XADVAC3 c.
Both I and II
Name:____________________ Date:__________
Section:___________________
Write the correct answer on the space provided.
STRICTLY NO ERASURES. (15 mins)
I. THEORIES
_____1. For reporting purposes, currencies are defined
as
a. International and functional
b. Foreign, functional and presentation
c. Domestic and international
d. Operating, international and presentation
_____2. The functional currency is
a. The currency in which the entity reports
earnings.
b. The currency in which the entity primarily
conducts banking activities.
c. The currency in which the entity primarily
operates
d. The currency in which the entity presents
the financial statements
_____3. Under IFRS, how is presentation currency
defined?
a. The currency of the primary environment in
which the entity operates
b. The currency in which financial statements
are presented
c. A currency other than the functional
currency
d. The currency that uses the current rate.
_____4. Initially, a foreign currency transaction shall be
recorded by applying
a. The spot exchange rate at the date of
transaction.
b. The closing rate at the end of reporting
period
c. The average exchange rate during the year
d. The spot exchange rate at the date of the
settlement of the transactions
_____5. Foreign currency monetary items are
subsequently translated at
a. Closing rate
b. Historical rate
c. Forward rate
d. Spot exchange rate
_____6. Exchange rate is
a. The ratio of exchange for two currencies
b. The spot exchange rate at the end of
reporting period
c. The exchange rate for immediate delivery
d. The difference resulting from translating a
given number of units of one currency into
another currency at different exchange
rates
_____7. A foreign currency transaction includes
I. Purchase and sale of goods and services
whose price is denominated in a local
currency
II. Borrowing and lending of funds when
the amounts payable or receivable are
denominated in a foreign currency
a. I ony
b. II only
d. Neither I nor II
_____8. Exchange differences arising from foreign
currency transactions shall
a. Be recognized in profit or loss of the period
in which they arise
b. Be recognized as component of other
comprehensive income
c. Be deferred and amortized over a
reasonable period
d. Not be recognized
_____9. It is a subsidiary, associate, joint venture or a
branch of a reporting entity whose activities are based
or conducted in a country or currency other than of the
reporting entity.
a. Multinational entity
b. Foreign operation
c. Foreign entity
d. Affiliated entity
_____11. Which of these considerations would not be
relevant in determining the entity’s functional
currency?
a. The currency that influences the costs of
the entity
b. The currency in which finance or fund is
generated
c. The currency in which receipts from
operating activities are retained
d. The currency that is the most
internationally acceptable for trading
_____12. Foreign operations that are an integral part of
the operations of the entity would have the same
functional currency as the entity. Where a foreign
operation functions independently from the parent, the
functional currency will be
a. That of the parent
b. Determined using the guidance for
determining an entity’s functional currency
c. That of the country of incorporation
d. The same as the presentation currency
_____13. Foreign currency is
a. The currency of the primary economic
environment in which the entity operates
b. A currency other than the functional
currency of the entity
c. The currency in which the financial
statements are presented
d. The currency in which finance or fund is
generated
_____14. Foreign currency non-monetary items are
measured at
a. Closing rate
b. Historical rate
c. Forward rate
d. Spot exchange rate
_____15. Spot exchange rate is
a. The rate in which currencies can be
exchanged today or on a given date
b. The rate in which currencies can be
exchanged at some future date
c. The rate in effect at the time an asset or
liability is acquired.
d. The rate for two currencies at the end of a
period of time