A US-Based Company Purchases Merchandise on Account from a Company in in Mexico

question 90

Multiple Choice

A U.S.-based company purchases merchandise on account from a company in Mexico. The purchase contract is denominated in pesos. If the peso decreases in value relative to the dollar, the purchaser will record a ________. The peso ________ relative to the dollar.

• A)Foreign Currency Transaction Loss; weakens
• B)Foreign Currency Transaction Loss; strengthens
• C)Foreign Currency Transaction Gain; weakens
• D)Foreign Currency Transaction Gain; strengthens

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