{"id":17115,"date":"2022-03-31T13:04:00","date_gmt":"2022-03-31T07:34:00","guid":{"rendered":"https:\/\/scholarsclasses.com\/blog\/?p=17115"},"modified":"2026-02-09T21:04:48","modified_gmt":"2026-02-09T15:34:48","slug":"accounting-of-transactions-of-foreign-currency-mcqs","status":"publish","type":"post","link":"https:\/\/scholarsclasses.com\/blog\/accounting-of-transactions-of-foreign-currency-mcqs\/","title":{"rendered":"Accounting of Transactions of Foreign Currency MCQ | (Free Resource)"},"content":{"rendered":"\n<h2 class=\"wp-block-heading has-text-align-center\"><strong><strong><strong>Accounting of Transactions of Foreign Currency MCQ<\/strong><\/strong><\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" width=\"1024\" height=\"576\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/03\/Accounting-of-Transactions-of-Foreign-Currency-MCQ-1024x576.webp\" alt=\"Accounting of Transactions of Foreign Currency MCQ\" class=\"wp-image-17162 lazyload\" style=\"--smush-placeholder-width: 1024px; --smush-placeholder-aspect-ratio: 1024\/576;width:720px;height:auto\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/03\/Accounting-of-Transactions-of-Foreign-Currency-MCQ-1024x576.webp 1024w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/03\/Accounting-of-Transactions-of-Foreign-Currency-MCQ-300x169.webp 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/03\/Accounting-of-Transactions-of-Foreign-Currency-MCQ-768x432.webp 768w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/03\/Accounting-of-Transactions-of-Foreign-Currency-MCQ-1536x864.webp 1536w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/03\/Accounting-of-Transactions-of-Foreign-Currency-MCQ-640x360.webp 640w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/03\/Accounting-of-Transactions-of-Foreign-Currency-MCQ.webp 1920w\" data-sizes=\"(max-width: 1024px) 100vw, 1024px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" \/><figcaption class=\"wp-element-caption\">Accounting of Transactions of Foreign Currency MCQ<\/figcaption><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/financial-accounting-mcqs\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/financial-accounting-mcqs\/\">MCQs on other topics of Financial Accounting <\/a><\/strong><\/li>\n\n\n\n<li><a href=\"https:\/\/www.icsi.edu\/media\/webmodules\/modelquestionpaper\/CMA-MCQ%20100.pdf\" data-type=\"URL\" data-id=\"https:\/\/www.icsi.edu\/media\/webmodules\/modelquestionpaper\/CMA-MCQ%20100.pdf\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Cost Accounting MCQs pdf<\/strong><\/a><\/li>\n<\/ul>\n\n\n\n<p><strong>1. Which of the following statements is false?<br><\/strong>(a) AS 11 should be applied in accounting for transactions in foreign currencies<br>(b) AS 11 deals with accounting for foreign currency transaction in the nature of forward exchange contracts<br>(c) AS 11 specifies the currency in which an enterprise should present its financial statements<br>(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<\/p>\n\n\n\n<p><strong>2. Average rate<br><\/strong>(a) is the exchange rate at the balance sheet date<br>(b) is the mean of the exchange rates in force during a period<br>(c) is the ratio for exchange of two currencies<br>(d) is the rate at which an asset could be exchanged between knowledgeable, willing parties inan arm\u2019s length transaction<\/p>\n\n\n\n<p><strong>3. Closing rate<br><\/strong>(a) is the exchange rate at the balance sheet date<br>(b) is the mean of the exchange rates in force during a period<br>(c) is the ratio for exchange of two currencies<br>(d) is the rate at which an asset could be exchanged between knowledgeable, willing parties inan arm\u2019s length transaction<\/p>\n\n\n\n<p><strong>4. Exchange rate<br><\/strong>(a) is the exchange rate at the balance sheet date<br>(b) is the mean of the exchange rates in force during a period<br>(c) is the ratio for exchange of two currencies<br>(d) is the rate at which an asset could be exchanged between knowledgeable, willing parties inan arm\u2019s length transaction<\/p>\n\n\n\n<p><strong>5. Currency other than the reporting currency of an enterprise<br><\/strong>(a) Non-Reporting currency <br>(b) U.S. Dollars<br>(c) Foreign Currency <br>(d) Indian Rupees<\/p>\n\n\n\n<p><strong>6. Currency used in presenting the financial statements<br><\/strong>(a) Reporting currency <br>(b) Non-Foreign Currency<br>(c) Official Currency <br>(d) Indian Rupees<\/p>\n\n\n\n<p><strong>7. Money held and assets and liabilities to be received or paid in fixed or determinable amounts of money<br><\/strong>(a) Current items <br>(b) Non-monetary items<br>(c) Monetary items <br>(d) Forward Exchange Contract<\/p>\n\n\n\n<p><strong>8. Which of the following is a foreign currency transaction ?