How Should U

question 20

Multiple Choice

How should U.S. companies record receivables and payables from international trade that are denominated in foreign currencies?

• A) All assets and liabilities of U.S. companies must be recorded in foreign currency.
• B) Conservatism would dictate that liabilities should be recorded in the currency in which they are payable, but assets should be recorded in U.S. dollars, regardless of what currency will be received.
• C) There should be separate receivable and payable accounts for each currency that is used by the company.
• D) The company should choose any one currency to use for recording receivable and payables so that there is consistency in the accounts.

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Definitions:

Economic Problem

The fundamental challenge of meeting the unlimited needs and desires of individuals with limited resources, necessitating choices and priorities in allocation.

Standard Of Living

The level of prosperity, amenities, material possessions, and basic needs accessible to a specific social class or region.

Economic Growth

An increase in a country's output of goods and services over time, typically measured by changes in real GDP, indicating improvements in living standards and economic health.

Capital

Assets or resources that are available for use in the production of further assets or goods.