UNIVERSITY OF CALIFORNIA, BERKELEY
ADVANCED FINANCIAL ACCOUNTING (UGBA 120B)
EXAM 2025 WITH 100% CORRECT ANSWERS
The foreign exchange rate for the immediate delivery of
currencies exchanged is called the – Answer✅️☑️Spot
Rate
A U.S. company buys merchandise from a foreign
company denominated in the foreign currency. Which of
the following statements is true? – Answer✅️ ☑️If the
foreign currency appreciates, a foreign exchange loss
will result.
Which one of the following relationships between
fluctuations in exchange rates and foreign exchange
gains and losses is true? – Answer✅️ ☑️For an export
sale, a gain results when foreign currency appreciates.
The foreign exchange rate for the immediate delivery of
currencies exchanged is called the: - Answer✅️
☑️spot
rate.
A U.S. company sells merchandise to a foreign
company denominated in the foreign currency. Which of
the following statements is true? – Answer✅️☑️If the
,foreign currency appreciates, a foreign exchange gain
will result.
In accounting for foreign exchange currency, the United
States uses – Answer✅️ ☑️Two-transaction perspective
that accrues foreign exchange gains and losses.
A company has a discount on a forward contract for a
foreign currency denominated asset. How is the
discount recognized over the life of the contract under
cash flow hedge accounting? – Answer✅️ ☑️As a debit to
discount expense.
Larson Company, a U.S. company, has an India rupee
account receivable resulting from an export sale on
September 7 to a customer in India. Larson signed a
forward contract on September 7 to sell rupees and
designated it as a cash flow hedge of a recognized
receivable. The spot rate was $.023, and the forward
rate was $.021. Which of the following did the U.S.
exporter report in net income? – Answer✅️ ☑️Discount
expense.
All of the following data may be needed to determine
the fair value of a forward contract at any point in time
except – Answer✅️ ☑️The future spot rate.
Williams, Inc., a U.S. company, has a Japanese yen
account receivable resulting from an export sale on
,March 1 to a customer in Japan. The exporter signed a
forward contract on March 1 to sell yen and designated
it as a cash flow hedge of a recognized receivable. The
spot rate was $.0094, and the forward rate was $.0095.
Which of the following did the U.S. exporter report in
net income? – Answer✅️ ☑️Premium revenue.
The forward rate may be defined as – Answer✅️ ☑️The
price today at which a foreign currency can be
purchased or sold in the future.
Fair value hedges enable management to predict the
income statement effect of a hedge better than do their
counterpart cash flow hedges. – Answer✅️ ☑️False
Which statement is true regarding a foreign currency
option? – Answer✅️ ☑️A foreign currency option gives
the holder the right but not the obligation to buy or sell
foreign currency in the future
If the holder of a foreign currency option chooses to
exercise the option, the exchange rate that will be used
is called the: - Answer✅️ ☑️strike price.
A buyer of a put option on euros will benefit if the spot
rate of euros is higher than the strike price. –
Answer✅️ ☑️False
, An individual or firm will always be better off
economically by hedging rather than not hedging. –
Answer✅️ ☑️False
The holder of a call option will benefit if the spot rate of
the underlying currency is greater than the option strike
price. A call option is the right, but not the obligation, to
buy foreign currency at a predetermined price. –
Answer✅️ ☑️True
The amount an option would be worth if exercised
immediately is the: - Answer✅️
☑️intrinsic value.
A highly inflationary economy is defined as –
Answer✅️ ☑️Cumulative 3-year inflation in excess of
100%
A foreign subsidiary maintains its records using local
country GAAP, which is inconsistent with U.S. GAAP. It
maintains its book in ringgits but the functional
currency is euros (not highly inflationary). The parents
company’s reporting currency is US dollars. Which of
the following is the correct sequence of events to
convert these financials for inclusion in the
consolidated financial statements? – Answer✅️ ☑️Recast
the books using U. S. GAAP, remeasure from ringgits to
eurors, then translate from eurors to dollars.
