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:

Commodity

An essential commodity employed in business activities that is substitutable with other commodities of the identical category.

Maximise

The process of increasing a particular variable or outcome to its highest possible value under given constraints.

Input

Resources used in the production process to create goods or provide services.

Proportions

The relationship between parts and a whole, often expressed as a ratio or fraction.