<br><\/strong>(i) an enterprise buys or sells goods or services whose price is denominated in a foreign currency<br>(ii) an enterprise borrows or lends funds when the amounts payable or receivable are denominatedin a foreign currency<br>(iii) an enterprise becomes a party to an unperformed forward exchange contract<br>(a) only (iii) <br>(b) all<br>(c) only (i) <br>(d) only (ii)<\/p>\n\n\n\n<p><strong>9. A foreign currency transaction should be recorded, on initial recognition<br><\/strong>(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<br>(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<br>(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<br>(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<\/p>\n\n\n\n<p><strong>10. Which of the following statements is false?<br><\/strong>(a) At each balance sheet date, foreign currency monetary items should be reported using theclosing rate<br>(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<br>(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<br>(d) At each balance sheet date, foreign currency monetary items should be reported using the average rate during the year<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Answers:<\/strong> <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-red-color\">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<\/mark> <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-red-color\"> 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<\/mark><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>11. Following is&nbsp;not&nbsp;an example of a monetary item.<br><\/strong>(a) Cash <br>(b) Receivables<br>(c) Payables <br>(d) Fixed assets<\/p>\n\n\n\n<p><strong>12. Following is an example of a non-monetary item.<br><\/strong>(a) Debtors <br>(b) Creditors<br>(c) Bank account <br>(d) Inventories<\/p>\n\n\n\n<p><strong>13. At each balance sheet date, non-monetary items, which are carried at fair value or other similar valuation denominated in a foreign currency, should be reported<br><\/strong>(a) using the exchange rate at the date of the transaction<br>(b) using the exchange rates that existed when the values were determined<br>(c) using the closing exchange rate at the date of the balance sheet<br>(d) using the average exchange rate during the financial year<\/p>\n\n\n\n<p><strong>14. At each balance sheet date, Foreign currency monetary items should be reported<br><\/strong>(a) using the exchange rate at the date of the transaction<br>(b) using the average of the (i) exchange rate at the date of the transaction and (ii) closing exchange rate<br>(c) using the closing exchange rate at the date of the balance sheet<br>(d) using the lowest exchange rate during the financial year<\/p>\n\n\n\n<p><strong>15. Following Exchange differences should be recognized as income or as expenses in the period in which they arise &#8211;<br><\/strong>(a) Exchange difference arising on the settlement of monetary items<br>(b) Exchange difference arising on reporting an enterprise\u2019s monetary items at rates different from those at which they were initially recorded during the period<br>(c) Exchange difference arising on reporting an enterprise\u2019s monetary items at rates different from those at which they were reported in previous financial statements<br>(d) all the above<\/p>\n\n\n\n<p><strong>16. Following Balances should be translated at the closing rate<br><\/strong>(a) Non-monetary items valued at historical cost denominated in a foreign currency<br>(b) Monetary items<br>(c) Non-monetary items which are carried in terms of fair value, denominated in a foreign currency<br>(d) All the above<\/p>\n\n\n\n<p><strong>17. Following Balances should be translated at the exchange rate on the date of the original transaction<br><\/strong>(a) Non-monetary items valued at historical cost denominated in a foreign currency<br>(b) Monetary items<br>(c) Non-monetary items which are carried in terms of fair value, denominated in a foreign currency<br>(d) All the above<\/p>\n\n\n\n<p><strong>18. Following Balances should be translated at the exchange rate that existed when the values were determined<br><\/strong>(a) Non-monetary items valued at historical cost denominated in a foreign currency<br>(b) Monetary items<br>(c) Non-monetary items which are carried in terms of fair value, denominated in a foreign currency<br>(d) None of the above<\/p>\n\n\n\n<p><strong>19. No exchange difference will arise on<br><\/strong>(a) inventory, fixed assets, investments etc. valued at historical cost denominated in a foreign currency<br>(b) cash, debtors or creditors<br>(c) inventory, fixed assets, investments etc. which are carried in terms of fair value, denominated in a foreign currency<br>(d) (a) and (c) above<\/p>\n\n\n\n<p><strong>20. The mean of the exchange rates in force during a period is known as<br><\/strong>(a) Average Rate <br>(b) Closing Rate<br>(c) Reporting Rate <br>(d) Fair Rate<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Answers:<\/strong> <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-red-color\">11)Fixed