1. Maxwell Co. a U.S. corporation, sold inventory on credit to a British company on April 8, 2021. Maxwell received payment of 40,000 British pounds on May 8, 2021. The exchange rate was 1 pound = $1.56 on April 8 and 1 pound = $1.45 on May 8. What amount of foreign exchange gain or loss should be recognized? (round to nearest dollar) A) $10,200 loss B) $10,200 gain C) $4,400 loss D) $4,400 gain

2. Malinois Co., a U.S. corporation, sold inventory on December 31, 2021, with payment of 12,000 British pounds to be received in sixty days. The pertinent exchange rates were as follows:

December 1 Spot rate $1.831 December 31 Spot rate $1.976 January 30 Spot rate $1.768 For what amount should Sales be credited on December 1? A) $18,310 B) $19,760 C) $23,712 D) $21,972

3. Goodman, Pinkman, and White formed a partnership on January 1, 2020, and made capital contributions of $125,000 (Goodman), $175,000 (Pinkman) and $250,000 (White), respectively. With respect to the division of income, they agreed to the following: (1) interest of an amount equal to 10% of that partners beginning capital balance for the year; (2) annual compensation of $15,000 to Pinkman; and (3) the remainder of the income or loss to be split among the partners in the following percentages: (a) 20% for Goodman; (b) 40% for Pinkman; and (c) 40% for White. Net income was $200,000 in 2020 and $240,000 in 2021. Each partner withdrew $1,500 for personal use every month during 2020 and 2021. What was Whites total share of net income for 2020? A) $95,000 B) $84,500 C) $77,000 D) $25,000

4. Use the information from question 7. What was the total capital balance for the partnership at December 31, 2021? A) $936,000 B) $805,000 C) $924,000 D) $882,000

5. A partnership began its first year of operations with the following capital balances:

Young, Capital $143,000 Eaton, Capital $104,000 Thurman, Captial $143,000

The Articles of Partnership stipulated that profits and losses be assigned in the following manner: *Annual salaries of $26,000 was to be awarded to Young and $13,000 to Thurman. *Each partner was to be attributed with interest equal to 10% of the capital balance as of the first day of the year. *The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and Thurman, respectively. *Each partner withdrew $13,000 per year. Assume that the net loss for the first year of operations was $26,000 with net income of $52,000 in the second year. What was Eatons total share of net loss for the first year? A) $3,900 loss B) $11,700 loss C) $10,400 loss D) $24,700 loss

6. A local partnership has assets of cash of $30,000 and land recorded at $700,000. All liabilities have been paid and the partners are all personally insolvent. The partners capital accounts are as follows; Roberts $500,000, Perry $300,000, and Mones $30,000. The partners share profits and losses 5:3:2. If the land is sold for $450,000 how much cash will Mones receive in the final settlement? A) $0 B) $15,000 C) $300,000 D) $217,500

7. A city starts a solid waste landfill during 2020. When the landfill was opened the city estimated that it would fill to capacity within 6 years and that the cost to cover the facility would be $1.8 million which will not be paid until the facility is closed. At the end of 2020, the facility was 15% full, and at the end of 2021 the facility was 35% full. On government-wide financial statements, which of the following are the appropriate amounts to present in the financial statement for 2021? A) Expense will be $360,000 and liability will be $630,000 B) Expense will be $630,000 and liability will be $540,000 C) Expense will be $270,000 and liability will be $540,000 D) Both expense and liability will be zero.

8. A U.S. company sells merchandise to a foreign company denominated in U.S. dollars. Which of the following statements is true? A) If the foreign currency appreciates, a foreign exchange gain will result. B) If the foreign currency depreciates, a foreign exchange gain will result. C) No foreign exchange gain or loss will result. D) If the foreign currency appreciates, a foreign exchange loss will result.

9. A U.S. company sells merchandise to a foreign company denominated in the foreign currency. Which of the following statements is true? A) If the foreign currency appreciates, a foreign exchange gain will result. B) If the foreign currency depreciates, a foreign exchange gain will result. C) No foreign exchange gain or loss will result. D) If the foreign currency appreciates, a foreign exchange loss will result.

10. A forward contract may be used for which of the following?

1) A fair value hedge of an asset. 2) A cash flow hedge of an asset. 3) A fair value hedge of a liability. 4) A cash flow hedge of a liability.

A) 1 and 3. B) 2 and 4. C) 1, 3, and 4. D) 1, 2, 3, and 4.

11. A company has a discount on a forward contract for a foreign currency denominated asset. How is the discount recognized over the life of the contract under fair value hedge accounting? A) As a debit to discount expense. B) As a debit to amortization expense. C) As an adjustment to the forward contract. D) As an adjustment to the net foreign exchange gain or loss.

12. Which of the following approaches is used in the U.S. in accounting for foreign currency transactions? A) One-transaction perspective; defer foreign exchange gains and losses. B) Two-transaction perspective; accrue foreign exchange gains and losses. C) Three-transaction perspective; defer foreign exchange gains and losses. D) One-transaction perspective; accrue foreign exchange gains and losses.

13. When a U.S. company purchases parts from a foreign company, which of the following will result in zero foreign exchange gain or loss? A) The transaction is denominated in U.S. dollars B) The option strike price to sell foreign currency is less than the spot rate of the currency. C) The option strike price to buy foreign currency is less than the spot rate of the currency. D) The foreign currency appreciated in value relative to the U.S. dollar.

14. Under the temporal method, common stock would be remeasured at what rate? A) Beginning of the year rate. B) Average rate C) Current rate D) Historical rate

15. Under the current rate method, common stock would be translated at what rate? A) Beginning of the year rate B) Average rate C) Current rate D) Historical rate