ADVANCED FINANCIAL ACCOUNTING (UGBA 120B)
EXAM 2025 WITH 100% CORRECT ANSWERS
The foreign exchange rate for the immediate delivery of
currencies exchanged is called the – Answer✅️☑️Spot
Rate
A U.S. company buys merchandise from a foreign
company denominated in the foreign currency. Which of
the following statements is true? – Answer✅️ ☑️If the
foreign currency appreciates, a foreign exchange loss
will result.
Which one of the following relationships between
fluctuations in exchange rates and foreign exchange
gains and losses is true? – Answer✅️ ☑️For an export
sale, a gain results when foreign currency appreciates.
The foreign exchange rate for the immediate delivery of
currencies exchanged is called the: - Answer✅️
☑️spot
rate.
A U.S. company sells merchandise to a foreign
company denominated in the foreign currency. Which of
the following statements is true? – Answer✅️☑️If the
,foreign currency appreciates, a foreign exchange gain
will result.
In accounting for foreign exchange currency, the United
States uses – Answer✅️ ☑️Two-transaction perspective
that accrues foreign exchange gains and losses.
A company has a discount on a forward contract for a
foreign currency denominated asset. How is the
discount recognized over the life of the contract under
cash flow hedge accounting? – Answer✅️ ☑️As a debit to
discount expense.
Larson Company, a U.S. company, has an India rupee
account receivable resulting from an export sale on
September 7 to a customer in India. Larson signed a
forward contract on September 7 to sell rupees and
designated it as a cash flow hedge of a recognized
receivable. The spot rate was $.023, and the forward
rate was $.021. Which of the following did the U.S.
exporter report in net income? – Answer✅️ ☑️Discount
expense.
All of the following data may be needed to determine
the fair value of a forward contract at any point in time
except – Answer✅️ ☑️The future spot rate.
Williams, Inc., a U.S. company, has a Japanese yen
account receivable resulting from an export sale on
,March 1 to a customer in Japan. The exporter signed a
forward contract on March 1 to sell yen and designated
it as a cash flow hedge of a recognized receivable. The
spot rate was $.0094, and the forward rate was $.0095.
Which of the following did the U.S. exporter report in
net income? – Answer✅️ ☑️Premium revenue.
The forward rate may be defined as – Answer✅️ ☑️The
price today at which a foreign currency can be
purchased or sold in the future.
Fair value hedges enable management to predict the
income statement effect of a hedge better than do their
counterpart cash flow hedges. – Answer✅️ ☑️False
Which statement is true regarding a foreign currency
option? – Answer✅️ ☑️A foreign currency option gives
the holder the right but not the obligation to buy or sell
foreign currency in the future
If the holder of a foreign currency option chooses to
exercise the option, the exchange rate that will be used
is called the: - Answer✅️ ☑️strike price.
A buyer of a put option on euros will benefit if the spot
rate of euros is higher than the strike price. –
Answer✅️ ☑️False
, An individual or firm will always be better off
economically by hedging rather than not hedging. –
Answer✅️ ☑️False
The holder of a call option will benefit if the spot rate of
the underlying currency is greater than the option strike
price. A call option is the right, but not the obligation, to
buy foreign currency at a predetermined price. –
Answer✅️ ☑️True
The amount an option would be worth if exercised
immediately is the: - Answer✅️
☑️intrinsic value.
A highly inflationary economy is defined as –
Answer✅️ ☑️Cumulative 3-year inflation in excess of
100%
A foreign subsidiary maintains its records using local
country GAAP, which is inconsistent with U.S. GAAP. It
maintains its book in ringgits but the functional
currency is euros (not highly inflationary). The parents
company’s reporting currency is US dollars. Which of
the following is the correct sequence of events to
convert these financials for inclusion in the
consolidated financial statements? – Answer✅️ ☑️Recast
the books using U. S. GAAP, remeasure from ringgits to
eurors, then translate from eurors to dollars.
