Which of the Following Statements Is False

question 50

Multiple Choice

Which of the following statements is false?

• A) The most common method firms use to reduce the risk that results from changes in exchange rates is to hedge the transaction using currency forward contracts.
• B) Fluctuating exchange rates cause a problem known as the importer-exporter dilemma for firms doing business in international markets.
• C) Exchange rate risk naturally arises whenever transacting parties use different currencies: both of the parties will be at risk if exchange rates fluctuate.
• D) Because the supply and demand for currencies varies with global economic conditions, exchange rates are volatile.

---

Definitions:

Chart of Accounts

A systematic list of all account titles and numbers used by a company to organize its financial transactions and prepare financial statements.

Debits

Accounting entries that increase asset or expense accounts, or decrease liability, equity, or revenue accounts; they are recorded on the left side of accounting ledgers.

Credits

Accounting entries that increase liabilities or equity or that decrease assets.

Cash Receipts

The collection of money, including coins, notes, cheques, and electronic transactions, received from activities such as sales or services.