Adjusting foreign currency receivables and payables to the spot rate at intervening financial reporting dates is essentially current-value accounting.

Question

Quizplus · Accepted Answer

Adjusting foreign currency receivables and payables to the spot rate at intervening financial reporting dates reflects their current value in the reporting currency, which is a principle of current-value accounting. This approach ensures that the financial statements present the value of these items in terms of the current exchange rate, providing a more accurate representation of their worth at the reporting date.

Adjusting Foreign Currency Receivables and Payables to the Spot Rate