Why Must the Two-Transaction Perspective Be Used for Recording Foreign

question 57

Multiple Choice

Why must the two-transaction perspective be used for recording foreign currency transactions under U.S. GAAP?

• A) The two-transaction perspective is required under IFRS.
• B) U.S. GAAP requires conservatism in financial reporting.
• C) All other methods are excessively complicated to use and therefore obscure the essence of the transaction.
• D) Management made two decisions: one to sell and another to extend credit in a foreign currency.

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Definitions:

Hot Wallets

Cryptocurrency wallets that are connected to the internet, facilitating easier transactions but also exposing them to greater security risks compared to cold wallets.

Cold Wallets

A secure offline wallet used for storing cryptocurrencies, offering protection from hacking or other electronic failures.

AAC

Advanced Audio Coding, a standardized, lossy compression and encoding scheme for digital audio, designed to be the successor of MP3 that offers better sound quality.