Accounting of Transactions of Foreign Currency MCQ | (Free Resource)
Accounting of Transactions of Foreign Currency MCQ
1. Which of the following statements is false?
(a) AS 11 should be applied in accounting for transactions in foreign currencies
(b) AS 11 deals with accounting for foreign currency transaction in the nature of forward exchange contracts
(c) AS 11 specifies the currency in which an enterprise should present its financial statements
(d) The principal issues in accounting for foreign currency transactions are to decide whichexchange rate to use and how to recognize in the financial statements the financial effect ofchanges in exchange rates
2. Average rate
(a) is the exchange rate at the balance sheet date
(b) is the mean of the exchange rates in force during a period
(c) is the ratio for exchange of two currencies
(d) is the rate at which an asset could be exchanged between knowledgeable, willing parties inan arm’s length transaction
3. Closing rate
(a) is the exchange rate at the balance sheet date
(b) is the mean of the exchange rates in force during a period
(c) is the ratio for exchange of two currencies
(d) is the rate at which an asset could be exchanged between knowledgeable, willing parties inan arm’s length transaction
4. Exchange rate
(a) is the exchange rate at the balance sheet date
(b) is the mean of the exchange rates in force during a period
(c) is the ratio for exchange of two currencies
(d) is the rate at which an asset could be exchanged between knowledgeable, willing parties inan arm’s length transaction
5. Currency other than the reporting currency of an enterprise
(a) Non-Reporting currency
(b) U.S. Dollars
(c) Foreign Currency
(d) Indian Rupees
6. Currency used in presenting the financial statements
(a) Reporting currency
(b) Non-Foreign Currency
(c) Official Currency
(d) Indian Rupees
7. Money held and assets and liabilities to be received or paid in fixed or determinable amounts of money
(a) Current items
(b) Non-monetary items
(c) Monetary items
(d) Forward Exchange Contract
8. Which of the following is a foreign currency transaction ?
(i) an enterprise buys or sells goods or services whose price is denominated in a foreign currency
(ii) an enterprise borrows or lends funds when the amounts payable or receivable are denominatedin a foreign currency
(iii) an enterprise becomes a party to an unperformed forward exchange contract
(a) only (iii)
(b) all
(c) only (i)
(d) only (ii)
9. A foreign currency transaction should be recorded, on initial recognition
(a) in the reporting currency, by applying to the foreign currency the exchange rate between thereporting currency and the foreign currency at the date of the recognition
(b) in the Indian Rupees, by using the exchange rate between the Indian Rupee and the U.S.Dollars at the date of the transaction
(c) in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction
(d) in the reporting currency, by applying to the foreign currency amount the average exchange rate between the reporting currency and the foreign currency during the financial year
10. Which of the following statements is false?
(a) At each balance sheet date, foreign currency monetary items should be reported using theclosing rate
(b) At each balance sheet date, non-monetary items which are carried in terms of historical costdenominated in a foreign currency should be reported using the exchange rate at the date ofthe transaction
(c) At each balance sheet date, non-monetary items, which are carried at fair value denominated in a foreign currency should be reported using the exchange rates that existed when the values were determined
(d) At each balance sheet date, foreign currency monetary items should be reported using the average rate during the year
| Answers: 1)AS 11 specifies the currency in which an enterprise should present its financial statements 2)is the mean of the exchange rates in force during a period 3)is the exchange rate at the balance sheet date 4)is the ratio for exchange of two currencies 5)Foreign Currency 6)Reporting currency 7)Monetary items 8)all 9)in the reporting currency, by applying to the foreign currency amount the exchange ratebetween the reporting currency and the foreign currency at the date of the transaction 10)At each balance sheet date, foreign currency monetary items should be reported using theaverage rate during the year |
