Reference no: EM132785449

Question 1: When general price-level balance sheets are prepared, they should be presented in terms

A. general purchasing power of the peso at the latest balance sheet date.

B. the general purchasing power of the peso in the base period.

C. the average general purchasing power of the peso in the base period.

D. the general purchasing power of the peso at the time financial statements are issued.

Question 2: During a period of inflation, an account balance remains constant. With respect to this account, a purchasing power gain will be recognized if the account is a:

(a) monetary asset

(b) monetary liability

(c) nonmonetary asset

(d) nonmonetary liability

Question 3: During a period of declining prices:

A. a general price-level loss arises from maintaining a negative position in net monetary items.

B. a general price-level loss arises from maintaining a positive position in net monetary items.

C. a general price-level gain arises from maintaining a negative position in monetary items.

D. a general price-level gain arises from maintaining monetary liabilities.

Question 4: Restatement under constant peso accounting involves the use of the general price level index. A change in a price index from 120 to 150 during a period indicates that:

A. prices have increased 30%.

B. prices have increased 25%.

C. prices have increased 20%.

D. purchasing power has declined 30%.