Which of the Following Statements About Risk Assessment Is True

question 37

Multiple Choice

Which of the following statements about risk assessment is true?

• A) Risk assessment focuses on the quantitative evaluation of exposures.
• B) Risk assessment evaluates risk both on an inherent and residual basis.
• C) Risk assessment determines the organization's tolerance for exposure.
• D) Risk assessment is the amount of inherent risk in a separately identifiable business entity.

---

Definitions:

Cash Budget

A cash budget is a financial plan that estimates the cash inflows and outflows over a specific period, helping businesses manage their liquidity and financial stability.

Minimum Cash Balance

The least amount of cash a business decides to keep on hand to meet immediate needs, often set as a part of cash management policies.

Cash Excess

Cash excess refers to the situation where a company or individual has more liquid cash available than is necessary for current operations or investments.

Master Budget

A comprehensive financial planning document that includes all of the smaller, individual budgets within an organization, projecting all major financial activities.