The Possibility That Interest Rates May Rise Is an Example

question 14

Multiple Choice

The possibility that interest rates may rise is an example of

• A) political risk.
• B) exchange rate risk.
• C) interest rate risk.
• D) liquidity risk.

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Definitions:

Allowance

In accounting, a reduction from the gross amount of receivables to reflect the estimated uncollectible amounts; in budgeting, an allocated amount for specific expenses.

Doubtful Accounts

Accounts receivable that a company does not expect to collect in full, often leading to an allowance for doubtful accounts as a contra asset on the balance sheet.

Allowance Method

An accounting technique used to manage accounts receivable and bad debt expense by estimating uncollectible accounts at the end of each period.

Net Income

The total revenue of a business minus total expenses, representing the profit made during a specific period.