per euro.At the time of payment,the exchange rate decreased to $1.12.Maroon must record a loss of $450.

The price of one currency stated in terms of another currency is called a foreign exchange rate.

FreshFoods,Inc.sells American gourmet foods to merchandisers in Singapore.Prepare the journal entries for FreshFoods,to record the following transactions.Include any year-end adjustments.