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.

Question

Quizplus · Accepted Answer

Receivables and payables in foreign currencies should be recorded in separate accounts for each currency to accurately reflect the financial position and risk exposure due to currency fluctuations. This approach allows for proper management and reporting of foreign currency transactions.

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