The Principle That Can Be Summarized as "Anticipate No Gains

question 97

Multiple Choice

The principle that can be summarized as "anticipate no gains, but provide for all possible losses and if in doubt, record an asset at the lowest reasonable amount and report a liability at the highest reasonable amount" is the:

• A)revenue concept.
• B)accounting conservatism principle.
• C)the materiality principle.
• D)disclosure principle.

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Definitions:

Home Currency Approach

A method of assessing an international investment by converting all foreign currencies involved into the investor’s domestic or "home" currency.

Spot Rate

The ongoing market rate at which a certain currency is available for buying or selling for immediate dispatch.

Unbiased Forward Rate

Theoretically, a forward rate in the currencies market that is equal to the spot rate adjusted for interest rate differentials, without any prediction of future direction.

Forward Rate

The agreed-upon price for a financial transaction that will occur at a future date, often used in the context of foreign exchange or interest rates.