1. Which of the following statements is true regarding the cumulative translation adjustment? Select one:

A: Changes in the cumulative translation adjustment are reported in the income statement at each statement date.

B: The cumulative translation adjustment account affects the amount of gain or loss reported upon the sale of a foreign subsidiary.

C: Changes in the cumulative translation adjustment account are added back in the computation of net cash flow from operating activities since they are non-cash income or expense.

D: The cumulative translation adjustment account is reported in accumulated other comprehensive income and is transferred into reported earnings when the transaction to which it relates affects reported earnings.

___________________________

2. If a subsidiarys financial statements are translated, the translation gain (loss) is related to changes in:

Select one:

A: The subsidiarys stockholders equity

B: The subsidiarys net monetary assets

D: The subsidiarys working capital

E: The subsidiarys operating profit

_____________________________________

3. Assume that your subsidiary operated independently of the parent company. Which if the following is true?

	Translation adjustments have an immediate effect on cash flows		Translation adjustments should be reflected in earnings
a.	Yes		No
b.	Yes		Yes
c.	No		No
d.	No		Yes

Select one:

a.

b.

c.

d.

_______________________________

4. One of our subsidiary companies maintains its accounting records in Euros and designates the British Pound as its functional currency. Your computations yield a translation gain of $5,000 and a remeasurement loss of $7,000. What amount should you report as a gain or loss in your income statement?

Select one:

A: ($7,000)

B: $5,000

C: $0

D: ($2,000)

______________________________________________

5. During the translation process, the current year change to the cumulative translation adjustment is a function of which of the following relationships of the subsidiary?

Select one:

A: Its monetary assets minus monetary liabilities

B: Its current assets minus current liabilities

C: Its total assets minus total liabilities

D: Its operating cash flows