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Correct longer period to amortize the patent and the

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Correctlonger period to amortize the patent and the straight-line method to depreciate the fixed asset.Your Answer
5/30/22, 10:44 AMCMA Exam Review - Part 2 - Assessment ReviewQuestion 62.A.4.aforex.fluctuations.tb.008_2104LOS: 2.A.4.aLesson Reference: Foreign Exchange FluctuationsDifficulty: hardBloom Code: 5On August 11, Doggie Door United, a U.S. company, purchased equipment for €15,000 from Spain. On the same day, the company also sold products for€25,000 to Germany. At the end of the month, the euro had weakened in value relative to the U.S. dollar. Which of the following statements is trueregarding these transactions’ change in value and Doggie Door’s net working capital as of August 31?Accounts payable will increase, accounts receivable will increase, net working capital will increaseAccounts payable will decrease, accounts receivable will increase, net working capital will increaseAccounts payable will decrease, accounts receivable will decrease, net working capital will not changeRationaleAccounts payable will increase, accounts receivable will increase, net working capital will increaseThis answer is incorrect. This would be the results if the euro had strengthened relative to the U.S. dollar.RationaleAccounts payable will decrease, accounts receivable will decrease, net working capital will decreaseThis answer is correct. If the euro weakens relative to the U.S. dollar, then each euro will purchase fewer U.S. dollars. Therefore, the accountsreceivable balance will drop in value. Accounts payable also will decrease. Net working capital = Current assetsCurrent liabilities. Because theaccounts receivable balance is much larger than the accounts payable balance, accounts receivable will drop by a larger amount than accountspayable. This will result in a decrease in net working capital.RationaleAccounts payable will decrease, accounts receivable will increase, net working capital will increaseThis answer is incorrect. Accounts payable and accounts receivable would both move in the same direction.RationaleAccounts payable will decrease, accounts receivable will decrease, net working capital will not changeThis answer is incorrect. Net working capital = Current assetsCurrent liabilities. Because the accounts receivable balance is much larger than theaccounts payable balance, accounts receivable will drop by a larger amount than accounts payable. This will result in a decrease in net workingcapital.Accounts payable will decrease, accounts receivable will decrease, net working capital will decreaseCorrect
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Balance Sheet, Generally Accepted Accounting Principles, Assessment Review

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