Why Is the Accrual Method of Accounting for Unrealized Foreign

question 14

Multiple Choice

Why is the accrual method of accounting for unrealized foreign exchange gains sometimes criticized?

• A) Foreign exchange gains almost never occur, so there is no reason to have an accounting standard for it.
• B) It violates the principle of conservatism.
• C) It is not objective.
• D) There is no reliable method for measuring unrealized foreign exchange gains.

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Definitions:

Abdomen

The region of the body that houses the organs of digestion, enclosed by the diaphragm at the top and the pelvis at the bottom.

Retrograde Pyelography

A diagnostic imaging test where dye is injected into the bladder and travels up the ureters to the kidneys, used to detect abnormalities.

Specific Gravity

A measure of the density of a substance compared to the density of water.

Urine

A liquid waste product filtered from the blood by the kidneys, excreted through the urethra.