1. The key to deciding which method to use to convert foreign currency financial statements to U.S. dollar financial statements is

A. Knowing the exchange rate on the balance sheet date.

B. Knowing whether the foreign currency is worth more than or less than $1 per unit.

C. Knowing if the company uses any hedging.

D. Knowing what the functional currency is.

E. Knowing if the weighted average exchange rate is appropriate for use.

2. Under what circumstances does SFAS # 52 mandate which method must be used to convert foreign currency financial statements to U.S. dollar financial statements?

A. If the U.S. and the foreign country have a financial statement provision treaty.

B. If the U.S. and the foreign country have a tax treaty.

C. If the cumulative inflation rate over 3 years exceeds 100%.

D. If the cumulative inflation rate in the foreign country exceeds the U.S. Inflation rate.

E. None of the above is correct.

3. Which tests must a company use to determine which operating segments require separate disclosure?

A. Revenue test and asset test.

B. Revenue test, profit or loss lest, and asset test.

C. Revenue test and profit or loss test.

D. Profit or loss test and asset lest.

E. Revenue lest, asset lest, and liability lest.

4. When defining a reportable segment. which of the following condition would be sufficient to allow a company to combine two operating segment, for purposes of testing?

A. The products sold by each segment arc produced in the same plant.

B. Both segments have several Customers in common.

C. The segments may sell different products. but the) have a similar production process.

D. Both segments arc required to adhere to U.S. Department of Labor regulations regarding immigration laws.

E. Both segments are owned by the same parent company.

5. Which one of the following items must be disclosed in the footnotes for all reportable operating segments?

I. Revenue from external customers.

II. Total Segment Assets

III. Revenues from foreign customers. identifies' by country.

A. 1. II, and III

B. I and III only

C. II and iii only

D. I and II only

E. None of the above items have to be disclosed.

6. Which accounts are remeasured using current exchange rates?

A. all revenues and expenses.

B. all assets and liabilities.

C. all monetary assets and liabilities.

D. all current assets and liabilities.

E all noncurrent assets and liabilities.

7. For a foreign subsidiary that uses the US dollar as its functional currency. what translation method is required?

A. Current/Noncurrent Method.

B. Monetary/Nonmonetary Method.

C. Current Rate Method.

D. Temporal Method.

E. Indirect Method.

8. Which of the following is not necessarily true for an operating segment?

A. An operating segment earns revenues and incurs expenses.

B. The chief operating decision maker regularly Reviews an operating segment to assess performance and make resource allocation decisions.

C. Discrete financial information generated by the internal accounting system is available for an operating segment.

D. An operating segment regularly generates a profit from its normal, ongoing operations.

9. On October lof the current year, Mud Company, a U.S. company, purchased parts from Terra, a Portuguese company, with payment due on December I of the current year. If Mud's year's operating income included no foreign exchange gain or loss. the transaction could have

A. Resulted in an extraordinary gain.

B. Been denominated in U.S dollars.

C. Generated a foreign exchange gain to be reported as a deferred charge on the balance sheet.

D. Generated a foreign exchange loss to be reported as a separate component of stockholders equity.

10. Dun-For Company hay tiled for Chapter 7 liquidation on Starch 31 of the current year. From this list of liabilities. which is not a liability with priority?

A Payroll totaling $15,000 was not paid on March 16 and March 30 of the current year. No employee earns over $1.500 per pay period.

B. Accounts payable of $27.000 for raw materials and various supplies purchased before March 31 of the current year.

C. Sales tax of $4,000 owed to the state government for sales made during March of the current year.

D. Accounts payable of $2.000 for raw materials and various supplies purchased during April of the current year.

11. Dun-For Company has filed for Chapter 7 liquidation on March 31 of the current year. Dun-For Company also owed $750.000 on a mortgage on its land and building. The bankruptcy trustee sold the land and building for $900.000. Who will get the money?

A. The creditor will receive $750,000; the stockholders will receive the remaining $150,000.

B. The creditor will receive $750,000; the trustee will receive the remaining $150,000 as compensation for his services.

C. The creditor will receive $700,000: the remaining $150,000 will be available to pay other liabilities.

D. The full selling price of $900,000 will be divided pro-rata to all creditors.

12. Dun-For Company has filed for Chapter 7 liquidation on March 31 of the current year. Dun-For Company had purchased a forklift for $35.000. The company still owed $24,000 on it. The seller had a security interest in the forklift. The forklift was sold for $15.000; that money was turned over to the original seller. What will happen to the remaining $9,000 of debt on the forklift?

A. The remaining debt will be paid from money obtained from the sale of fully secured debts; the $9.000 will be treated like a fully secured debt.

B. The remaining debt will be forgiven. It cannot legally be collected since the asset securing the debt has been sold.

C. The remaining debt will automatically be exchanged for an equal par value of common stock.

D. The remaining $9,000 debt will be included in liabilities owed to unsecured creditors.

Answer rating: 100% (QA)

1 A 2 E 3 ... View the full answer