Question

T/F

From a U.S. importer’s and exporter’s perspective, appreciation of the foreign currency will generate foreign exchange losses on payables created from its import purchase of goods from foreign sellers and foreign exchange gains on receivables created from its export sale of goods to foreign buyers.

Answer 1

Answer: True

suppose the U.S. importers purchase the goods and the subsequent payment of the respective allows the customer one-month too pay. Foreign currency payable resulting from import purchase are revalued at the end of the accounting periods using the current spot rate. An increase in the value of payable will be a foreign loss.

suppose the U.S. exporters sale the goods and the subsequent collection of the respective allows the customer one-month too pay. Foreign currency receivables resulting from the export sale are revalued at the end of the accounting periods using the current spot rate. An increase in the value of receivable will be a foreign gain.