The Amount of Risk a Company Is Willing to Accept

question 85

Multiple Choice

The amount of risk a company is willing to accept in order to achieve its goals and objectives is

• A) Inherent risk
• B) Residual risk
• C) Risk appetite
• D) Risk assessment

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account that reduces the total amount of accounts receivable to reflect the estimated portion that may not be collected.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered or used but not yet paid for.

Aging

A method used to categorize accounts receivable based on the length of time an invoice has been outstanding, helping businesses to manage and collect debts effectively.

Adjusting Entry

A journal entry made at the end of an accounting period to record revenues and expenses in the correct period.