1. If $1.5625 can be exchanged for 1 British pound, the direct and indirect exchange rate quotations are:
(a) $1.5625 and 1 British pound, respectively
(b) $1.5625 and 0.64 British pounds, respectively
(c) $1.00 and 1.5625 British pounds, respectively
(d) $1.00 and 0.64 British pounds, respectively
2. A U.S. firm purchases merchandise from a Canadian firm with payment due in 60 days and denominated in Canadian dollars. The U.S. firm will report an exchange gain or loss on settlement if the transaction is:
(a) Recorded in U.S. dollars
(b) Measured in U.S. dollars
(c) Not hedged through a forward contract
(d) Settled after an exchange rate change has occurred
3. Exchange gains and losses on accounts receivable and payable that are denominated in a foreign currency are:
(a) Accumulated and reported upon settlement
(b) Deferred and treated as transaction price adjustments
(c) Reported as equity adjustments from translation
(d) Recognized in the periods in which exchange rates change