Question :
Essay Questions
74.Accounting terminologyListed below nine technical accounting terms introduced in : 1237539
Essay Questions
74.Accounting terminology
Listed below are nine technical accounting terms introduced in this chapter:
Each of the following statements may (or may not) describe one of these technical terms. In the space provided below each statement, indicate the accounting term described, or answer “None” if the statement does not correctly describe any of the terms.
_____ (a) The strategy of creating offsetting positions so that losses from currency fluctuations will be offset by gains resulting from the same fluctuations.
_____ (b) The price of foreign currency, stated in terms of the domestic currency.
_____ (c) An item likely to appear in the income statements of American-based importers when foreign exchange rates are rising.
_____ (d) The organization responsible for developing uniform worldwide accounting standards.
_____ (e) Payments made to foreign officials to expedite paperwork.
_____ (f) The process of restating an amount of foreign currency in terms of the equivalent number of U.S. dollars.
_____ (g) An item likely to appear in the income statements of American-based exporters when foreign exchange rates are falling.
75.Listed below are several terms and statements with missing expressions. Fill in the blanks with the appropriate term.
(1) To convert a foreign currency to an equivalent dollar amount _________ the foreign currency by the foreign exchange rate.
(2) To convert a dollar amount into an equivalent amount of foreign currency ___________ the dollar amount by the exchange rate.
(3) The __________ prohibits companies engaged in global activities from bribing officials of foreign countries.
(4) Goods imported into __________ are duty free.
(5) ___________ minimizes or eliminates the risk of loss associated with foreign currency fluctuations.
(6) In a __________ ownership of land and the means of production are privately held.
(7) In a __________ the government allocates resources and determines output among various segments of the economy.
(8) The process of restating an amount of foreign currency in terms of the equivalent number of dollars is called ________ the foreign currency.
(9) A currency is described as ___________ when its exchange rate is rising relative to other currencies.
(10) A currency is described as __________ when its exchange rate is falling in relation to other currencies.
76.Importing transactions-journal entries
Striking Furs imports furs from Canada. In the space provided below, prepare journal entries to record the following events.
Dec. 11, 2014: Purchased furs from Capable Trappers, Ltd., a Canadian corporation, at a price of 25,000 Canadian dollars, due in 60 days. The current exchange rate is $0.85 U.S. dollars per Canadian dollar. (Striking uses the perpetual inventory method; debit the Inventory account.)
Dec. 31, 2014: Striking made a year-end adjusting entry relating to the account payable to Capable Trappers. The exchange rate at year-end is $0.89 U.S. dollars per Canadian dollar.
Feb. 9, 2015: Issued a check for $21,750 (U.S. dollars) to National Bank in full settlement of the liability to Capable Trappers, Ltd. The exchange rate at this date is $0.87 U.S. dollars per Canadian dollar.
77.Exporting transactions-journal entries
Jung Farms exports wheat to Germany. In the space provided below, prepare journal entries to record the following events.
Nov. 15, 2014: Sold wheat to a German restaurant chain at a price of 2 million euros, due in 90 days. The current exchange rate is $0.80 U.S. dollars per euro. (Jung uses the periodic inventory method.)
Dec. 31, 2014: Jung made a year-end adjusting entry relating to the account receivable from the German restaurant chain. The exchange rate at year-end is $0.85 U.S. dollars per Euro.
Feb. 15, 2015: Received a check for $1,640,000 from the InterContinental Bank in full settlement of the receivable from the German restaurant chain. The exchange rate at this date is $0.82 U.S. dollars per euro.
