A U. S. Company's credit sale to an international customer allowing payment to be made in a foreign currency requires using the same exchange rate for the date of sale and the cash payment date.

Question

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The exchange rate for the date of sale and the cash payment date may not be the same due to fluctuations in exchange rates. Therefore, the company may face foreign exchange risk if the exchange rate changes unfavorably between the sale date and the payment date.

A U S Company's Credit Sale to an International Customer Allowing Payment