Question

Match the items in the left-hand column with the descriptions/explanations in the right hand column.
Items
1. Direct exchange rate
2. Indirect exchange rate
3. Managing an exposed net asset position
4. Spot rates
5. Current rates
6. Foreign currency transaction gain
7. Foreign currency transaction loss
8. Foreign currency transactions
9. Hedging a firm commitment
10. Functional currency
11. Speculating in a foreign currency
12. Managing an exposed net liability position
13. Settlement date
14. Denominated
15. Reporting currency

Descriptions/Explanations
A. Exchange rate for immediate delivery of currencies.
B. Imports and exports whose prices are stated in a foreign currency.
C. The primary currency used by a company for performing its major financial and operating functions.
D. U.S. companies prepare their financial statements in U.S. dollars.
E. 1 European euro equals $0.65.
F. A forward contract is entered into when receivables denominated in European euros exceed payables denominated in that currency.
G. Accounts that are fixed in terms of foreign currency units.
H. 1 U.S. dollar equals 99 Japanese yen.
I. Spot rate on the entity’s balance sheet date.
J. In an export or import transaction, the date that foreign currency units are received or paid, respectively.
K. A forward contract is entered into when payables denominated in British pounds exceed receivables denominated in that currency.
L. Reported when receivables are denominated in European euros and the euro strengthens compared to the U.S. dollar.
M. A forward contract is entered into on May 1 that hedges an import transaction to occur on July 1.
N. Forward contract in which no hedging is intended.
O. Reported when payables are denominated in Swiss francs and the franc strengthens compared to the U.S. dollar.



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  • CreatedMay 23, 2014
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