---**Understanding Foreign Exchange Transactions and Gains**Rush records its transactions in U.S. dollars. A **purchase** of goods resulted in a **payable** denominated in UK pounds, and a **sale** of goods resulted in a receivable denominated in Euros.Rush recorded a foreign exchange **transaction gain** on settlement of the **UK pound payable** and an exchange transaction **gain on the collection of the Euros receivable**.**Question:**Did the US dollar weaken or strengthen against those respective currencies?**Options:****US dollar against the UK Pound**A. weakened B. strengthened C. weakened D. strengthened **US dollar against the Euro**A. weakened B. weakened C. strengthened D. strengthened ---This scenario involves assessing the impact on the US dollar in terms of its exchange rate fluctuations against the UK pound and the Euro in the context of financial transactions. 1. **Understanding Foreign Exchange Gains**: - A **foreign exchange gain** on a payable indicates that the currency the payable is denominated in (UK pound) declined in value relative to the US dollar. Thus, fewer US dollars are required to settle the payable. - A **foreign exchange gain** on a receivable indicates that the currency the receivable is denominated in (Euro) increased in value relative to the US dollar. Hence, the receivable converts to more US dollars.2. **Conclusion**: - The US dollar **strengthened** against the UK pound. - The US dollar **weakened** against the Euro.These principles help understand the currency risk and exchange rate impact on international transactions.**Explanation of Diagram:**There is a pair of columns listing responses to the question "Did the US dollar weaken or strengthen against those respective currencies?" Each column represents a currency (UK Pound and Euro) with multiple-choice options indicating whether the US dollar weakened or strengthened.---

An importer always has the expectations that foreign currency depreciate and home currency…

Rush records its transactions in U.S. dollars. A purchase of goods resulted in a payable denominated in UK pounds, and a sale of goods resulted in a receivable denominated in Euros. Rush recorded a foreign exchange transaction gain on settlement of the UK pound payable and an exchange transaction gain on the collection of the Euros receivable. Did the US dollar weaken or strengthen against those respective currencies? US dollar against the UK Pound US dollar against the Euro weakened А. weakened В. strengthened weakened weakened strengthened strengthened strengthened

Rush records its transactions in U.S. dollars. A purchase of goods resulted in a payable denominated in UK pounds, and a sale of goods resulted in a receivable denominated in Euros. Rush recorded a foreign exchange transaction gain on settlement of the UK pound payable and an exchange transaction gain on the collection of the Euros receivable. Did the US dollar weaken or strengthen against those respective currencies? US dollar against the UK Pound US dollar against the Euro weakened А. weakened В. strengthened weakened weakened strengthened strengthened strengthened

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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