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.

---

Definitions:

Albert Ellis

An American psychologist who developed Rational Emotive Behavior Therapy (REBT), focusing on helping patients change irrational beliefs.

Neurological Cause

An underlying reason for a condition or behavior that relates to the structure or function of the nervous system.

Unconditional Positive Regard

A term from humanistic psychology that indicates accepting and respecting others as they are without judgment or evaluation.

Systematic Desensitization

A behavioral therapy technique used to reduce phobic reactions and anxieties by gradually exposing the individual to the feared object or situation.