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

question 35

Multiple Choice

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

• A)The two-transaction approach 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:

Vietnam Policy

Refers to the strategies and decisions made by the United States government regarding its military and political involvement in Vietnam, particularly during the Vietnam War.

Nationalist Movements

Collective actions and ideologies aimed at achieving self-determination, independence, or national sovereignty for a particular group or territory.

Gamal Abdul Nasser

An Egyptian political leader and second President of Egypt who led the 1952 overthrow of the monarchy and introduced far-reaching land reforms.