Foreign Currency Flashcards
1
Q
Functional Currency?
A
the currency of the primary economic environment which the entity operates in
2
Q
presentation currency?
A
Currency presented in financial statements
3
Q
exchange currency?
A
the ratio of exchange for the two currencies.
4
Q
Closing rate (CR)?
A
the spot exchange rate at the end of the reporting period
5
Q
Average rate (AR) ?
A
average rate throughout the accounting period
6
Q
monetary items?
A
Units of currency to be received or paid
- receivables
- payables
- loans
7
Q
Non - monetary items?
A
items that give no right to receive or deliver cash
- inventory
- ppe
8
Q
How to account for settled transactions ( payment or receipt occurs in accounting period) .
A
Translate payment/receipt using historical rate prevailing at that date.
Exchange difference may arise, posted in spl.
