An American Company Makes a Credit Purchase of Goods from a Company

question 77

Multiple Choice

An American company makes a credit purchase of goods from a company in London for $500. On the date of purchase, the exchange rate was $1.50 per pound. However, on the date of payment, the rate had risen to $1.55 per pound. As a result, the American company would record

• A) an exchange gain of $25.
• B) an exchange loss of $775.
• C) an exchange loss of $25.
• D) no exchange gain or loss.

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Definitions:

Weight Density

A measure of how much mass a material has in a given volume, often used in shipping to determine freight classification.

Transportation Cost

The expenses associated with moving goods, materials, or people from one location to another, including fuel, labor, and vehicle maintenance costs.

Order Lead Time

The duration from when an order is placed until it is fully processed and delivered to the customer, affecting supply chain efficiency.

Customer Places

Locations or platforms where customers engage with businesses, make purchases, or receive services.