A U.S.-based company sells merchandise on account to a company in Mexico.The Mexican company wants to pay for the merchandise in pesos.If the peso decreases in value relative to the dollar,the seller will record a ________.We say the peso ________ relative to the dollar.
A)Foreign Currency Transaction Gain; weakens
B)Foreign Currency Transaction Gain; strengthens
C)Foreign Currency Transaction Loss; weakens
D)Foreign Currency Transaction Loss; strengthens

Question

Quizplus · Accepted Answer

If the peso decreases in value relative to the dollar, the U.S.-based company will record a Foreign Currency Transaction Loss. We say that the peso weakens relative to the dollar because it now takes more pesos to equal the same amount of dollars.

A US-Based Company Sells Merchandise on Account to a Company in in Mexico.The