How Should U

question 45

Multiple Choice

How should U.S.companies record receivables and payables from international trade that are denominated in foreign currencies?

• A)All assets and liabilities of U.S.companies must be recorded in U.S.dollars.
• B)Conservatism would dictate that liabilities should be recorded in the currency in which they are payable, but assets should be recorded in U.S.dollars, regardless of what currency will be received.
• C)There should be separate receivable and payable accounts for each currency that is used by the company.
• D)The company should choose any one currency to use for recording receivable and payables so that there is consistency in the accounts.

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Definitions:

Classified Balance Sheet

A financial statement that groups assets, liabilities, and equity into subcategories, providing detail and clarity to financial positions.

Adjusted Trial Balance

A list of all ledger accounts and their final balances after adjustments have been made, used as the basis for preparing financial statements.

End-Of-Period Spreadsheet

A tool used in accounting to compile all account balances at the period's end, aiding in the preparation of financial statements.

Salaries Expense

The total amount paid to employees for services rendered over a specific period, recorded as an expense in financial accounting.