When the Nominal Exchange Rate Changes from 4 Francs Per

question 143

Multiple Choice

When the nominal exchange rate changes from 4 francs per dollar to 6 francs per dollar, the dollar has:

• A)appreciated.
• B)depreciated.
• C)become overvalued.
• D)become undervalued.

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Definitions:

Accrual Basis

An accounting method where revenue is recorded when earned and expenses are recorded when incurred, regardless of when cash transactions occur.

Prepaid Expenses

Future expenses that have been paid in advance and are recorded as assets until they are actually incurred.

Unearned Revenues

Unearned revenues are funds received by a company for goods or services yet to be delivered or performed, recognized as a liability on the balance sheet until the obligation is fulfilled.

Unearned Consulting Revenue

Revenue received for services that have not yet been performed or delivered and is recorded as a liability until the service is provided.