Under US GAAP, What Is the Proper Treatment of Unrealized Foreign

question 13

Multiple Choice

Under U.S. GAAP, what is the proper treatment of unrealized foreign exchange losses?

• A) They should be deferred on the Balance Sheet until the cash is paid.
• B) They should not be recognized until cash is received to complete the transaction.
• C) They should be recorded on the Income Statement in the period the exchange rate changes.
• D) They should be deferred on the Balance Sheet until an offsetting foreign exchange gain is realized.

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Definitions:

Raw Materials

Basic materials used in the production process to create goods and products.

Finished Product

A completed item ready for sale, having undergone all stages of manufacturing and preparation.

Organizing

The process of arranging or structuring resources and tasks to achieve objectives efficiently, often relating to business or project management.

Directing

The process of guiding, leading, and motivating employees to achieve organizational goals.