When the Exchange Rate for a Foreign Currency Changes Between

question 4

Multiple Choice

When the exchange rate for a foreign currency changes between a sale and the receipt of payment -

• A) the amount of the bank deposit is determined by the rate at the time of the sale
• B) the amount of the bank deposit is determined by the rate at the time of the receipt
• C) the amount of revenue is determined by the rate at the time of the receipt
• D) the amount of revenue is the average of the two exchange rates

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Definitions:

Operating Income

Earnings before interest and taxes (EBIT), representing the profit from a company’s ordinary, core business operations.

Contribution Format

An income statement layout that separates fixed and variable costs, allowing for the calculation of contribution margin and easier analysis of profitability.

Operating Income

A financial metric that shows how much of a company's revenue is left over after paying for variable costs of production like wages and raw materials.

Contribution Format

A method of income statement presentation that separates fixed costs from variable costs to show the contribution margin.