The Process That Links Risk and Return in Order to Determine

question 200

Multiple Choice

The process that links risk and return in order to determine the worth of an asset is termed ________.

• A) securitization
• B) valuation
• C) discounting
• D) compounding

---

Definitions:

Credit Normal Balance

The usual balance side for credit accounts, typically seen in liabilities, equity, and revenue accounts.

Adjusting Entry

Journal entries made at the end of an accounting period to update accounts for accurate financial reporting.

Closing Entry

A journal entry made at the end of an accounting period to transfer temporary accounts to permanent accounts and prepare the books for the next period.

Real Account

Another term for permanent account in accounting, referring to accounts that are not closed at the end of the accounting period and carry their ending balance into the next period.