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

The average rate during the year should be used for cost of goods sold under the current rate method. This is because cost of goods sold represents the average cost of goods sold throughout the year and therefore should be translated at the average exchange rate during that same period.

Under the Current Rate Method of Translating Foreign Currency Financial