rates of inflation.

11. A theory that explains long-run changes in exchange rates is called purchasing power parity.
12. When a transaction is to be settled by the receipt or payment of a fixed amount of a
specified currency, the receivable or payable respectively, is said to be denominated in that
currency. 13. A party to a foreign transaction measures and records the transaction in the
currency of the country in which the party is located.
14. When a domestic exporter is to receive payment in a foreign currency at a date later than
the transaction date, the domestic exporter is said to be in a (n) exposed asset position.
15. When a domestic importer is to make payment in a foreign currency at a date later than the
transaction date, the domestic exporter is said to be in a (n) exposed liability position.
16. The date of which a transaction to import or sell inventory is recorded is called the
transaction date. 17. In settling foreign currency transactions, companies usually use bank wire
transfers.
False 1. International accounting standards are promulgated by the International Organization of
Securities Commissioners. True 2. U.S. accounting standards currently do not comply with
international accounting standards in all areas. False 3. In general, international accounting
standards are more demanding than U.S. accounting standards. True 4. In general, U.S.
accounting standards are more stringent than international accounting standards. False 5. It is a
major effort to bring a U.S. company’s financial statements into compliance with international
accounting standards. False 6. The process of actually changing one currency into another
currency is called translation. True 7. The number of units of the foreign currency needed to
acquire one unit of the domestic currency (the Philippine peso) is referred to as the indirect
quotation of the exchange rate. False 8. The number of urates of inflation.
11. A theory that explains long-run changes in exchange rates is called purchasing power parity.
12. When a transaction is to be settled by the receipt or payment of a fixed amount of a
specified currency, the receivable or payable respectively, is said to be denominated in that
currency. 13. A party to a foreign transaction measures and records the transaction in the
currency of the country in which the party is located.
14. When a domestic exporter is to receive payment in a foreign currency at a date later than
the transaction date, the domestic exporter is said to be in a (n) exposed asset position.
15. When a domestic importer is to make payment in a foreign currency at a date later than the
transaction date, the domestic exporter is said to be in a (n) exposed liability position.
16. The date of which a transaction to import or sell inventory is recorded is called the
transaction date. 17. In settling foreign currency transactions, companies usually use bank wire
transfers.
False 1. International accounting standards are promulgated by the International Organization of
Securities Commissioners. True 2. U.S. accounting standards currently do not comply with
international accounting standards in all areas. False 3. In general, international accounting
standards are more demanding than U.S. accounting standards. True 4. In general, U.S.
accounting standards are more stringent than international accounting standards. False 5. It is a
major effort to bring a U.S. company’s financial statements into compliance with international
accounting standards. False 6. The process of actually changing one currency into another
currency is called translation. True 7. The number of units of the foreign currency needed to
acquire one unit of the domestic currency (the Philippine peso) is referred to as the indirect
quotation of the exchange rate. False 8. The number of units of the domestic currency (the
Philippine peso) needed to acquire one unit of the foreign currency is referred to as the indirect
quotation of the exchange rate. True 9. To determine the Philippine peso equivalent of an
amount stated in a foreign currency, multiply the foreign currency by the direct exchange rate.
False 10. To determine the Philippine peso equivalent of an amount stated in a foreign
currency, multiply the foreign currency by the indirect exchange rate. True 11. A foreign
currency is strengthening; as a result, the indirect exchange rate will decrease. False 12. A
foreign currency is weakening; as a result, the indirect exchange rate will decrease. True 13.
The Philippine peso is weakening; as a result, the direct exchange rate will increase. False 14.
The Philippine peso is strengthening; as a result, the direct exchange rate will increase. True
15. Floating rates and forward rates mean different things. False 16. Fixed rates and forward
rates mean the same thing. True 17. Denominated means the currency in which settlement
must be madenits of the domestic currency (the Philippine peso) needed to acquire one unit of
the foreign currency is referred to as the indirect quotation of the exchange rate. True 9. To
determine the Philippine peso equivalent of an amount stated in a foreign currency, multiply the
foreign currency by the direct exchange rate. False 10. To determine the Philippine peso
equivalent of an amount stated in a foreign currency, multiply the foreign currency by the
indirect exchange rate. True 11. A foreign currency is strengthening; as a result, the indirect
exchange rate will decrease. False 12. A foreign currency is weakening; as a result, the indirect
exchange rate will decrease. True 13. The Philippine peso is weakening; as a result, the direct
exchange rate will increase. False 14. The Philippine peso is strengthening; as a result, the
direct exchange rate will increase. True 15. Floating rates and forward rates mean different
things. False 16. Fixed rates and forward rates mean the same thing. True 17. Denominated
means the currency in which settlement must be made