Accounting for Foreign Currency Transactions

When a multinational corporation engages in foreign currency transactions, it often needs to determine how to account for these transactions in its financial statements. A transaction that involves the exchange of currencies at the date of the transaction must be recognized using the exchange rate applicable on that date. This is important for ensuring that the financial reports provide an accurate representation of the company's financial position.

Which of the following statements correctly reflects how foreign currency transactions are accounted for?