Excel Sources Inc

question 56

Multiple Choice

Excel Sources Inc. is a U.S. incorporated company. Due to change in exchange rate, it receives $150,000 as payment against a sale of $165,000. Under the two-transaction perspective:

• A) no journal entry will be prepared on the date of sale.
• B) the sale will be recorded at $150,000 on the date of sale.
• C) foreign exchange loss will be recorded for $15,000.
• D) Accounts Receivable will be debited for $15,000 on the date of payment.

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Definitions:

Adjusting Entries

Accounting records entries documented at the conclusion of an accounting cycle to distribute revenues and expenses to the period they genuinely took place.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary accounts' balances to permanent accounts and prepare the company's books for the next period.

Accounting Cycle

The process of recording and processing all financial transactions of a company, from when the transaction occurs, to its representation on the financial statements, followed by closing the accounts.

Financial Statements

Financial statements are formal records that outline the financial activities and position of a business, person, or entity. These include income statements, balance sheets, and statements of cash flows.