Final answer:
Exchange gains and losses occur on items translated at the historical rate but not on items translated at the closing.
Step-by-step explanation:
Exchange gains and losses occur on items translated at the historical rate but not on items translated at the closing. This statement is false.
When items are translated at the historical rate, any exchange gains or losses that occur are recognized in the income statement. On the other hand, when items are translated at the closing rate, any exchange gains or losses are recognized in other comprehensive income, which is a separate component of equity.
For example, if a company holds foreign currency-denominated assets, such as accounts receivable, and the exchange rate changes between the historical date and the closing date, there may be an exchange gain or loss. If the assets are translated at the historical rate, this gain or loss would be recognized in the income statement.