# 1 what is the exchange rate in effect at the date of the transaction called a closin 4309907

1) What is the exchange rate in effect at the date of the transaction called?

A) Closing rate

B) Spot rate

C) Forward rate

D) Settlement rate

2) Which of the following statements is true?

A) The historical rate is the exchange rate at the beginning of the reporting

period and the closing rate is the exchange rate at the end of the reporting

period.

B) The historical rate is the exchange rate at the date of the transaction and the

closing rate is the exchange rate at the end of the reporting period.

C) The spot rate is the exchange rate at the date of the transaction and the

closing rate is the exchange rate at the conclusion of a hedge instrument.

D) The historical rate is the exchange rate at the beginning of the reporting

period and the forward rate is the exchange rate at the end of the reporting

period.

3) Which of the following is not a major reason for fluctuating exchange rates?

A) Differences in inflation rates

B) Black market (illegal) trading of currencies

C) Differences in interest rates

D) Trade surpluses and deficits between countries

4) On January 1, 20×4, HB Inc. issued 10,000,000 Euros (€) of bonds payable. The bonds are due on December 31, 20X6. Over the life of the bonds, the exchange rates were as follows:

 January 1, 20X4 €1 = \$1.40 December 31, 20X4 €1 = \$1.45 December 31, 20X5 €1 = \$1.50 December 31, 20X6 €1 = \$1.48

Assume that exchange gains and losses on long-term monetary are recognized in income immediately. What is the exchange gain (loss) recognized in income during 20X6?

A) \$(800,000)

B) \$(200,000)

C) \$ 200,000

D) \$ 800,000

5) On January 1, 20×4, HB Inc. issued 10,000,000 Euros (€) of bonds payable. The bonds are due on December 31, 20X6. Over the life of the bonds, the exchange rates were as follows:

 January 1, 20X4 €1 = \$1.40 December 31, 20X4 €1 = \$1.45 December 31, 20X5 €1 = \$1.50 December 31, 20X6 €1 = \$1.48

Assume that exchange gains and losses on long-term monetary are recognized in income immediately. What is the exchange gain (loss) recognized in income during 20X5?

A) \$(1,000,000)

B) \$(500,000)

C) \$500,000

D) \$1,000,000

6) Under the two transaction theory of treating a gain on exchange rate changes, how is the gain treated?

A) As an operating activity

B) As an investing activity

C) As a financing activity

D) As a cost of acquiring assets

7) Exchange gains and losses on accounts receivable/payable that are denominated in a foreign currency are ________.

A) deferred and reported upon settlement

B) reported as adjustments to the transaction prices

C) reported as equity adjustments from translation

D) recognized in the periods in which exchange rates change

8) What is the effect of fluctuations in exchange rates on accounts payable?

A) Deferred and amortized

B) Deferred to maturity

C) Recognized immediately in income

D) Recognized if losses, deferred if gains

9) Under IFRS 8, at which exchange rate should monetary assets and liabilities be translated?

A) The exchange rate at the statement of financial position date

B) The closing rate

C) The historical rate

D) The fair value rate

10) Which of the following items is a non-monetary item?

A) Cash

B) Accounts receivable

C) Inventory

D) Accounts payable

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Regards,

Cathy, CS.