Suppose the Exchange Rate Has Changed from $US1

question 222

Multiple Choice

Suppose the exchange rate has changed from $US1.40 per British pound to $US2.00 per British pound. This means that the

• A) U.S. dollar depreciates from £0.71 per $US dollar to £0.50 per $U.S.
• B) British pound depreciates against the U.S. dollar.
• C) U.S. dollar can buy more British goods than before.
• D) U.S. dollar appreciates from £0.50 per dollar to £0.71 per dollar.

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Definitions:

Short-term Obligations

Financial liabilities that are due for payment within one year.

Normal Balance

The side of an account (debit or credit) that is expected to have a higher balance based on the accounting equation.

Asset Account

An account on a balance sheet representing tangible or intangible items of value owned by a company.

Trial Balance

A ledger balance sheet summarizing all accounts, showing equal totals for both credit and debit columns.