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

---

Definitions:

Governmental Regulations

Laws and rules established by governments to regulate behaviors, activities, and standards in various industries and society at large.

Supply Chain Sustainability

The management of environmental, social, and economic impacts within the supply chain, focusing on long-term viability and ethics.

Legal Obligations

Responsibilities or duties enforced by law that an entity or individual must follow.

Stakeholders

Individuals or groups with an interest or concern in the success and operations of a business, including employees, customers, investors, and suppliers.