Ch 9 Multiple Choice Questions class answer

Ch 9 Multiple Choice Questions class answer - Multiple...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Multiple Choice Questions 1. The foreign exchange rate for the immediate delivery of currencies exchanged is called the A. Forward rate. B. Historical rate. C. Market rate. D. Swap rate. E. Spot rate. 1. E Study Guide – Chapter 9 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2. When a foreign currency exchange rate is expressed as the number of foreign currency units required to purchase one (1) U.S. $, this is called a(n) A. Derivative quote B. Forward quote C. Direct quote D. Indirect quote E. Market quote 2. D 2 Advanced Accounting – 10/e
Background image of page 2
3. When a foreign currency exchange rate is expressed as the number of U.S. $ required to purchase one (1) unit of foreign currency, this is called a(n) A. Derivative quote B. Forward quote C. Direct quote D. Indirect quote E. Market quote 3. C Study Guide – Chapter 9 3
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4. According to current U.S. standards, for which of the following can the resultant hedge gains/losses be recorded in Comprehensive Income, rather than on the income statement? A. Gains/losses arising from the change in fair value of hedges using speculative derivatives. B. Gains/losses arising from the change in fair value of Fair Value Hedges. C. Gains/losses arising from the change in fair value of Cash Flow Hedges. D. Gains/losses arising from a hedge of a forecasted foreign currency transaction accounted for as a Fair Value Hedge. E. Gains/losses arising from a hedge of an Option Contract that is accounted for as a Fair Value Hedge. 4. C 4 Advanced Accounting – 10/e
Background image of page 4
5. For which of the following hedges does U.S. GAAP allow hedge accounting to be used to record gains and losses related to the hedge instrument in net income? Option Used as Forward a Hedge of a Foreign Currency Contract Foreign Currency Option Used as a Hedge Firm Commitment Cash Hedge____ A. Yes Yes Yes B. Yes No Yes C. Yes Yes No D. No Yes No E. Yes No No 5. C Study Guide – Chapter 9 5
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6. A U.S. exporter has a 90-day account receivable denominated in Euros (€ ) as a result of an export sale made on May 1, 2011, to a German customer. The exporter signed a 90-day forward contract on May 1, 2011, to sell Euros. The spot rate was $1.305 on that date and the 90-day forward rate was $1.250. On June 30, 2011, the exporter’s fiscal year-end, the spot rate was $1.320 and the 30-day forward rate was $1.275. Which one of the following would the U.S. exporter have reported in income for the year ending June 30, 2011? A. Net Exchange Loss B. Net Exchange Gain C. No Exchange Gain or Loss D. Net Credit Adjustment to Beginning Retained Earnings E. Net Debit Adjustment to Beginning Retained Earnings 6. A Since the exporter is going to be receiving €’s, it means they will selling €’s and receiving U.S. $ on the maturity date in 30 days. They currently have a contract that will pay them $1.250 per €. The currently available 30-day forward contract would pay them $1.275 per €. They will
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 25

Ch 9 Multiple Choice Questions class answer - Multiple...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online