When a Company Holds a Payable Denominated in a Foreign

question 137

Multiple Choice

When a company holds a payable denominated in a foreign currency:

• A)it wants the foreign currency to weaken.
• B)it wants the foreign currency to strengthen.
• C)it wants the foreign currency to remain the same.
• D)it does not matter if the foreign currency strengthens or weakens.

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Definitions:

Accrued

Refers to amounts that are recognized in the financial statements before the cash transactions occur, representing liabilities for goods and services received but not yet paid.

Routine Entry

Repeated and standard accounting entries made for recurring transactions within a business's financial records.

Expense

An outflow of cash or other valuable assets from a person or company to another entity in exchange for goods or services.

Deferral

Recognition of revenue or expenses in a period different from when the transaction actually occurred, usually related to prepaid expenses or unearned revenue.