Impact of Strengthening Yen on Revenue

Easy Multinational Operations Impact On Financial Statements

ABC Corporation is a US-based company that operates in several countries, including Japan and Canada. Due to fluctuations in currency exchange rates, the financial results for ABC Corporation can vary significantly. The company reports its financial statements in US dollars. When the Japanese yen strengthens against the US dollar, it impacts the revenues recognized for sales made in Japan.

Which of the following statements correctly describes the impact of a strengthening Japanese yen on ABC Corporation's financial statements?

A strengthening Japanese yen will increase the reported sales revenues from Japan in US dollars.

A strengthening Japanese yen will decrease the cost of goods sold for products sold in Japan.

A strengthening Japanese yen will have no impact on the net income reported by ABC Corporation.

Hint

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