Under the current rate method of translating foreign currency financial statements,what exchange rate should be used for cost of goods sold?
A)spot rate at the end of the year
B)average rate during the year
C)spot rate mid-year
D)There is no single rate because beginning and ending inventory must be converted at different exchange rates than purchases.

Question

Quizplus · Accepted Answer

Under the current rate method, all income statement items including Cost of Goods Sold (COGS) are translated at the weighted average exchange rate during the year, instead of using spot rates at a specific point in time. This method ensures that the translation of foreign currency financial statements reflects the impact of exchange rate fluctuations over the entire period.

Under the Current Rate Method of Translating Foreign Currency Financial