What is the effect of fluctuations in exchange rates on accounts payable?
A)Deferred and amortized
B)Deferred to maturity
C)Recognized immediately in income
D)Recognized if losses, deferred if gains

Question

Quizplus · Accepted Answer

Fluctuations in exchange rates affect accounts payable immediately and are recognized in income. This is because accounts payable represent amounts owed to foreign creditors which will become due in the future, meaning that any changes in exchange rates will impact the amount that will be paid. Therefore, any gains or losses resulting from fluctuations in exchange rates are recognized immediately in income. Choices A, B, and D do not accurately reflect the effect of fluctuations in exchange rates on accounts payable.

What Is the Effect of Fluctuations in Exchange Rates on Accounts