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30 Cards in this Set
- Front
- Back
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hyperinflation |
is a matter of judgment is indicated by characteristics of the economic environment of a country which include but are not limited. |
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True |
t/f the general population prefers to keep its wealth in nonmonetary assets or in relatively stable foreign currency |
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Constant peso counting |
the restatement of financial statements of an entity that reports in the currency of a hyperinflation economy is accomplished by means of? is the restatement of conventional or historical financial statements in terms of the current purchasing power of the peso through the use of index number. also known as purchasing power or price level accounting |
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monetary items |
money held and assets and liabilities to be received or paid in fixed or determinable amount of money cash and assets that represent a fixed amount of pesos to be received, or obligations that represent a fixed amount of pesos to be paid. |
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nonmonetary items |
by the process of exclusion, may be defined as those items that cannot be classified as monetary these items are so called ______ because their peso amounts reported in the financial statements differ from the amounts that are ultimately realizable or payable. |
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True |
only nonmonetary items are restated and monetary items are not retasted anymore when preparing constant peso financial statements |
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general price index |
the index number used for restatement is known as? such index is designed to show how much the overall level of prices in the economy has changed over time. |
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inflation |
an increase in the general price index means that the purchasing power of money has decreased |
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deflation |
a decrease in the general price index means that the purchasing power of money has increased |
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purchasing power |
means the good and services that money can buy |
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d. all of the indicate hyperinflation |
hyperinflation is indicated by all of the following, except a. the general population prefers to keep wealth in nonmonetary assets. b. interest rates, wages, and prices are linked to a price index c. the cumulative inflation rate over three years is approaching or exceeds 100% d. all of the indicate hyperinflation |
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c. inflation rates have exceeded interest rates in three successive years. |
all would indicate that hyperinflation exist, except a. the general population regards monetary amounts in terms of relatively stable foreign currency b. the cumulative inflation rate over three years is approaching, or exceeds 100% c. inflation rates have exceeded interest rates in three successive years. d. the general population prefers to keep wealth in nonmonetary assets |
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a. are not restated because they are already expressed in terms of the measuring unit current at year-end |
in a hyperinflation economy, monetary items a. are not restated because they are already expressed in terms of the measuring unit current at year-end b. are not restated c. are restated applying the general price index d. are restated applying the specific price index |
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d. people prefer to keep their wealth in nonmonetary assets or a stable foreign currency. |
which would indicate that hyperinflation exists? a. sales on credit are at lower prices than cash sales. b. inflation is approaching or exceeds 20% per year. c. monetary items do not increase in value. d. people prefer to keep their wealth in nonmonetary assets or a stable foreign currency. |
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a. the body of the financial statements |
an entity that wishes to present information about the effect of changing prices in a hyperinflation economy should report this information in a. the body of the financial statements b. the notes to financial statements c. supplementary information to the financial statements d. management report |
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a. assets and liabilities whose amounts are fixed by contract in terms of pesos. |
for purposes of adjusting financial statements for changes in the general price level, monetary items consist of a. assets and liabilities whose amounts are fixed by contract in terms of pesos. b. assets and liabilities classified as current c. cash and cash equivalents plus all receivables with a fixed maturity date. d. cash, other assets expected to be converted into cash, and current liabilities |
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c. Administration costs paid in cash |
All of the following are monetary items, except a. Trade payables b. Trade receivables c. Administration costs paid in cash d. Loan repayable at face amount |
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d. Measuring unit current at the end of reporting period |
The financial statements of an entity that reports in the currency of a hyperinflationary economy shall be stated in terms of a. Historical cost b. Current cost c. Fair value d. Measuring unit current at the end of reporting period |
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a. Profit or loss and separately disclosed |
The gain or loss on purchasing power in a hyperinflationary economy shall be included in a. Profit or loss and separately disclosed b. Retained earnings c. Equity d. Comprehensive income |
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a. General price index |
In a hyperinflationary economy, amounts not expressed in the measuring unit current at the end of reporting period are restated by applying the a. General price index b. Specific price index c. Both general price index and specific price index d. Either general price index or specific price index |
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b. Accumulated depreciation equipment |
When computing information on a constant peso basis which of the following is classified as nonmonetary? a. Allowance for doubtful accounts b. Accumulated depreciation equipment c. Unamortized premium on bonds payable d. Advances to unconsolidated subsidiaries |
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a. Estimated warranty liability |
When computing information on a constant peso basis, which of the following is classified as nonmonetary? a. Estimated warranty liability b. Accrued expense c. Unamortized discount on bonds payable d. Refundable deposit |
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d. Inventory |
When computing information on a constant peso basis, which of the following is classihed as nonmonetary? a. Cash surrender value b. Long-term receivable c. Accrued loss on firm purchase commitment d. Inventory |
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d. Allowance for doubtful accounts |
When computing information on a constant peso basis, which of the following is classified as monetary? a. Goodwill b. Equipment c. Patent d. Allowance for doubtful accounts |
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c. Monetary asset and monetary liability |
Purchasing power gain or loss results from a. Monetary asset b. Monetary liability c. Monetary asset and monetary liability d. Nonmonetary asset and nonmonetary liability |
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a. Monetary asset |
During a period of inflation, an account balance remains constant. With respect to this account, a purchasing power loss will be recognized if the account is a a. Monetary asset b. Monetary liability c. Nonmonetary asset d. Nonmonetary liability |
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a. Cash |
During a period of deflation, an entity would have the greatest gain in general purchasing power by holding a. Cash b. Property, plant and equipment c. Accounts payable d. Mortgage payable |
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c. A purchasing power loss if the item is a monetary liability. |
During a period of deflation in which a liability account balance remains constant, which of the following occurs? a. A purchasing power loss if the item is a nonmonetary liability. b. A purchasing power gain if the item is a nonmonetary liability. c. A purchasing power loss if the item is a monetary liability. d. A purchasing power gain if the item is a monetary liability. |
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d. A purchasing power gain if the item is a monetary liability. |
During a period of inflation in which a liability account balance remains constant, which of the following occurs? a. A purchasing power loss if the item is a nonmonetary liability. b. A purchasing power gain if the item is a nonmonetary liability. c. A purchasing power loss if the item is a monetary liability. d. A purchasing power gain if the item is a monetary liability. |
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a. Monetary liability |
During a period of inflation, an account balance remains constant. With respect to this account, a purchasing power gain is recognized if the account is a a. Monetary liability b. Monetary asset c. Nonmonetary liability d. Nonmonetary asset |
