How Should We Recognize the Difference in the Value of a Receivable

question 52

Multiple Choice

How should we recognize the difference in the value of a receivable in a foreign currency at the time it was recorded and the time the cash was received?

• A) As an adjustment to stockholders' equity
• B) As an adjustment to purchases
• C) As an extraordinary capital expenditure
• D) As a prior period adjustment

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Definitions:

Paid

The status of a financial obligation that has been fulfilled, indicating that no debt remains.

Year

A period of time consisting of 365 days, or 366 in a leap year, used as a basic unit of time to measure durations and align calendars.

Accumulated Depreciation

Accumulated depreciation accounts for the total amount of depreciation expense that has been claimed over the life of an asset, reducing its book value.

Balance Sheet

A report that lists a business's assets, obligations, and the equity of its shareholders on a specific date.