Translation gains and losses can be quite different from operating gains and losses

Question

Quizplus · Accepted Answer

Operating gains and losses refer to the company's revenue and expenses from its primary business activities. On the other hand, translation gains and losses refer to the gains or losses that arise from the conversion of foreign currencies to the company's functional currency. These gains or losses can be quite different from operating gains and losses in both magnitude and sign. For example, a company may have high operating gains but experience translation losses due to fluctuations in exchange rates, or vice versa. Therefore, the best choice is D, as translation gains and losses can differ from operating gains and losses in both magnitude and sign.

Translation Gains and Losses Can Be Quite Different from Operating