Credit Risk Is the Risk That

question 86

Multiple Choice

Credit risk is the risk that

• A) an instrument's price or value will change.
• B) the company itself will not be able to fulfill its obligation.
• C) one of the parties to the contract will fail to fulfill its obligation and cause the other party loss.
• D) cash flow will change over time.

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Definitions:

Income Summary

An account used to summarize the revenue and expenses for a specific period, aiding in the transition to the next accounting period.

Net Loss

The amount by which total expenses exceed total revenues in a given period, indicating a financial loss.

Net Income

A company's total earnings post the subtraction of all expenses, taxes, and costs from its overall revenue.

Owner's Capital

This represents the total equity invested by the owners in a company plus any retained earnings, indicative of the net worth of the company from the owner's perspective.