n 5 ed What is a "foreign exchange rate?" a. out of question The difference between the price of goods in a foreign currency and the price in a domestic currency b. The cost to hold all monetary assets in a single currency C. The price to buy foreign goods d. The price to buy a foreign currency 4 ut of uestion What is "hedge accounting?" a. Recording options and other derivatives on the Balance Sheet. b. Any record keeping related to purchase, sale, or valuation of derivatives. c. Using multiple accounting methods to offset the effect of foreign currency exchange. d. Matching gains or losses from hedging with losses or gains from the risk being hedged. d 3 out of uestion Under U.S. GAAP, which of the following conditions must be met to qualify for hedge accounting? a. All of the above must be met in order to qualify for hedge accounting. b. A derivative must be used specifically to hedge fair value exposure or cash flow exposure. c. There must be formal documentation of the hedging relationship. d. The hedge must be effective. d 2 Out of uestion The number of U.S. dollars ($) today to buy one U.K. pound () six months from now is called: a. the forward rate. b. the prime rate. c. the exact rate. d. the spot rate. n 1 ed out of question Excel Sources Inc. is a U.S. incorporated company. Due to change in exchange rate, it receives $150,000 as payment against a sale of $165,000. Under the two-transaction perspective: a. the sale will be recorded at $150,000 on the date of sale. b. Accounts Receivable will be debited for $15,000 on the date of payment. c. foreign exchange loss will be recorded for $15,000. d. no journal entry will be prepared on the date of sale