Asked by Daniel Gallups on Jul 02, 2024
Verified
Revenues and expenses denominated in a foreign currency, if assumed to be earned or incurred evenly during the financial period, and translated using the:
A) exchange rate at the beginning of the financial period.
B) exchange rate at the end of the financial period.
C) average exchange rate for the financial period.
D) exchange rate at the transaction date.
Denominated
To specify the currency in which a financial transaction or instrument is expressed or required to be settled.
Exchange Rate
The price of one country's currency expressed in the currency of another country.
- Comprehend the principles of revenue and expense translation in a foreign currency setting according to different time periods and exchange rates.
Verified Answer
SA
samim akhtar6 days ago
Final Answer :
C
Explanation :
The average exchange rate for the financial period is the best choice as it provides a more accurate representation of the true amount of revenues and expenses earned or incurred during that period. Using the exchange rate at the beginning or end of the period may not fully capture the fluctuations in the exchange rate throughout the period. Using the exchange rate at the transaction date may not be practical for companies with many transactions or those with lengthy periods between the transaction date and financial reporting period.
Learning Objectives
- Comprehend the principles of revenue and expense translation in a foreign currency setting according to different time periods and exchange rates.