Question

1.SSim-Tech, a US corporation has subsidiaries in six foreign countries. When SSim-Tech is preparing consolidated statements and is reviewing the impact of changing prices it must understand that when changes in prices consist of _______ price movements, they are character ized by, on average, the prices of all goods and services in the economy .

general and specific

general level

average

specific

none of the choices apply

2.SSim-Tech, a US corporation has subsidiaries in six foreign countries. When SSim-Tech determines that decreases in general purchasing power have occured because monetary assets were held during a period of inflation , this is referred to as a ________ .

monetary liability

monetary asset

monetary loss

translation loss

none of the choices apply

3.SSim-Tech, a US corporation has subsidiaries in six foreign countries. When SSim-Tech is preparing consolidated statements and is using price indexes to determine changes, what is the ratio change of a basket of goods that cost $200,000 in year one and cost $225,000 in year two?

25,000 to 1

1.5

1.4

1.125

none of the choices apply 4.SSim-Tech, a US corporation has subsidiaries in six foreign countries. When SSim-Tech is preparing consolidated statements and is reviewing the impact of changing prices on income, income that has been adjusted for changing prices is referred to as _______ income. deferred net real revalued none of the choices apply

5.SSim-Tech, a US corporation has subsidiaries in six foreign countries. When SSim-Tech is preparing consolidated statements and is reviewing the impact of changing prices it must understand that when changes in prices consist of _______ price movements, they are characterized by, on average, the prices of all goods and services in the economy .

general and specific

general level

average

specific

none of the choices apply

6.SSim-Tech, a US corporation has subsidiaries in six foreign countries. When SSim-Tech is preparing consolidated statements and it uses a consolidation method that first restates a foreign subsidiary's accounts to for local inflation and then translated the parent company currency, this process is referred to as the ________ .

translate - restate method

restate - translate method

restated - weighted average cost method

translated - variable cost method

none of the choices apply

7.SSim-Tech, a US corporation has subsidiaries in six foreign countries. When SSim-Tech is preparing consolidated statements and is reviewing the impact of changing prices it must understand that when changing prices increase it is referred to as _______ .

a loss

deflation

inflation

as income

none of the choices apply

8.SSim-Tech, a US corporation has subsidiaries in six foreign countries. When SSim-Tech is preparing consolidated statements and its' subsidiaries are experiencing inflation, most likely assets are ________ .

overstated

understated

revalued

translated - using a variable cost method

none of the choices apply

9.SSim-Tech, a US corporation has subsidiaries in six foreign countries. When SSim-Tech is preparing consolidated statements and it uses a consolidation method that first translates a foreign subsidiary's accounts to parent currency and then restates the translated amounts for parent company inflation, this process is referred to as the ________ .

translate - restate method

restate - translate method

restated - weighted average cost method

translated - variable cost method

none of the choices apply

10.SSim-Tech, a US corporation has subsidiaries in six foreign countries. When SSim-Tech is preparing consolidated statements and is considering adjusting asset values for changes in specific prices, this process is referred to as ________ .

deferred cost adjustments

current cost adjustments

real cost adjustments

relative cost adjustments

none of the choices apply

Answer 1

1. The general level prices must be considered while preparing consolidated financials and must be averaged for the period under consideration.

2. monetary loss

3. Index ratio= 22500/20000 = 1.125

4. deferred

5. The general level prices must be considered while preparing consolidated financials and must be averaged for the period under consideration.

6. restate - translate method

7. inflation

8. overstated

9. translate - restate method

10. real cost adjustments