When a U.S.company does business with a British company and payment is in British pounds,an exchange gain or loss occurs if the exchange rate between dollars and pounds changes between the date of sale and the date of payment.

Question

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This statement is true. An exchange gain or loss occurs when the exchange rate between currencies changes, resulting in a difference in the amount of dollars the U.S. company receives or pays for the British pounds used to make the transaction.

When a USCompany Does Business with a British Company and Payment Is