A U.S. company makes a sale to a foreign customer payable in 30 days in the customer's currency. The sale would be recorded by the U.S. company on the date:
A) Of sale using a projected estimate of the U.S. dollar value at payment date.
B) Of sale using a 30-day average U.S. dollar value.
C) Of sale using the current dollar value.
D) Of sale using the foreign currency value.
E) When payment is received.

Question

Quizplus · Accepted Answer

The sale would be recorded using the current dollar value on the date of sale. This is because in accounting, transactions are recorded at their fair market value on the transaction date, which would be the current dollar value. Using a projected estimate or average value would not be accurate and would not reflect the true value of the transaction on the date of sale. The foreign currency value would also not be appropriate as the U.S. company would be converting the foreign currency to U.S. dollars at a later date when payment is received.

A US Company Makes a Sale to a Foreign Customer Payable