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

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 14QE

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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
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
Write Notes on the Following A: Off Balance Sheet Assets and Liabilities B: Interest Rate Risk Management C: Sterilized Intervention in Foreign Exchange D: Unsterilized Intervention in Foreign Exchange E: Balance of Payment
Which one of the following is financial instrument is used by the exporter and importer to fulfill their short term financial requirement? O a. Treasury Bills O b. Bankers' acceptances C. Certificate of Deposits O d. Commercial Papers
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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…
(c) Explain the rule for translating the Financial Statements of Foreign Operations from Functional Currency to Presentation Currency
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
Which accounts are remeasured (versus translated) using current exchange rates? Select one: a. All current assets and liabilities b. All assets and liabilities All revenues and expenses d. Cash, receivables, and most liabilities e. All noncurrent assets and liabilities C.
Briefly summarize the accounting issues arising from foreign currency denominated transactions
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.
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?