When a U.S.company does business with a British company and payment is in U.S.dollars,an exchange gain or loss occurs if the exchange rate between dollars and pounds changes between the date of sale and the date of payment.

Question

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An exchange gain or loss occurs when the payment is in a foreign currency and the exchange rate changes, not when the payment is in the company's own currency (U.S. dollars in this case).

When a USCompany Does Business with a British Company and Payment Is