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

question 41

Multiple Choice

How should we recognize the difference between 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 sales revenue
• C)As an extraordinary gain or loss
• D)As a prior period adjustment

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Definitions:

Semiannual Compounding

Another term for compounded semi-annually, indicating that interest is added to the principal sum twice per year.

Nearest Cent

Rounding a monetary amount to the closest one-hundredth of a currency unit.

Future Value

The value of an investment or asset at a specific future date, considering factors like interest rates or earnings growth.

Nearest Cent

The process of adjusting a monetary amount to the closest one-hundredth of the currency unit, typically a dollar.