assets  12)Inventories  13)using the exchange rates that existed when the values were determined  14)using the closing exchange rate at the date of the balance sheet  15)all the above<\/mark> <mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-red-color\"> 16)Monetary items  17)Non-monetary items valued at historical cost denominated in a foreign currency  18)Non-monetary items which are carried in terms of fair value, denominated in a foreign currency  19)(a) and (c) above  20)Average Rate<\/mark> <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>21. The exchange rate at the balance sheet date is known as<br><\/strong>(a) Average Rate <br>(b) Closing Rate<br>(c) Non-monetary Rate <br>(d) Monetary Rate<\/p>\n\n\n\n<p><strong>22. Reporting currency is the currency used<br><\/strong>(a) In recording the financial transactions <br>(b) In presenting the financial statements<br>(c) In settling the financial transactions <br>(d) None of the above<\/p>\n\n\n\n<p><strong>23. Foreign currency is a currency<br><\/strong>(a) Used in recording the foreign transactions<br>(b) Used in presenting the foreign financial statements<br>(c) Other than the reporting currency of an enterprise<br>(d) Other than the Indian Rupee<\/p>\n\n\n\n<p><strong>24. Non-monetary items<br><\/strong>(a) Are the items exchanged at fair value<br>(b) Are the items other than assets and liabilities<br>(c) Are assets and liabilities other that monetary items<br>(d) None of the above<\/p>\n\n\n\n<p><strong>25. Monetary items<br><\/strong>(a) Are assets and liabilities to be received or paid in money<br>(b) Are assets to be received in fixed or determinable amounts of money<br>(c) Are money held and assets and liabilities to be received or paid in fixed or determinable amounts of money<br>(d) None of the above<\/p>\n\n\n\n<p><strong>26. An exchange difference results<br><\/strong>(a) When there is a change in the exchange rate between the transaction date and the date ofsettlement of any non-monetary items arising from a foreign currency transaction<br>(b) When there is a change in the fair value rate between the transaction date and the date ofsettlement of any monetary items arising from a foreign currency transaction<br>(c) When there is a change in the exchange rate between the transaction date and the date ofsettlement of any monetary items arising from a foreign currency transaction<br>(d) None of the above<\/p>\n\n\n\n<p><strong>27. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency should be reported using the exchange rate at the date of the<br><\/strong>(a) Balance Sheet <br>(b) Transaction<br>(c) Settlement <br>(d) None of the above<\/p>\n\n\n\n<p><strong>28. The contingent liability denominated in foreign currency at the balance sheet date is disclosed by using the<br><\/strong>(a) Average Rate <br>(b) Closing Rate<br>(c) Non-monetary Rate <br>(d) Monetary Rate<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Answer:<\/strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-red-color\"><strong> <\/strong>21)Closing Rate  22)In presenting the financial statements  23)Other than the reporting currency of an enterprise  24)Are assets and liabilities other that monetary items  25)Are money held and assets and liabilities to be received or paid in fixed or determinable amounts of money  26)When there is a change in the exchange rate between the transaction date and the date ofsettlement of any monetary items arising from a foreign currency transaction  27)Transaction  28)Closing Rate<\/mark><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><a href=\"https:\/\/youtu.be\/hgvarfCu9uQ\" data-type=\"link\" data-id=\"https:\/\/youtu.be\/hgvarfCu9uQ\" target=\"_blank\" rel=\"noopener\">Video<\/a> lectures on Accounting of Transactions of Foreign Currency MCQ&#8217;s.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":17162,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,7],"tags":[4771],"class_list":["post-17115","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bcom","category-degree-college","tag-accounting-of-transactions-of-foreign-currency"],"_links":{"self":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/17115","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/comments?post=17115"}],"version-history":[{"count":5,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/17115\/revisions"}],"predecessor-version":[{"id":41918,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/17115\/revisions\/41918"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media\/17162"}],"wp:attachment":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media?parent=17115"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/categories?post=17115"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/tags?post=17115"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}