A decrease in the direct rate of US$1 to A$# results in:
A) an exchange loss.
B) a decrease in A$ amount for a payable in US$.
C) an increase in A$ amount for receivable in US$.
D) an increase in US$ amount for a payable in A$.

Question

Quizplus · Accepted Answer

A decrease in the direct rate of US$1 to A$1 means that more A$ are needed to purchase one US$. Therefore, a payable in US$ would require a larger amount of A$ to pay off the debt, resulting in a decrease in A$ amount for that payable.

A Decrease in the Direct Rate of US$1 to A