ACC 440 Week 3 Learning Team Assignment Ch. 11 Textbook Exercises

In this pack of ACC 440 Week 3 Learning Team Assignment Ch. 11 Textbook Exercises you will find the next information:

Q11-1 Explain the difference between indirect and direct exchange rates.


Q11-2 What is the direct exchange rate if a U.S. company received $1.3623 in Canadian currency in exchange for $1.00 in U.S. Currency?


Q11-3 The U.S. dollar strengthened against the European euro. Will imports from Europe into the United States be more expensive or less expensive in U.S. dollars? Explain.


Q11-4 Differentiate between a foreign transaction and a foreign currency transaction. Give an example of each.


Q11-5 What types of economic factors affect currency exchange rates? Give an example of a change in an economic factor that result in a weakening of the local currency unit versus a foreign currency unit.


Q11-6 How are assets and liabilities denominated in a foreign currency measure on the transaction date? On the balance sheet date?


Q11-7 When are foreign currency transaction gains or losses recognized in the financial statements? Where are these gains or losses reported in the financial statements?


Q11-8 Sun Company, a U.S. corporation, has an accounts payable of $200,000 denominated in Canadian dollars. If the direct exchange rate increases, will Sun experience a foreign currency transaction gain or loss on this payable?


Q11-9 What are some ways a U.S. company can manage the risk of exchanges in the exchange rates for foreign currency?


Q11-10 Distinguish between an exposed net asset position and an exposed net liability position.

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