1. What is a companys functional currency? a. The currency of the primary economic environment in which it operates. b. The currency of the country where it has its headquarters c. The currency in which it prepares its financial statements d. The reporting currency of its parent for a subsidiary 2. A spot rate may be defined as a. The price a foreign currency can be purchased or sold today b. The price today at which a foreign currency can be purchased or sold in the future c. The forecasted future value of a foreign currency d. The U.S. Dollar value of a foreign currency 3. How is the disposition of the translated gain or loss reported on the parent companys financial statements? a. Net income/loss on the income statement b. Cumulative translation adjustment as a deferred asset c. Other comprehensive income d. Retained earnings 4. If a subsidiary is operating in a highly inflationary economy, how are the financial statements to be restated? a. Historical rate b. Working capital rate c. Translation d. Re-measurement