A Small Company Can Deal with Changing Currency Rates By

question 81

Multiple Choice

A small company can deal with changing currency rates by:

• A)stating contracts in US dollars (rather than in ZAR) as opposed to the international currency.
• B)locating all plants in countries with the most advantageous exchange position.
• C)limiting sales in each country so as to reduce exposure to any one currency.
• D)following the advice of the international sales manager.

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Definitions:

Account Receivable

Deferred payments from customers for the delivery or use of goods or services by a company.

Balance Sheet Relationships

The connections and correlations between various items listed on a balance sheet, such as the relation between assets, liabilities, and shareholders' equity.

Allowance Method

The allowance method is an accounting technique that estimates uncollectible accounts receivable, adjusting for debts likely not to be collected.

90-Day Note

A short-term debt security that matures in 90 days, typically used in the financing of inventory, accounts receivable, or other short-term needs.