The Trial Balance

question 3

Multiple Choice

The trial balance

• A) Is a listing of all the accounts and their balances in the order the accounts appear on the statement of financial position.
• B) Has as its primary purpose to prove (check) that all journal entries were made for the period.
• C) Can be used to uncover errors in journalizing and posting.
• D) Is used to prepare the statement of financial position while the general ledger is used to prepare the income statement.

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Definitions:

Dollar Exposure

The extent to which a company or investor is affected by changes in the value of the U.S. dollar against foreign currencies.

Call Delta

An option's sensitivity measure that indicates how much the price of the call option is expected to change in response to a one-point change in the price of the underlying asset.

Two-State

Usually references a model involving two possible outcomes or states, often used in finance to model investment under uncertainty.

Hedge Ratio

The ratio used to calculate the number of derivatives needed to hedge a particular risk exposure.