Under US GAAP, What Method Is Required to Account for Foreign

question 44

Multiple Choice

Under U.S. GAAP, what method is required to account for foreign currency transactions?

• A) A one-transaction perspective must be used.
• B) The two-transaction perspective must be used.
• C) A sale is not recorded until payment is received and converted to U.S. dollars.
• D) A sale is not recorded until payment is received in the foreign currency.

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Definitions:

Output

The quantity of goods or services produced in a given period by a firm, industry, or country.

Multiplier Size

A measure of the impact of fiscal and monetary policies on the national income, showing how initial spending leads to increased total spending.

Fiscal Policy

Government policies regarding taxation and spending that are used to influence economic conditions, including stimulating or restraining economic growth.

Potential GDP

The highest level of Gross Domestic Product (GDP) an economy can sustain over a long period without increasing inflation, reflecting its full employment output.