The Difference Between Accounting Exposure and Translation Exposure

question 38

Multiple Choice

The difference between accounting exposure and translation exposure

• A)translation is about going from one language to another, accounting is just about the numbers.
• B)accounting exposure and translation exposure are the same thing.
• C)hedging one always involves increasing the other.
• D)hedging one might involve increasing the other.

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Definitions:

Accrued Interest

Interest that has been incurred but not yet paid in cash during a specific time period.

Note

A financial instrument that represents a debt or obligation between two parties, wherein the issuer promises to pay the holder a certain amount of money at a future date.

Adjusting Journal Entry

An entry made in the accounting journals at the end of an accounting period to allocate items between accounting periods.

Allowance for Doubtful Accounts

An estimate of the amount of accounts receivable that may not be collected, used to reduce the carrying amount of receivables on the balance sheet.