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 U.S.dollars.
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.

Question

Quizplus · Accepted Answer

Companies should maintain separate accounts for receivables and payables denominated in different currencies. This will allow better tracking of transactions and easier management of risks associated with currency fluctuations. It will also help in accurately valuing assets and liabilities in the financial statements.

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