Question #27
Reading: Reading 10 Multinational Operations
PDF File: Reading 10 Multinational Operations.pdf
Page: 14
Status: Correct
Correct Answer: A
Question
Which of the following statements is least accurate regarding accounting for foreign currency translations? The:
Answer Choices:
A. current rate method applies the current exchange rate to all balance sheet accounts
B. current rate method applies the average exchange rate to all income statement accounts
C. temporal method uses the historical exchange rate to translate non-monetary assets and liabilities into the currency of the country of the parent company
Explanation
The current rate method applies the current exchange rate to all balance sheet accounts
except for common stock, which is translated at a historical rate.