What Is the Primary Difference Between Transaction Exposure and Accounting

question 8

Multiple Choice

What is the primary difference between transaction exposure and accounting exposure?

• A) Transaction exposure results from changes in currency exchange rates, whereas accounting exposure is the result of changes in accounting method.
• B) Transaction exposure results in changes in cash flow, whereas accounting exposure does not necessarily result in changes in cash flow.
• C) Transaction exposure must be hedged, but accounting exposure does not need to be hedged.
• D) Transaction exposure affects only monetary assets and liabilities, whereas accounting exposure affects all assets and liabilities.

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Definitions:

Continental Collisions

The process where two or more continental plates converge, leading to mountain building, seismic activity, and crustal deformation.

Erosional Remnant

A landform left standing after the surrounding terrain has been eroded away, often showcasing resistant geologic features.

Granite

A coarse-grained igneous rock composed mainly of quartz, feldspar, and mica, usually found in the continental crust.

Mesa

A flat-topped, steep-sided landform that rises sharply above the surrounding landscape, typical in arid and semi-arid regions.