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:

Passive Immunity

Passive immunity is the type of immunity acquired by the transfer of antibodies from another individual, offering immediate, but temporary, protection.

Plasma Proteins

A variety of proteins in blood plasma that perform functions such as clotting, defense against disease, and transport of substances.

Actively Immunized

Having received a vaccine that stimulates the body's immune response to a specific disease, leading to the development of immunity.

HIV Virus

The human immunodeficiency virus, a retrovirus that attacks the immune system, leading to acquired immunodeficiency syndrome (AIDS) if not treated.