1. Assume that our US-based company purchases 2,000 units of inventories from a UK supplier at 6/unit. To record the purchase:

a. Our company will debit inventories and credit accounts payable for 12,000.

b. Our company will debit inventories and credit accounts payable for the $US equivalent of 12,000.

c. Our company will not record the purchase of inventory until the payable is paid.

d. Either a or b is current.

2. If our company borrows money with a foreign currency-denominated loan:

a. It must record the loan and the accrued interest at the current $US value on each statement date.

b. It must record the loan, but not the accrued interest, at the current $US value on each statement date.

c. It must record the accrued interest, but not the loan, at the current $US value on each statement date.

d. No adjusting entries to reflect currency fluctuations need to be made.