4-What is the effect of fluctuations in exchange rates on accounts payable?

a) Deferred and amortized.

b) Recognized immediately in income.

c) Recognized if losses, deferred if gains.

d) Deferred to maturity.

5- Which of the following statements relating to a functional currency is FALSE?

a) Functional currency is determined on an entity by entity basis

b) Functional currency reflects the primary economic environment in which an entity operates.

c) The primary economic environment is the one in which an entity primarily generates and expends cash.

d) In order to determine what is considered to be a "functional currency," it is imperative that a "foreign currency" be first identified.

6- Each company in a group records its normal unhedged foreign currency transactions at the:

a) Rate when the transaction occurred.

b) Year-end rate.

c) Year-end rate or the rate when the transaction occurred.

d) Forward rate.