Flapp Corporation, a U

question 102

Multiple Choice

Flapp Corporation, a U.S. corporation, conducts all of its transactions in the U.S. dollar. It sells inventory for $1 million to a Canadian company when the exchange rate is $1US: $1.2Can. The Canadian company pays for the inventory when the exchange rate is $1US: $1.3Can. What is Flapp's exchange gain or loss on this sale?

• A) Flapp does not have a foreign currency exchange gain or loss, since it conducts all of its transactions in the U.S. dollar.
• B) Flapp's account receivable for the sale is $1 million (when the exchange rate is $1US: $1.2Can.) and it collects on the receivable when the exchange rate is $1US: $1.3Can. Flapp has an exchange gain of $100,000.
• C) Flapp's account receivable for the sale is $1 million (when the exchange rate is $1US: $1.2Can.). It collects on the receivable at $1US: $1.3Can. Flapp has an exchange loss of $10,000.
• D) Flapp's foreign currency exchange loss is $100,000.

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Definitions:

Diastole

The phase of the heartbeat when the heart muscle relaxes and allows the chambers to fill with blood.

Systole

The phase of the heartbeat during which the heart muscle contracts and pumps blood from the chambers into the arteries.

Ventricular Filling

The phase of the cardiac cycle when the heart's ventricles fill with blood coming from the atria.

Diastole

The moment in the heartbeat cycle when the heart's muscle eases and the chambers are enabled to draw in blood.