The following table summarizes the facts of five independent cases (labeled a through e) of U.S. companies engaging in credit transactions with foreign corporations while the foreign exchange rate is fluctuating:

You are to fill in each blank space after evaluating the information about the case provided in the other three columns. The content of each column and the word or words that you should enter in the blank spaces are described as follows:
Column 1 indicates the type of credit transaction in which the U.S. company engaged with the foreign corporations. The answer entered in this column should be either Salesor Purchases.
Column 2 indicates the currency in which the invoice price is stated. The answer may be either U.S. dollars or Foreign currency.
Column 3 indicates the direction in which the foreign currency exchange rate has moved between the date of the credit transaction and the date of settlement. The answer entered in this column may be either Rising or Falling.
Column 4 indicates the effect of the exchange rate fluctuation on the income of the American company. The answers entered in this column are to be selected from the following: Gain, Loss, or Noeffect.

Transcribed Image Text:

Column Type of Credit Transaction Currency Used in Contract Exchange Rate Direction Effect on ncome 4 Case Falling Rising Rising Falling Sales Purchases Foreign currency U.S. dollars Foreign currency Sales Purchases Loss No effect Gain Foreign currency