The management of translation exposure is best described as
A)selecting a mechanical means for handling the consolidation process for MNCs that logically deals with exchange rate changes.
B)selecting a mechanical means for handling the consolidation process for MNCs that makes this quarter's accounting numbers as attractive as possible.
C)selecting a mechanical means for handling the consolidation process for MNCs that treats inventory valuation as LIFO on the income statement and FIFO on the balance sheet.
D)selecting a mechanical means for handling the consolidation process for MNCs that treats inventory valuation as FIFO on the income statement and LIFO on the balance sheet.

Question

Quizplus · Accepted Answer

The management of translation exposure refers to the process of managing the impact of exchange rate changes on a multinational company's financial statements. It involves selecting a mechanical means for consolidating financial statements that logically deals with these changes. This could include using hedging strategies or adjusting the translation of foreign currency balances to minimize the impact of exchange rate fluctuations. Option A describes this process accurately. Option B refers to accounting manipulation to make financial statements look more attractive, which is not a proper management strategy. Option C and D refer to inventory valuation methods, which are not directly related to managing translation exposure.

The Management of Translation Exposure Is Best Described as