Most Foreign Exchange Transactions Are Through the U

question 20

Multiple Choice

Most foreign exchange transactions are through the U.S. dollar. If the transaction is expressed as the foreign currency per dollar this known as ________ whereas ________ are expressed as dollars per foreign unit.

• A) European terms; indirect
• B) American terms; direct
• C) American terms; European terms
• D) European terms; American terms

---

Definitions:

Discounts Lost

Refers to the financial opportunity lost by not taking advantage of discounts offered by suppliers for early payments.

Net Method

An accounting practice where purchases are recorded at their net cost, taking into account any discounts offered for early payment.

Cash Discounts

A reduction in the amount owed by a customer if payment is made within a specified period.

Periodic Inventory System

An inventory accounting system where updates are made on a periodic basis rather than after each transaction.